PA DEP Shuts Down ME2 Drilling in Lebanon, PA for 1 Gal Mud Spill

We chalk this one up as outrageous. The Pennsylvania Dept. of Environmental Protection (DEP) has just shut down further drilling for the Mariner East 2 Pipeline project at Snitz Creek in Lebanon County, PA–because of a “less than one gallon” spill of non-toxic drilling mud. Drilling mud is composed of bentonite–the same clay compound used in kitty litter, toothpaste and cosmetics. A spill of less than a gallon is NOTHING. It’s not even worth reporting. Yet Sunoco Logistics, the company drilling, was honest and reported the “inadvertent return” as it is called. And because Sunoco previously had another small spill at the same location, the DEP, bowing to pressure from radical environmental groups, has halted any further horizontal directional drilling (HDD) work at the Snitz Creek location. This is bizarre, but perhaps not unexpected. It all stems to a deal Sunoco made with the devil…
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CONSOL Energy 3Q17: NatGas & Coal Companies to Split Nov 28

Yesterday CONSOL Energy issued its third quarter 2017 update, along with a date for when the company will split in two–a coal company and a natural gas drilling company. The date is Nov. 28th. As of that date the CONSOL Energy name will belong to the coal company, and CNX Resources will be the new name of the natgas drilling company. According to Nick DeIuliis, CEO of CONSOL today and future CEO of CNX Resources, “Going into year-end, not only will our businesses be separated, but our E&P operations will be growing substantially.” One of the ways they intend to grow is by adding a third drilling rig to the two currently operating. Right now CONSOL is operating a rig in Greene County, PA and another in Monroe County, OH. The original plan was to add a third rig in 2018, but they are “moving it forward some” and will add it this year–somewhere in southwestern PA. During 3Q17 CONSOL drilled 10 wells–six of them in the Marcellus in southwest PA, and four in the Ohio Utica. The company continues to have a flirtation with the Utica–in PA. They have a program to drill dry Utica wells in both Indiana and Greene counties. The company said they plan to bring two Utica wells online in Westmoreland County by the end of the year–close to the first Utica well they drilled two years ago. Production was up slightly in 3Q17, to 101 billion cubic feet equivalent (Bcfe). By comparison, in 3Q16 CONSOL produced 96.4 Bcfe. Below is yesterday’s update, the current slide deck used on the analyst call, and excerpts from the analyst call…
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FERC Gives Rover Pipe OK to Use Different Tech to Speed Up Drilling

This story necessarily gets into the weeds of pipeline construction. But so you have the essential story line up front, this is it: On Monday Energy Transfer asked the Federal Energy Regulatory Commission (FERC) for permission to dump something called annular pressure monitoring (APM) when drilling underground (horizontal directional drilling, or HDD) for the Rover Pipeline–and on Tuesday FERC granted that permission. Here’s the slightly longer explanation. Rover is a $3.7 billion, 711-mile natural gas pipeline that will run from PA, WV and eastern OH through OH into Michigan and eventually into Canada. Early on, Rover had early missteps when using HDD to insert pipeline under things like rivers and roads. The most serious episode occurred when Rover drilling spilled 2 million gallons of non-toxic drilling mud in a swamp near the Tuscarawas River (in Ohio) back in April (see Rover Pipeline Accident Spills ~2M Gal. Drilling Mud in OH Swamp). However, there were other episodes too, which led FERC to stop all HDD work on Rover in April while they investigated. In August, FERC gave ET/Rover a list of eight conditions before they could restart HDD work (see FERC Issues Rover 8 Commandments to Restart Horizontal Drilling), and in September, FERC finally lifted the ban for some locations (see FERC Lifts Rover Horizontal Drilling Ban, Pipeline Work Resumes). One of the conditions in resuming HDD work was for Rover to constantly monitor downhole annular pressure–an indicator that problems may be happening and that mud is beginning to leak. In Monday’s request to FERC, Rover points out using APM is slowing work by up to 75% because when the signals stop coming they must pull everything out of the hole, reattach the wires, and push it all back down again. So Rover, working with experts, came up with an alternative to APM. It was that alternative that took FERC just a day to review and agree to. All of which means the final work to complete Rover should now speed up a bit…
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NEXUS Pipe Goes to Court to Gain Easements on 42 Ohio Properties

NEXUS Pipeline has had to use the unpreferred last option and has taken landowners of 42 properties to court using eminent domain in order to secure easements so they can lay pipeline through those properties. NEXUS is a $2 billion, 255-mile interstate pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada. NEXUS received final approval for the project from the Federal Energy Regulatory Commission (FERC) in August, the first major pipeline to get approved following a newly restored quorum at FERC (see New FERC Quorum Votes Final Approval for NEXUS Pipeline). In early October, FERC gave NEXUS permission to begin construction (see NEXUS Cleared to Begin Construction, Rover Cleared to Restart HDD). While 97% of the landowners along the proposed route have signed easements for the pipeline, a few have not. The landowners NEXUS has taken to court (so far) are in Ohio, in Stark, Summit, Wayne, Medina, Lorain, Sandusky, Wood and Erie counties. Yes, there are still a few lawsuits hanging out there, including a lawsuit by Green, OH and one by the Coalition to Reroute Nexus (CORN). However, it seems unlikely the lawsuits will stop the project. Here’s the unfortunate news about NEXUS suing a few holdouts…
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Crestwood Sells Salt Operation in Watkins Glen, Keeps LPG Storage

Our heart stopped when we saw news from Crestwood Equity (used to be called Crestwood Midstream) yesterday that the company has sold its US Salt business on the shore of Seneca Lake near Watkins Glen to Kissner Group for $225 million. We thought, “Oh no! Crestwood has finally thrown in the towel on their Seneca Lake Propane Storage project!” But alas, our fears were unfounded. Background: In 2009 Inergy filed a request to convert a depleted salt cavern along the shore of Seneca Lake (in Schuyler County, NY, near Watkins Glen) into a propane/natural gas storage facility. Inergy was later bought by and merged into Crestwood Midstream, and Crestwood Midstream later renamed itself Crestwood Equity Partners. The New York Dept. of Environmental Conservation (DEC) has been sitting on its hands from the beginning, refusing to grant the necessary permits to allow the facility to open. Sound familiar? Same old delay and later deny strategy from our corrupt governor, Andrew Cuomo. As recently as May of this year, Crestwood remained committed to building the storage facility in depleted salt caverns originally drilled by US Salt, which is owned by Crestwood (see Crestwood Drops Seneca Lake Natgas Storage Plan, Keeps LPG Plan). Crestwood scaled back the plan, excluding storage of natural gas and instead sticking with storing just propane (or LPG, liquefied petroleum gas). So when we read the news in Crestwood’s third quarter update yesterday that the company has sold off US Salt–we thought that was the end of the LPG storage project. Apparently antis in the Finger Lakes region thought the same thing. A local news outlet published an incorrect story stating the LPG storage project is dead. But then Crestwood issued a follow-up statement to say no, the LPG project is still alive and kicking–they kept that part of the US Salt real estate and still intend to build the storage facility, when/if the corrupt Cuomo DEC issues the necessary permits…
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DCP Midstream to Import Propane from Europe for Chesapeake Region

DCP’s import terminal on the East Coast will supply propane customers in the Chesapeake region. Photo courtesy of DCP.

This, for us, is a “man bites dog” kind of story. Something unexpected and unusual. The Marcellus/Utica region produces an abundance of methane (i.e. natural gas). However, when methane comes out of the ground, other hydrocarbons come out of the ground too–so-called natural gas liquids (NGLs) like ethane, propane, butane, etc. So we not only produce a boatload of methane, we also produce a lot of those other hydrocarbons too. In fact, there is and has been a plan on the boards for years to build a propane storage facility along the shores of Seneca Lake in New York to handle northeast propane production (see today’s story, Crestwood Sells Salt Operation in Watkins Glen, Keeps LPG Storage). So imagine our surprise to read a story about DCP Midstream, which operates an NGL export terminal in Chesapeake, Virginia, plans to use that terminal during the slow winter months to *import* propane–from places like Europe. Really?! You can’t get it from the Marcellus/Utica? Or ship it in from the Gulf Coast? DCT says some of its customers in “the Chesapeake region” want more propane, and DCT aims to deliver by shipping it all the way from another continent…
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Range Resources’ 10-Year Pipeline Strategy About to Pay Off

Yesterday MDN received an email from subscriber Sandy R. who lives in southwestern PA. Her land is leased to Range Resources, and she recently read that Range “now has their own pipelines to carry Marcellus gas to better paying markets.” In our response to Sandy, we mentioned that although producers sometimes buy a share of a pipeline, they rarely own pipelines outright. More often they sign long-term (10-20 year) agreements with large midstream companies to reserve capacity along pipelines. We went looking for which pipelines Range might have reserved capacity on that are near where Sandy lives, and found two things that caught our attention. One is a recent statement from Range bragging (our word) about a strategy they put in place 10 years ago to get enough pipeline capacity to move Marcellus gas out of the region to better paying markets. The second thing is we located a list of major northeast pipeline projects with the pipelines Range has reserved capacity along highlighted in yellow. Cool! So below is an article mentioning some of the pipelines Range says will be a game-changer for them in the near-term, followed by that list of pipelines they have reserved capacity along…
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TX Newpark Resources Buys Pittsburgh Well Services Group for $75M

Texas-based Newpark Resources, a drilling fluids and specialty services company for the oil and gas industry, announced yesterday it is buying Well Service Group located in Robinson Township, near Pittsburgh, for $75 million. Well Service Group, a containment and well site service company, was founded in 2012 and has sold and serviced equipment for Newpark from the beginning. So it seems like a natural marriage. It is one company (Newpark) buying out one of its best distributors (Well Service Group). No word on potential layoffs due to the buyout, but we doubt there will be any. This is a relatively small deal as deals go in the oil patch…
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Fracker FTS International Gets Ready to Launch IPO

FTS International, is the largest private (not publicly traded stock) well completion company in North America. In 2015 FTS fracked EQT’s ginormous Scotts Run 591340 dry Utica well in Greene County, PA producing an initial production (IP) of 72.9 million cubic feet of natural gas per day (see Private Company Fracked EQT’s Monster Utica Well, Working on More). That well is still the reigning champion for highest initial production. However, a year ago FTS sold off their sand hauling business and laid off over 40 people (see FTS Intl Fires All Drivers & Mechanics in Sand Hauling Business). FTS euphemistically called it “adjusting head count.” If you’ve ever been “adjusted,” you know how it lousy it feels. We mentioned that FTS is the largest *private* well completion company in North America. In February FTS announced it would launch an initial public offering (see FTS Intl, NA’s Largest Private Well Completion Co, Going Public). But since that time we’ve not heard anything more about the IPO. That is, until now. An investor website noticed that FTS has just filed an amended form with the Securities and Exchange Commission related to the IPO. The paperwork still indicates they seek to raise $100 million, but the investor website notes that figure is often used as a placeholder. What the FTS paperwork does not indicate is when the shares will be offered, and what kind of price per share they hope to get. What the paperwork does seem to imply is that FTS is either now actively shopping its IPO shares, or soon will be. In scanning through the SEC paperwork, a couple of items pop out as noteworthy for us: (1) the company is $1.2 billion in debt, and (2) they currently operate 6 frack fleets in the Marcellus/Utica…
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Marcellus & Utica Shale Story Links: Wed, Nov 1, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: PA DEP public hearing on Birdsboro power plant tomorrow; micro-grid for Potsdam, NY advances; o&g methane emissions down 47% in Four Corners region; fracking boom’s midlife crisis; how shale boom is boosting US exports; natgas processing economics; Clean Energy provides more CNG to USPS; shale economics indicate continuing opportunity; TransCanada limits access to Canadian pipeline; and more!
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