WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty

While everyone was focused on the passage of a co-tenancy bill in West Virginia (see WV Gov. Justice Does 180 – Says He’ll Sign Co-Tenancy Bill), another bill, with arguably more impact on both rights owners and drillers, quietly made its way through the legislative process and was signed into law by Gov. Jim Justice on Friday. We’re talking about a bill that guarantees that rights owners (i.e. landowners) will get an actual, guaranteed minimum royalty of 12.5%–regardless of post production deductions. WV Senate Bill (SB) 360 is now the law! The bill was proposed to counter what landowners say was a miscarriage of justice at the hands of the WV Supreme Court in the Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own decision from a few months before and allowed EQT to deduct post-production expenses (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). While this is fantastic news for landowners/rights owners in WV, you can’t escape the larger implications, which is that there is now no reason (no excuses left) why the PA version of this bill, introduced for the past three consecutive two-year sessions (six years total), can’t also get passed…

Important Note: SB 360 does NOT apply across the board, to all WV leases. It only applies to limited cases, like Leggett v. EQT, which are “flat rate royalty leases.” See a further explanation below.
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Pittsburgh Airport Plans NatGas Microgrid to Attract New Business

Seems like we increasingly see the word “microgrid” popping up. What, exactly, is a microgrid? Microgrids are small electric generating plants, most often powered by natural gas. They usually produce a few megawatts of electricity and are often used for “peaking”–which means they are used during times of high electricity demand. During times of high demand these small microgrids kick on and produce electricity to help meet the demand (see One of Nation’s Largest NatGas Microgrids Coming to Philly Navy Yard). Sometimes microgrids outright replace reliance on the local electric utility. Such is what is being proposed for the Pittsburgh International Airport. You may recall that CONSOL Energy (now CNX Resources) drilled a bunch of wells on Airport property and produces a boatload of natgas every day. The plan is to use some of that gas to power a microgrid to lower the cost of electricity at the airport complex–a complex where officials are attempting to attract businesses to locate. Having super cheap electricity generated by your own natgas helps…
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5 Old Hippies Arrested for Blocking Pipeline in Lancaster County

It’s been a while since we’ve heard anything from the so-called “more than 1,000” protesters willing to get themselves arrested in Lancaster County in their holy mission to stop the Williams Atlantic Sunrise Pipeline. As of last November, the unofficial tally we could determine is that 45 people who belong to Lancaster Against Pipelines (LAP) have gotten themselves arrested for illegal actions in attempting to stop the pipeline (see 5 More Protesters Arrested in Lancaster Co. Blocking Pipeline Work). LAP is a small but committed group. It’s hard to stick to your so-called principles when there’s a foot of snow on the ground–so all winter long there hasn’t been much in the way of protests. But spring is beginning to break in Amish country. On Saturday, a busload of around 50 protesters visited Williams’ Lancaster County headquarters in an attempt to terrorize the workers by entering the building, walking the halls singing and plastering “Do Not Cross” police tape on the doors (and leaving behind a fake pipeline). The protesters then visited a construction site where five of the nuttier nutjobs, ranging in age from 55-72 (most of them from Philly), climbed onto a piece of equipment and refused to come down, delaying construction by three hours, forcing state troopers to arrest them…
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Grumpy Antis Protest at ME2 Sinkhole Site – Jeer Sunoco Workers

A third sinkhole related to Mariner East 2 pipeline work and the uncovering (and subsequent shutdown) of the Mariner East 1 pipeline has some folks in Chester County, PA stirred up and rather grumpy (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). A group of some 150 anti-pipeline protesters (perhaps a better word is “mob”) gathered Saturday in Chester County near the sinkhole sites, carry signs and chanting. Did they demand that the DEP and Gov. Wolf force Sunoco Logistics Partners, the builder of ME2, to find a different route around a geography known for sinkholes for decades? Or force Sunoco to slow down in an attempt to prevent any more sinkholes? Or demand Sunoco come to the table to talk about how they will prevent any more issues in the area–and compensate properties near the sinkhole? No. Their demand of Wolf: Shut it down, now. And keep it shut down. Cancel the entire multi-billion dollar ME2 project that is 93% complete. In other words, their demand is unreasonable, not realistic, not the way adults behave when they have disagreements and concerns…
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PA DEP Schedules 3 Hearings for Shell Ethane Pipeline

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In February, MDN told you the Pennsylvania State Dept. of Environmental Protection (DEP) had caved to pressure from anti-fossil fuelers with regard to Shell’s proposed Falcon Ethane Pipeline project (see PA DEP Caves to Pressure, Extends Comment Period for Shell Pipeline). Shell is working on an ethane “pipeline system” with two “legs” to feed the mighty cracker plant being built in Monaca, Beaver County (see Shell Working on 94-Mile Ethane Pipeline to Feed PA Cracker). The DEP advertised an official comment period for the project on Jan. 20, giving interested parties until Feb. 20 to file their comments–an entire month. However, one month isn’t enough time for anti-drillers to marshal the faithful to try and sink the project. FracTracker Alliance, an anti-fossil fuel organization, colluded with other groups to put the word out to flood the DEP with demands to keep the comment period open. The DEP caved and extended the comment period to April 17th along with three public hearings (circus freak shows), to give the FracTracker faithful time to mount publicity and legal offensives to try and stop the project. The DEP has just announced the dates and locations for the three public hearings…
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“Free” NatGas in Texas Permian Changes Shale Gas Economics in M-U

We spotted an article appearing on the Forbes magazine website that has a chart that stopped us cold in our tracks. The article was written by Jude Clemente, one of our favorite contributors to the Forbes website. He includes three charts in the article to update folks who have an interest in the natural gas space (the article is titled 3 Natural Gas Charts To End Winter 2018). The first chart in the list is “U.S. Natural Gas Wellhead Breakevens by Basin” and shows how much money a driller must make in order to break even–still make a profit. How much money, on average, does a driller have to make per thousand cubic feet (Mcf) in, for example, the Marcellus Shale basin in order to stay profitable? That number would be $2.15/Mcf. Anything above $2.15 and the driller makes money. (Bear in mind these are averages. Some drillers, like Cabot Oil & Gas, have lower expenses and can make money at much lower prices per Mcf than others.) What about the Utica? Drillers need to make an average of $2.41/Mcf in the Utica to break even. But at the top of the chart is a rather wild number. Drillers in the Permian Basin (in Texas) can LOSE or spend up to $2.36/Mcf and still “break even.” What? How can that be?…
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Other Energy Stories of Interest: Mon, Mar 12, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: $597K maintenance agreement between Allegheny Twp and Huntley & Huntley; PA’s CNG project lauded by engineers; PA DEP wants input on drilling under I-79 for pipes; PA DEP Secretary tells PA Senator fracking in SRBC has been fine; Chesapeake may sell Haynesville assets to Tellurian; fraudulent climate litigation shakedowns; huge Chinese demand fuels next U.S. shale boom; and more!
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