MVP Pipeline Cleared to Begin Building Pipeline in Virginia

In January, MDN reported that Mountain Valley Pipeline (MVP)–a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA–had received permission from the Federal Energy Regulatory Commission (FERC) to begin tree clearing and construction of access roads and construction yards in five West Virginia counties (see Mountain Valley Pipe Gets FERC Approval to Begin WV Construction). That was MVP’s very first permission to begin construction-related activities. It was the trickle. The flood gates burst open in February when FERC issued four new orders granting MVP permission to continue not only tree clearing and building roads, but also to begin construction of the actual pipeline itself in WV, and tree clearing/preliminary construction activity in VA (see FERC Grants MVP OK to Begin Pipeline Construction in Virginia & W.V.). The activity in VA was in just one county (Giles) and in one location. MVP still could not construct pipeline in VA pending required state permits. The situation in VA fundamentally changed this week. On Monday, the VA Dept. of Environmental Quality (DEQ) issued erosion, sediment and storm water control permits for the project–meaning actual pipeline construction can now begin. And yesterday, FERC granted MVP permission to construct pipeline not only in Giles, but also in Craig, Montgomery and Roanoke counties. MVP is now fully authorized in VA and there’s no stopping it…
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A (Very) Rough Method for Calculating Royalties on Cabot Wells

Cabot Oil & Gas, one of our favorite Marcellus drillers, has just published a new PowerPoint slide deck presentation as part of an investor’s conference they attended earlier this week (the Scotia Howard Weil Energy Conference). Normally a new slide deck isn’t all that big a deal. However, thanks to MDN friend Chris Acker who pointed it out to us, there is some new information in the deck worthy of note. Back in December MDN brought you the news that Cabot had signed a deal to sell off their Texas Eagle Ford Shale assets in order to concentrate solely on the Marcellus (see Cabot O&G Sells Texas Eagle Ford Assets for $765M, Focus on Marc.). The slide deck notes that the Eagle Ford divestiture closed on Feb. 28th (slide #3). Also in the slide deck is a mention that Cabot plans to experiment with drilling “upper Marcellus” wells in the second half of 2018 (slide #11). Most (all?) of the wells they’ve drilled to date are “lower Marcellus.” A successful program of drilling upper Marcellus certainly bodes well for existing landowners with existing lower Marcellus wells–perhaps Cabot will revisit those pads to drill new wells? Slide #11 has some great information on it. We’ve used it to create a (very) rough royalty estimation calculator for Cabot landowners…
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Antero Res. Considers Mining its Own Frac Sand to Cut Costs

If you hang around the business world long enough (as we have), you notice certain trends. One such trend from yesteryear is companies integrating up and down the supply chain. Like when a widget manufacturing company buys the company that supplies it the raw materials used to make the widgets. Example: a car manufacturer buys the company that supplies it with plastic dashboards–and then buys the chemical company that produces the plastic to make the dashboards. And then the same car company, on the other side, buys the credit union that makes the loans to buy their cars! The company becomes integrated. But then the pendulum swings and in recent years, the trend has been about dis-integrating–spinning things off into their own self-contained units. Better to focus on one thing and do it well, rather than be like GE and spread yourself around to multiple industries and specialties. In the oil and gas world, Chesapeake Energy once owned its own oilfield services company (Chesapeake Oilfield Services)–which they later sold. One thing you don’t hear much about is shale companies vertically integrating and buying suppliers. However, Antero Resources, one of the biggest and best drillers in the Marcellus/Utica, is actively considering such a move. Antero wants to buy its own frac sand company as a way of controlling costs. Is it a good idea, or a bad idea?…
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Cove Point LNG Gets Ready to Ship First Marcellus Molecules in Apr

Patris LNG tanker

In early March Dominion Energy’s Cove Point LNG plant shipped its first-ever load of LNG (liquefied natural gas), although the gas itself was imported from Nigeria, used in testing the plant (see Cove Point Ships First LNG Cargo – But Not M-U Gas). Last week MDN told you that a BP-contracted LNG tanker, Patris, is on the way to Cove Point but will not dock until April 9th (see Cove Point LNG: BP Ship Coming for 1st M-U Pickup; India Wants Swap). The Patris will be the first ship to carry Marcellus molecules from the facility to distant shores. It now looks like we have confirmation, of a sort, that indeed the Patris will dock and load Marcellus LNG on April 9. That confirmation comes from Platts, which reports that on Monday feed gas (from the Marcellus) spiked up to 640 million cubic feet per day (MMcf/d), which is “the highest level in more than three weeks” of gas flowing into the facility. Here’s the latest on our continuing watch of Cove Point, a true game-changer for the Marcellus, and for companies like Cabot Oil & Gas that will send gas to the facility…
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PA DEP Stops ME2 Drilling in Huntingdon County for < 1 Gal. Spill

Sunoco Logistics Partners has had its share of problems in building the Mariner East 2 (ME2) twin NGL pipelines that run from eastern Ohio all the way to Marcus Hook, near Philadelphia. The main issue with construction of the pipeline has been underground horizontal directional drilling (HDD)–drilling under things like roads and bridges and streams and rivers–places where you can’t just dig a trench to lay pipeline. Some early problems with HDD caused the Pennsylvania Dept. of Environmental Protection (DEP) to shut down all ME2 HDD work (indeed all work period) for an extended period in January (see PA DEP Caves to Big Green Pressure, Stops All Work on ME2 Pipeline). After Sunoco agreed to pay the DEP a whopping $12.6 million “fine” (i.e. shakedown money), the DEP allowed work to resume in February (see Sunoco LP Pays PA DEP $12.6M to Resume ME2 Pipeline Construction). While doing ME2 HDD work in Huntingdon County last week, Sunoco contractors reported less than one gallon of non-toxic drilling mud (bentonite) went missing–it came back out of a hole it didn’t go down. And because of that, the DEP has shut down all work at the site…
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PA Court Tells SWPA Town Can’t Restrict MarkWest Compressor Stn

Cecil Township

Cecil Township (Washington County, PA) is one of the original seven selfish towns that sued Pennsylvania over the 2012 Act 13 oil and gas law, a law that replaced a mishmash of local zoning ordinances governing oil and gas activity with one uniform, and fair, set of state regulations. Cecil and the other selfish towns won their case on appeal with the PA Supreme Court (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). Although Cecil (and other towns) have been zealous in using their authority to zone out drilling and pipeline activity, sometimes they go too far, as Cecil has done. The PA Commonwealth Court ruled last Friday that Cecil exceeded their authority by “imposing a slew of conditions” (26 conditions!) on a proposed MarkWest Energy compressor station planned for the municipality, a plant first proposed back in 2010…
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Yale Study Claims Ohio Utica Fracking Causes STDs

What a shame that a university with one of the best reputations in the world, Yale, has sunk this low–to pedal yet another so-called study that claims where there is fracking in the Ohio Utica, there’s also a higher incidence of sexually transmitted diseases (STDs) like gonorrhea and chlamydia. This isn’t the first “fracking causes STDs” study. Antis have issued these “studies” for years (see MDN coverage here). This latest study by Yale “researchers” was published in an online journal with no standards, PLOS ONE. Other bought-and-paid-for anti-fracking “science” has been published by the PLOS ONE research-mill (see a list of other fake studies bashing shale appearing in PLOS ONE). PLOS ONE is a favorite place to publish research that can’t meet the rigorous review process of real journals. Here’s the latest substandard anti-drilling “research” from the Yale School of Public Health…
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Other Energy Stories of Interest: Wed, Mar 28, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: UGI looks to combine gas divisions into one unit; PA unions throw their political weight behind natgas; Wellsville Intermodal facility may qualify as national Opportunity Zone; India looks to swap LNG cargoes from Sabine Pass; India sells Texas shale assets for $100M; US LNG exports quadrupled in 2017; and more!
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