Clock Runs Out – Rex Energy Files for Chapter 11 Bankruptcy

In early April, Rex Energy, a driller focused solely on the Marcellus/Utica driller, defaulted on payments it owes to debtholders (see Rex Energy Defaults on IOUs, Can’t File Annual Report on Time). Rex told the Securities and Exchange Commission (SEC) the company could not make a semi-annual interest payment due on senior notes on April 2. Rex said in the filing that the noteholders to whom payment is due signed a temporary “forbearance” agreement that gives Rex a little breathing room, until April 16. The April 16 payment didn’t happen. Rex and the noteholders signed a second forebearance agreement giving Rex another extension, then another, then another. At least four, maybe five such extensions were granted. But in the end, Rex could not work out favorable terms. And lack of progress caused the banks that lend Rex money to call in the loans. With no money to pay those loans, Rex has no choice but to file for Chapter 11. Rex reported in an SEC 10-Q filing on Tuesday that: “An acceleration notice from the lenders of our senior term loan has been received and we lack the liquidity to pay these obligations. Given these circumstances, the Company is currently in the process of preparing to file for protection under Chapter 11 of the U.S. Bankruptcy Code which is expected to occur imminently following the filing of this Form 10-Q.” Rather ominously, the next sentence reads: “There can be no assurances that the Company will be able to reorganize its capital structure on terms acceptable to the Company, its creditors, or at all.” What does this mean for Rex’s Marcellus/Utica drilling program?…
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U.S. Fourth Circuit Court Vacates Key Permit for Atlantic Coast Pipe

Disgusting and frustrating. That’s our reaction to a decision by the U.S. Fourth Circuit Court of Appeals that invalidates (vacates) a permit issued by the U.S. Fish and Wildlife Service that allows Dominion Energy’s Atlantic Coast Pipeline (ACP) to accidentally kill a few bats and bumble bees (classified as endangered) as it builds the massive $6.5 billion, 600-mile project from West Virginia to North Carolina. The Sierra Club, Defenders of Wildlife and Virginia Wilderness Committee (all radical left organizations) previously sued in federal court asking the court to stop work on ACP until the Federal Energy Regulatory Commission makes a decision on whether or not to “rehear” their decision to approve the project in the first place. In March, the court declined to stop work on ACP (see Fed Court Dismisses Anti Lawsuit to Stop Atlantic Coast Pipeline). However, as part of the effort to stop ACP, Sierra Club, et al also asked the court to invalidate a key permit by the U.S. Fish and Wildlife Service, which the court did do on Tuesday. Sierra Club is now demanding that the court revisit its decision about whether to stop all work on the pipeline. In the meantime, work does continue. Dominion says while it’s disappointed in the decision and will have to get a new, more specific permit from Fish and Wildlife, in the meantime they’ll continue construction in those (many) places not under the now-invalid permit. That is, most construction will continue. This does not really hamper the project. Not yet anyway. As long as the Fourth Circuit doesn’t shut it all down…
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Fed Court Forces FERC to Decide on MVP Rehearing, No More Delays

It was a big week for Sierra Clubbers. The radical environmental organization (that irrationally hates all fossil fuels, even fossil fuels they used to love, like natural gas) previously filed a lawsuit in the U.S. District Court of Appeals for D.C. asking the court to consider whether or not the Federal Energy Regulatory Commission (FERC) should have issued an approval for Mountain Valley Pipeline (MVP). MVP is a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA–to move Marcellus/Utica gas south. No, the court did not rule FERC was out of order in its decision. Not yet, anyway. This gets in the weeds just a bit, so bear with us. The first step in the process of challenging a pipeline is to ask FERC to rehear their decision. If FERC refuses to rehear (reconsider) the decision, then whoever asked for the rehearing is free to file a lawsuit in the court system to challenge FERC’s decision to approve a project. FERC has 30 days to make a rehearing decision–unless they pull out the “tolling order” card and play it. A tolling order allows FERC more time to decide on rehearing–months, even a year. FERC played the tolling order card here and told the court, “We haven’t decided on rehearing yet, so you need to toss out the radical Sierra Club lawsuit challenging our decision to approve MVP” (MDN condensed version). This week the court said a very loud “NO” to FERC’s request. The court further told FERC to get off its duff and make the rehearing decision within 30 days. In the meantime, the Sierra Club of course wants MVP construction “paused indefinitely” while they continue to tie it up in legal knots. Don’t look for that to happen…
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FERC Tax Decision Forces Williams to Restructure – No More MLP

It appears a decision by the Federal Energy Regulatory Commission (FERC) earlier this year that strips away the main advantages of the tax-advantaged master limited partnerships (MLP) structure is causing the MLP to go the way of the dodo bird. Because of the Trump tax cut, in March FERC reversed a previous policy and will no longer allowed MLP interstate oil and gas pipelines to include an income tax allowance in their cost-of-service rates (see FERC Takes Aim at Adjusting Pipe Rates in Light of Trump Tax Cut). Not long after, Tallgrass Energy, owner of the Rockies Express Pipeline, announced they would phase out their MLP structure (see Tallgrass Energy Eliminating MLP – First “Casualty” of Tax Cut?). As we predicted, it was the first of many to do so. Williams is now the latest midstream company to dump its MLP. Williams is essentially two companies–Williams (the corporation) and Williams Partners (the MLP). The MLP owns most of the assets. Williams Partners will be no more and instead, all of the assets will now live under the Williams (corporation) umbrella. Which shouldn’t surprise anyone. Once upon a time Williams had plans to merge the two together–but that all got mothballed when they ended up first fighting against, then trying to merge with Energy Transfer Equity (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). FERC’s action in March provided the motivation for Williams to move forward with phasing out the Williams Partners MLP, which will cost Williams (the corporation) $10.5 billion to do…
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Williams Refiles Application with NY DEC for Transco NESE Project

In April MDN told you that the New York Dept. of Environment Conservation (DEC) had rejected a modest pipeline expansion proposal by Williams’ Transco Pipeline subsidiary (see Cuomo-Corrupted DEC Denies Permit for Williams NESE Pipe Project). The project, which we’ve previously written about and are actively promoting, is called the Northeast Supply Enhancement (NESE) project (see Time to Support Transco’s Northeast Supply Enhancement Project). NESE is meant to increase pipeline capacity and flows heading into northeastern markets. Transco wants to provide more Marcellus natural gas to utility giant National Grid beginning with the 2019-2020 heating season. National Grid operates in New York City, Long Island, Rhode Island and Massachusetts. There are a number of components to the project, but the key component, the heart of the project, is a new 23-mile pipeline from the shore of New Jersey into (on the bottom of) the Raritan Bay–running parallel to the existing Transco pipeline–before connecting to the Transco offshore. The DEC warned Williams that they would reject the application as incomplete unless/until FERC itself provides an environmental assessment of the project. That happened in March, but the DEC said it didn’t have enough time to review it and requested Williams refile (we’ve heard that one before). Given Cuomo is refusing to approve any new natural gas pipeline projects (see him say it point blank in this video), we’re not optimistic that the DEC will actually approve it this time either…
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Atlantic Coast Pipeline Nearly Done in Lancaster County – July

Good news. The main part of the Atlantic Sunrise Pipeline project–where it runs through Lancaster County, PA–is almost finished. Atlantic Sunrise is a $3 billion, 198-mile 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. The most opposition to the pipeline has happened in Lancaster County. Right now 90% of the pipeline has been welded in Lancaster County and sits above ground. By the end of July, all of it will be done and buried in the ground. It won’t be long after that that the entire 198 miles will begin to flow northeast PA Marcellus gas…
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Liberal Groups Force Range, Anadarko to Consider Global Warming

We get tired of saying it, but perhaps we should never get tired of saying that according to the most reliable methods of tracking temperatures on earth (by satellite), THERE IS NO GLOBAL WARMING. The only way global warming alarmists get away with claiming the earth is heating up is by using doctored computer algorithms. The actual testing and measurement of temps doesn’t show we’re heating up! And yet the manipulators who persist in using scare tactics that mankind is somehow causing the earth to heat up catastrophically by burning fossil fuels and leaking methane into the atmosphere, have just claimed a couple of more scalps in their efforts to shut down the fossil fuel industry. A so-called church, the Unitarian Universalist Association (people who believe in everything, consequently they believe in nothing) bought $2,000 worth of Range Resources stock and proposed a resolution to all shareholders at the annual meeting that forces Range to publish a report on how evil the company is for causing global warming (i.e. produce a report on Range’s efforts to scale back methane emissions). The measure passed by 50.25%. A group called As You Sow bought Anadarko stock and floated a resolution instructing the company to produce a report on how mythical man-made global warming will affect the company financially as it will no doubt have to scale back its exploration and production. That resolution passed by 53%. These groups, with innocent-sounding names, are NOT innocent. They are far left, liberal groups that have snookered shareholders into voting against their own best interests by harming the very companies they invest in, forcing those companies, ultimately, to stop drilling. All in the name of “climate change” (i.e. global warming)…
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Other Energy Stories of Interest: Fri, May 18, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: PA Sen. Scott Wagner (friend of gas) wins PA primary to challenge Tom Wolf for governor; industry invests $63.9B in Ohio Utica; UGI lowering natgas rates starting June 1; PA EQB taking public comment on raising shale permit fees 250%; could Utah see the country’s largest shale oil operation?; the great Bakken rebound; CFTC issues report on LNG markets; Gulf Coast ports limiting crude oil exports; Trump Justice Dept. tells court climate lawsuits violate Constitution; US o&g companies have invested $108B (!) in greenhouse gas reduction since 2000; and more!
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