FREE Audio: MDN Top 5 Stories for Week of June 18, 2018

MDN is testing a new feature and would appreciate your feedback. Below is an audio recording (“podcast”) featuring the Top 5 stories most read over the past week on MDN–from Friday, June 15th to Thursday, June 21st. We don’t include Friday’s (today’s) stories in the mix as they’ve only been available for a few hours when this episode was recorded. Just click on the green button to listen.

Below the recording is a list of the Top 5 with links to click to read the full stories (available only for paying subscribers). Please let us know what you think of the recording. Good idea? Waste of time? Does Jim speak too slow/too fast. Etc. All feedback–positive and negative–gratefully accepted. Send an email to: [email protected]

This list is meant as a way for folks to quickly catch up on the most essential news of the week–“essential” as determined by MDN’s audience of readers. We hope you enjoy it!

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PA Impact Fee/Tax Hauls in $210M in 2017 – Third Highest Ever

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Each June, the Pennsylvania Public Utility Commission (PUC), the agency charged with keeping tabs on impact fee revenue from shale drillers (PA’s version of a severance tax) releases the final numbers of impact fee revenues and disbursements. Yesterday was the appointed day for 2017. The PUC reports impact fees on natural gas producers in 2017 totaled $209,557,300–the third highest yearly amount of revenue generated since the fee/tax was implemented in 2011. That follows the lowest annual revenue generated from the fee to date last year, for 2016 (see PA PUC Impact Fee Report: Revenue Down Again in 2016). However, 2016 was the low point for drillers drilling new wells–the bottom of the valley in the oil and gas industry. Since mid-2016 we’ve been on an upswing in drilling new wells, which is reflected in 2017 impact fee revenues. Below we include the PUC press release, and screenshots for many of the pretty color pie charts showing topline numbers. What was the #1 county receiving impact fee revenue (meaning the #1 county drilled) in 2017? Once again it was Washington County. The driller paying the most in impact fees in 2017? Range Resources. The municipality receiving the most revenue from impact fees (meaning the most drilled municipality)? Center Township, in Greene County. Here’s the 411 on impact fees (i.e. taxes) raised and spent in PA for 2017…
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PUC Says PA Strippers Reduced 2017 Impact Fee by $6.1 Million

Once again we’re talking about strippers. Uh, stripper *wells* that is. In 2012 Pennsylvania passed the Act 13 drilling law that includes an impact fee on wells targeting shale layers, including the Marcellus. Snyder Brothers, headquartered in PA, drills mostly conventional (vertical only) wells in southwestern PA. In 2011-2012 they drilled 45 vertical-only wells targeting the Marcellus. All 45 of the vertical-only wells were fracked. Initially those wells produced more than 90 thousand cubic feet per day (Mcf/day), but by December of the year in which they were drilled, the wells produced less than 90 Mcf/day. The way the 2012 Act 13 law is written, if a well produces less than 90 Mcf/day during “any” month it is considered a stripper well and exempt from paying the impact fee. The state’s Public Utility Commission (PUC) assessed the fee anyway because for 11 months the wells produced more than 90 Mcf/day, arguing the word “any” is not a get-out-tax-jail-free card. Snyder Bros. sued and after an appeal of the case, Snyder Bros. won the case in March 2017, exempting those wells from paying impact fees (see PA Court Says Snyder Bros Wells are Strippers, No Impact Fees Due). That sent the state Public Utility Commission (PUC) into a tizzy with claims the Act 13 impact fees are now in jeopardy. So the PUC appealed the case to the PA Supreme Court. The Supremes heard arguments in the case in April (see PA Supreme Court Takes a Close Look at Strippers…as in Wells). The PUC released its full impact fee revenue generated and disbursed report yesterday (see today’s lead story). The PUC reports that not only are the fees from the Snyder wells missing from the total, but fees for some wells from other drillers as well–some 318 wells in all. Those other drillers cite the Snyder Bros. case as evidence they don’t owe money on what they consider to be stripper wells. In fact, when you total it all up, the PUC says the impact fee revenue for 2017 would have been ~$6.1 million higher if the “missing” fees from those 318 wells were part of the mix…
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NY Landowner Who Sued for “Takings” re Frack Ban Loses Fed Case

Is this the sad end to a noble cause? In 2015 MDN told you about an Allegany County, NY attorney/landowner who filed a lawsuit against the New York Dept. of Environmental Conservation (DEC) over their infamous and politically-motivated ban on fracking (see 1st Lawsuit Filed Against NY Cuomo Frack Ban – in Allegany County). The lawsuit was filed in state Supreme Court in Allegany County. Don’t be fooled by the Supreme Court label. In NY, Supreme Court is one level up from county court. The Supreme Court judge tossed the case saying the attorney/landowner didn’t have standing to file the lawsuit in the first place because he never had a permit to drill on his property. The Appellate Division later upheld the decision. The attorney/landowner then filed the same lawsuit in federal court–bypassing Cuomo-appointed state judges–in federal court last December (see NY Resident (& Lawyer) Sues DEC in Federal Court re Frack Ban). On Monday U.S. District Judge Michael Telesca ruled in that case–against the attorney/landowner, on what amounts to a technicality, saying the case violates the 11th Amendment of the U.S. Constitution which protects states from being sued for money in a federal court. Is this now the end? Does our intrepid attorney/landowner, have anything else up his legal sleeve?…
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News from DUG East: Record-Breaking Wells, Long Laterals & More

One of two major Marcellus/Utica events that happens each year in Pittsburgh, Hart Energy’s DUG East Conference, was held this week. (The other is Shale Insight, held in the fall.) We’ve covered a variety of news coming out of the DUG East event. Unfortunately we could not be there in person this year. By all accounts, a lot of great information was shared. We spotted two articles from different sources that do a good job of rounding up highlights from this week’s DUG. Hart’s own Exploration & Production magazine chronicles news from Eclipse Resources, whose CEO (Ben Hulburt) says the company expects to break more lateral records this year. Dennis Degner from Range Resources also talked about long laterals, and strategy. Degner said Range balances other factors like pipeline takeaway capacity and service costs. Also appearing on the stage were smaller/private M-U operators, like Northeast Natural Energy, who also shared some great insights. Below is a good roundup of the news coming from DUG this week, from a couple of sources…
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OH Landowners with Early Utica Leases Still Get Good Royalties

Some 10 years ago in the “early days” of the Ohio Utica Shale, landowners signed leases not knowing about the Utica and the bonanza it would soon bring. A group of 24 landowners in Columbiana County signed a lease in 2008 with Anshutz–for a few bucks an acre and 12.5% royalties. Seemed like a good deal then. But five years later leases were going for $5,000-$6,000/acre in signing bonuses and 20% royalties. It didn’t seem like such a good deal then. Chesapeake Energy later bought the Anshutz leases. We all know about the shenanigans Chesapeake plays with royalty payments. But these wells produce mainly oil instead of gas. In the early days, a 12.5% royalty, even on properties where post-production deductions “generously” taken, yielded a lot of money. Then the price of oil bottomed out and royalty checks shriveled up. With the price of oil back up, royalty checks, while not as much as they were 4-5 years ago, are still much higher than they were a few years ago. All of which is to say: When the price of oil (or gas) goes up, it covers a multitude of post-production deduction sins. But when the price is down, landowners get the shaft. At least, some landowners. Here’s the story of some of those Ohio landowners who signed early. As we read the story, our impression was this: Yes there’s been some bad (even lawsuits), but there’s been a lot of good too. And in the end, these landowners (like others we’ve spoken to in person at various events), would say if they had to do it all over again, they would. That is, shale drilling is worth it, even with the bad, and the ugly…
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Latest EDF Methane “Leakage” Study Picks Numbers Out of the Air

Another fake study is leading to a plethora of fake news stories–from the usual sources. The Environmental Defense Fund (EDF) used to be, once upon a time, at least somewhat reasonable. Out of the crop of environmentalist wackos, they were the best. People you could have a rational conversation with about fossil fuels. People you could carry on a civil debate with. No more. For the past few years the organization has taken a hard left turn and never looked back. Their latest annual “methane is leaking/the sky is falling” report is proof of that. Over the past six years the EDF has published study after study estimating methane leakage from gas drilling/pipelines/delivery systems somewhere between 1.2% and 1.5%. We all know that some methane leaks out–it’s inevitable. Gas companies are in the business of ensuring it doesn’t happen–it’s the commodity they sell! But sometimes it leaks–out of valves, or pipeline connections, etc. Methane is, as the false-but-popular meme goes, a “far more potent greenhouse gas” than carbon dioxide. Warmists say it so often to themselves, it’s like a mantra. “Methane is worse that CO2.” But the newest EDF “study,” which isn’t really new, pulls new numbers out of the air and now claims 2.3% of methane leaks out of the system. The EDF study is published in the so-called journal Science (which should be renamed Political Science), giving mainstream leftist news sources like the New York Times, Bloomberg and others permission to trumpet headlines that “methane leaks are far worse than the EPA, and we all, thought.” Even if we accept EDF’s new, much higher number of 2.3% leaking (which we don’t accept, but let’s pretend), even at that “high” number, EDF’s own warmist kindred admit extracting and burning natgas to generate electricity is STILL more beneficial for the climate than burning coal (Princeton University says the threshold is 3.2% leakage where natgas is no longer “good” for the climate). So while this is a big story in the leftist media echo chamber, it’s really no story at all…
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IHS Report: Shale Gale Turns 10, Looking Back & What’s Ahead

Here’s a bold prediction: The Age of Natural Gas will replace the Age of Oil–within our lifetimes. That’s the thought running through our head as we read a new report from analytics/consulting powerhouse IHS Markit titled, “The Shale Gale Turns 10: A Powerful Wind at America’s Back.” IHS Markit expects natural gas production to rise by almost 8 billion cubic feet per day (Bcf/d), more than 10%, in 2018 alone. Altogether, U.S. production is expected to grow by another 60% over the next 20 years, according to the report. Additionally, IHS Markit now estimates that approximately 1,250 trillion cubic feet (Tcf) of U.S. supply is economic below $4 per thousand cubic feet (Mcf). That’s up from a previous estimate of 900 Tcf in 2010. “To say that the ‘Shale Gale’–as IHS Markit originally coined it in 2010–has been anything but a veritable revolution would be an understatement,” says Daniel Yergin, vice chairman, IHS Markit and co-author of the report. “It represents a dramatic and largely unanticipated turnaround that dramatically changed both markets and long-term thinking about energy.” Indeed. Here’s more about the report…
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Energy Stories of Interest: Fri, Jun 22, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: Trade groups talk Marcellus Shale in Wyoming County; understanding M-U drillers; Babst Calland report focuses on M-U industry forging ahead despite obstacles; NH Senate votes to support natgas pipeline; public hearing held for Transco compressor stations in southern VA; Tellurian raises $115M for LNG plant; Permian “near its limit”; California regulators vote down $693M gas pipeline; connecting the dots between billionaire Tom Steyer and campaign to smear Exxon; the great American oil boom; the toppling of GE and what it means for other energy industry companies; Australia’s “lost chance” to grab China LNG marketshare; and more!
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