FREE Audio: MDN Top 5 Stories for Week of July 23, 2018

Below is an audio recording (“podcast”) featuring the Top 5 stories most read over the past week on MDN. 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 subscribers). 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. Enjoy!


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Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B

In what is perhaps the second biggest thing to hit Ohio since maybe the plow (the first being the Utica Shale, borrowing a phrase from Aubrey McClendon), Chesapeake Energy announced yesterday it is selling ALL of its 933,000 Ohio acres (including 320,000 net Utica acres) and 920 operated and non-operated Ohio Utica wells to Encino Acquisition Partners for $2 billion. This is truly big news! Encino Energy is a young company, founded in 2011, headquartered in Houston, TX. Last year Encino formed a partnership with Canada Pension Plan Investment Board to form Encino Acquisition Partners. It is the Encino subsidiary that is buying Chessy’s Ohio Utica assets. The burning question is, Will Encino drill more wells? Or just sit on its new acquisition? Based on how they describe themselves, we think Encino is going to pursue an active drilling program in the Ohio Utica. According to their own boilerplate, the company’s mission is to, “focus on driving long-term investor returns by acquiring and developing high-quality assets with an established base of production and a large, low-cost development inventory across the lower 48 states of the United States.” They’ve certainly acquired a high-quality asset with an established base of production and it has a large, low-cost development inventory. All the boxes are checked in buying Chesapeake’s Utica assets. So we’ll hold Encino to their word that they will “develop” it–meaning drill new wells. Chesapeake plans to use the $2 billion to pay down some of their ginormous debt…
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Strange: EQT Interim CEO Porges Skips Quarterly Conference Call

David Porges – MIA

Something strange is going on at EQT. Not only did interim CEO David Porges skip the company’s recent annual meeting in June (unheard of, see EQT CEO Didn’t Show Up for Annual Mtg – CFO Talks of Wild Ride), Porges also skipped yesterday’s quarterly analyst phone call to update big investors on the company’s performance (equally unheard of). Once again the heavy lifting fell to Robert McNally, EQT CFO, to be “the guy” sent out front and center to talk about the company. EQT, following its purchase of Rice Energy, is now the largest natural gas producer in the U.S. EQT has been without a permanent CEO following the exit of Steve Schlotterbeck in March, who left because the board refused to compensate him at a level commensurate with CEOs at other top producers in the region (see EQT CEO Steve Schlotterbeck Suddenly Quits, Leaves Company). EQT is currently conducting a search to find a new CEO. In the meantime, board chairman and former CEO David Porges stepped back into the role of CEO. But judging from his absence at critical events where the CEO always shows up, it’s pretty obvious he isn’t actually running the company. Looks to us like McNally is the guy running the company. We hope he’s being compensated commensurate with his added responsibilities in running the largest shale gas producer on the planet. At any rate, the news coming from yesterday’s 2Q18 update shows that sales were up, profits were down, and EQT’s Mountain Valley Pipeline has gotten a new (later) in-service date…
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Oneonta, NY Wants to Build NatGas Decompressor for Short Supplies

The main economic development agency in Otsego County, NY, known as Otsego Now, is working on a plan to build a “decompressor” in the Oneonta area to help with natural gas supplies. The proposed facility is described as “a decompression station for compressed natural gas deliveries by truck to supplement resources.” Here’s the problem. On really cold and really hot days, there’s not enough natural gas in the region, and some large users of gas (they get gas from local utility NYSEG), actually have to stop using gas and switch to oil as a backup. It’s nuts. Apparently NYSEG (New York State Electric & Gas, owned by Spainish-based Iberdrola) isn’t in the mood to upgrade a local pipeline that brings gas to the area. So to overcome lack of gas, the local econ development people are trying to chase down grants to build a decompression station, to accept CNG from a virtual pipeline (trucked in CNG), converting the compressed gas back to normal pressure so it can flow through NYSEG’s less-than-adequate pipelines in the area to large gas users that need it…
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EQT Still Fighting WV Minimum Royalty Law for Flat Rate Leases

Follow the bouncing ball. Earlier this year the West Virginia legislature passed Senate Bill (SB) 360, which Gov. Jim Justice subsequently signed into law (see WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty). The new law overturns a ruling by the WV Supreme Court in Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own previous decision and allowed EQT to deduct post-production expenses in old flat rate leases. In essence, SB 360 guarantees rights owners/landowners a 12.5% minimum royalty, regardless of post-production deductions–but only in flat rate leases. A flat rate lease is a lease in which a company pays a regular (in EQT’s case, annual) payment, regardless of how much oil/gas is produced. Traditionally drillers don’t deduct post-production expenses because the payments landowners get are piddly anyway. But EQT began to claim deductions, prompting a lawsuit that went all the way to the Supreme Court. The legislature aimed to “fix” what they considered an error in the court’s ruling. EQT claims the new law is unconstitutional and in April filed a lawsuit asking a judge to stop the law from taking effect (see EQT Sues WV for Passing Minimum Royalty Law re Flat Rate Leases). WV responded in June, asking the judge to dismiss EQT’s lawsuit (see WV Files Motion to Dismiss EQT Lawsuit Targeting Royalty Law). And now the ball has bounced again. EQT just filed paperwork asking the judge to deny the state’s motion to dismiss the lawsuit, claiming the new law improperly invokes “police power”…
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Squabbling Over 2nd Lordstown Utica-Fired Elec Plant Near an End

There is an ongoing legal squabble in Trumbull County, OH over a proposed second Utica gas-fired electric plant in Lordstown. Clean Energy Future (CEF) is currently building the Lordstown Energy Center, and has been since June 2016 (see Lordstown Energy Center Breaks Ground on $890M Electric Plant). That project is 95% built. CEF proposed, and got the Ohio Power Siting Board (OPSB) to approve, plans to build a second Utica-fired plant next door to the first (see Ohio Approves 2 Utica-Fired Power Plants in Guernsey, Trumbull Counties). As is typically the case, CEF (the builder) sold most of the first project to investors. In this case the new majority owner for the first power plant is Macquarie, an international investment firm. CEF sued Macquarie last September saying Macquarie is preventing CEF from building the second plant. Macquarie says if a second plant gets built in the same location, the first plant (now owned by Macquarie) will take a $6.7 million hit on earnings each year. Macquarie wants CEF to pay them that amount annually when/if the second plant gets built. To which CEF says, “They’re looking for an extortion payment.” Even though the legal wrangling continues, it’s now close to resolution. Trumbull County Court ruled in favor of CEF, instructing Macquarie to sign paperwork allowing the second plant to get built, and to sell property owned by the first plant to the second plant (as provided for under the original contract). Macquarie has refused to sell the land. CEF has asked the court to find them in contempt and make them sell. CEF also wants Macquarie to pay them $130 million for delaying the second project for more than a year…
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MarkWest Grows Marcellus/Utica Gathered Volume 46% in 2Q18

MarkWest Energy, now part of Marathon Petroleum, is the premier midstream company in Ohio and West Virginia. Yesterday MarkWest issued its second quarter 2018 update. MarkWest reported record income of $453 million compared with $190 million in the second quarter of 2017. Put another way, MarkWest made close to half a billion dollars in profit! What about MarkWest’s operations in the Marcellus/Utica region? There was “solid growth” during the quarter. Gathered volumes averaged 2.8 billion cubic feet per day (Bcf/d) for the quarter, a 46% increase versus 2Q17. The increase came mostly from higher Utica dry-gas volumes. Processed volumes averaged 5.2 Bcf/d, a 10% increase versus 2Q17 due in large part to bringing online the Sherwood 9 and Houston 1 plants…
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DOE Sec. Perry Attends Cove Point LNG Ribbon-Cutting Ceremony

Yesterday a bunch of dignitaries gathered in Lusby, Maryland to celebrate the launch of Dominion’s Cove Point LNG facility with a ribbon-cutting ceremony. Yes, the facility has been up and running since April (see Cove Point LNG Ships First Marcellus Cargo to Japan). This was a well-deserved, back-slapping soiree, made all the more sweet for the obstacles Dominion had to overcome from antis when building the facility. Joining the celebration were officials from Japan and India (the countries buying all of the gas shipped from Cove Point), along with the top brass from Dominion. Special guest of honor was Dept. of Energy Secretary Rick Perry, there to deliver a message from his boss, Donald Trump. Perry said Trump is, “eager to unleash our bounty to the world” and that’s why President Trump is “so supportive of this infrastructure project right here in Cove Point.” Very very supportive. 😉 Here’s how it went down yesterday on the shore of the beautiful Chesapeake Bay…
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Energy Stories of Interest: Fri, Jul 27, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: Beaver Community College gets another $1M to help train cracker plant workers; BP pays $10.5B for BHP Billiton’s U.S. shale assets; residents in Virginia worry solar farm will hurt the environment; energy companies (falsely) praise carbon tax bill; acting EPA administrator challenges Big Corn; US natgas storage increases, prices stay the same; new pipeline testing tool from Baker Hughes; heatwave tests the limits of so-called renewables; the regulation that could push oil to $200/barrel; and more!
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