PA Natural Gas Production Hits Another All-Time High in 2Q18

Last Thursday the PA Independent Fiscal Office (IFO) released their latest quarterly Natural Gas Production Report for Apr-Jun 2018 (full copy below). It shows natgas production rose 9.9% compared to the same period last year–same as the increase in 1Q18 (see PA Natural Gas Production Hits New All-Time High in 1Q18). The report also shows the number of producing wells is up 10.4% from last year. Total natural gas production volume was 1,455.8 billion cubic feet (Bcf), and the number of producing wells in 2Q18 was 8,672 (of which 8,194 were shale wells). The biggest news is that once again 2Q18 saw the highest quarterly production of natural gas in the state–ever. This is the seventh quarter in a row there has been an increase in production. Two-thirds of the state’s natural gas production consistently comes from four counties: Susquehanna, Washington, Bradford and Greene. The #1 county for natgas production in 2Q18 was, as it was in each quarter of 2017 and in 1Q18, Susquehanna County, in the northeastern corner of the state. The #1 producing driller in Susquehanna County is Cabot Oil & Gas. Here’s the full 2Q18 natural gas production report from the IFO…
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Shell Ethane Cracker Gets Reprieve from Trump Steel Quotas

Shell ethane cracker plant under construction in Monaca, PA – so many cranes you can’t count them!

RINO Pat Toomey can rest easy–there will be no delays in building the $6 billion Shell ethane cracker near Pittsburgh. The Trump Administration previously slapped a 25% tariff (i.e. tax) AND quotas on imported steel coming from countries dumping steel in our markets, driving out our own steel industry. Last week Trump lifted the quota from steel coming from certain countries, including Brazil. Shell is getting steel they need for the cracker from Brazil. Indeed, Shell’s Brazilian steel is already sitting in a U.S. port, undelivered due to the quota (a limit on how much can be imported). Now Shell’s steel can get shipped to Pittsburgh and used by the army of people working there. But get this: Shell will still have to pay the 25% tariff/extra charge for their Brazilian steel. Toomey, an early and persistent Trump critic (and a DC swamp dweller), one of PA’s two U.S. Senators, recently claimed Trump’s quotas/tariffs would result in layoffs and delays at the cracker (see Sen. Pat Toomey Claims Trump Tariffs Will Delay Shell Cracker). With that barrier now gone, Toomey will have to find something else to criticize about Trump. How about his hair?…
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WV’s Acting Secretary of Commerce is MIA – Hurting Investment?

In an act still befuddling for us, West Virginia Gov. Jim Justice fired Commerce Secretary Woody Thrasher in June (see WV Commerce Secretary Who Brokered $83B China Deal…Fired). Thrasher took over as Commerce Secretary in January 2017 as part of the new Gov. Jim Justice Administration. Thrasher is “the guy” most responsible for putting together the massive $83.7 billion deal signed by China last November to invest in WV shale and petrochemicals (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). It was the relationships established by Thrasher that led to that deal. So what happened to Thrasher? Why was he fired? It has nothing to do with the China deal. Anyway, Justice appointed W. Clayton Burch as Acting Secretary of Commerce. According to attendees at the recent West Virginia Chamber of Commerce Annual Meeting and Business Summit, nobody has seen Burch. Or at least, almost nobody. The head of the Chamber had face-to-face meeting with him once. Business leaders and legislators in WV are grumbling that they haven’t seen or heard from Burch since his appointment 80 days ago. It’s pretty obvious he’s just filling in until Justice gets off his derriere and appoints a new, permanent Secretary. The concern is that important projects, like the $83.7 billion deal with China, are suffering. Who will invest in WV if there’s no one to make decisions and propel projects forward?…
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How MarkWest Gets Marcellus/Utica NGLs to Market

The Marcellus and Utica Shale layers in Southwestern Pennsylvania, northern West Virginia and eastern Ohio produce a boatload of NGLs–natural gas liquids. One company had the foresight to plan a strategy to separate, transport and sell those NGLs. That company was MarkWest Energy, now known as MPLX following a purchase by/merger into Marathon Petroleum. MarkWest’s plan is firing on all cylinders. The experts at RBN Energy have analyzed MarkWest’s initial strategy, now largely complete, and their long-term strategy, still in the works, to give us a great snapshot of how NGLs are moving from our region to Midwestern and Canadian markets…
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Dominion Takes Out $3B Loan for Cove Point Facility

This another one of those high finance thangs we don’t fully understand. Dominion Energy spent $4 billion to build their Cove Point LNG export facility in Lusby, Maryland. Somehow and somewhere they got money to build it–investors perhaps, or maybe Dominion had some cash tucked away under the corporate mattress. Dominion wants to get some of that debt off its books, so it has just structured a three-year loan with 20 lenders for $3 billion, reducing the company’s “parent level debt”–as opposed to child or subsidiary level debt. What it all means, if we’re understanding it correctly, is that Dominion is moving debt from the parent company’s balance sheet to the Cove Point subsidiary company’s balance sheet. Prior to this, Cove Point “owed” the money to Dominion itself (all in the family), and now, instead, the Cove Point subsidiary will owe that money to lenders directly. That’s our take. Hopefully it won’t take long for Cove Point to pay off the debt…
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Schlumberger Donates $14M in Software to Youngstown State Univ

Houston-based Schlumberger (pronounced Shlum-Bur-Zhay) is the world’s largest oilfield services company. They’re the company a majority of exploration and production companies (drillers) call when they want a new well drilled. The #2 company on speed dial for drilling new wells is Halliburton, and they’re not even close in size to #1 Schlumberger. Here in the U.S., the #3 company on speed dial for drilling is Baker Hughes, still (for now) owned by GE. We mention all that because most folks recognize the names Halliburton and Baker Hughes, yet are often not familiar with the hard-to-pronounce Schlumberger. Even so, Schlumberger has a big presence in the Marcellus/Utica region. In a gesture of “giving back,” the company has just made a VERY generous grant of $14 million of its own proprietary software used for modeling and assessing risk associated with drilling new wells, to Youngstown State University. Most major E&Ps use Schlumberger’s software, even if they don’t use Schlumberger itself to do the actual drilling. While at first glance the gift of software may seem self-serving, it’s not. This gift means that students will be trained on the latest and greatest software that they will need to know, coming right out of college. It helps the kids gain a valuable skill, making them more employable once they hit the workforce…
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Energy Stories of Interest: Tue, Sep 4, 2018

The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: Chambersburg project to extend natgas line costing $1.2M, “significant impact”; CNX, Hess complete deal to sell their joint OH Utica assets to Ascent; WVU researchers to study methane emissions from well pads; OH Supreme Court rules against NEXUS pipeline referendum; Cali commits fossil fuel suicide, unlivable by 2045; NAFTA 2.0 must promote natgas trade with Canada; Texas power couple behind many of the deals you read about; FERC speeds up process for 12 LNG export projects; China’s natgas imports soar; and more!
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