Marcellus Drilling News

Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Statewide PA

Lawyer to PA Drillers: No Royalties? Time to Terminate the Lease
April 25, 2017April 25, 2017

For the past couple of years MDN has covered the issue of low and no royalties for landowners in Pennsylvania and other states because of the low commodity price for natural gas–and because drillers are deducting post-production expenses. The problem, from the landowner’s perspective, is that gas is still getting pumped–and they aren’t getting anything in royalties. Who would sign up for that?! The problem, from the driller’s perspective, is that they’ve spent big bucks to drill the well and even if they have to sell the gas at a loss, at least they’re getting some revenue through the door–hoping to hang on until prices go higher again. It is a conundrum. Last month the Pennsylvania Chapter of the National Association of Royalty Owners (NARO) held their annual meeting and convention in State College, PA. A number of interesting bits of information came out of that meeting. One interesting tidbit: A Houston lawyer told attendees that he is now using the strategy of telling drillers if they keep sending royalty statements with no checks (i.e. statements showing the driller is not making a profit)–they have 30 days to terminate their lease with those landowners. Some leases (not all) state that if a well quits producing profitable quantities of gas, the lease is officially ended. While in some respects the lawyer’s innovative interpretation of o&g contracts may be an empty threat, the strategy does appear to be getting results. Another tidbit: There is a concern that drillers may try to deduct losses today from profits in the future–from a landowner’s royalty check. What can landowners do to guard against it?…
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Empire Pipeline | Energy Services | Industrywide Issues | Litigation | New York | Pipelines | Regulation | Statewide NY

NFG Sues NY DEC in Fed Court re Northern Access Pipe Rejection
April 25, 2017April 25, 2017

Earlier this month MDN brought you the sad (and angering) news that once again Gov. Andrew Cuomo has caved to political pressure from environmental Nazis and instructed the now-corrupted Dept. of Environmental Conservation (DEC) to deny stream crossing permits for National Fuel Gas Company’s (NFG) Northern Access Pipeline project (see Cuomo’s Corrupt NY DEC Blocks NFG Northern Access Pipeline Permit). A few days later, NFG issued a statement to say their proposed pipeline project would have FAR LESS impact on the environment “than either exploding an entire bridge structure and dropping it into Cattaraugus Creek (Route 219) or developing and continuously operating a massive construction zone in the middle of the Hudson River (Tappan Zee Bridge) for a minimum of five years” (see NFG Calls Cuomo DEC Denial of Northern Access Pipe “Troubling”). Both of those projects were reviewed and approved by Cuomo’s DEC, yet the DEC rejected a benign pipeline project. At the time we said this: “While there is no mention of a lawsuit against the DEC, you can bet your bottom dollar such a suit is coming.” Once again, we were right. Last Friday NFG sued the DEC in federal court, asking the court to review the DEC’s action in rejecting permits for the federally-approved project…
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Industrywide Issues | Monroe County | NGLs | Ohio | Regulation

Mountaineer NGL Storage in Monroe County, OH Caught in Red Tape
April 25, 2017April 25, 2017

In April of 2016, Mountaineer NGL Storage announced an open season for a new underground NGL storage facility in Monroe County, Ohio, near Clarington, along the Ohio River (see New Company Announces Open Season for NGL Storage in Ohio Utica). Natural gas liquids (NGLs), including ethane, would be stored at the facility. It is a key, missing component in a plan to build at least one, and likely more than one ethane cracker plants in the region. A storage facility for both natural gas and NGLs is a critical part of natural gas infrastructure. Mountaineer recognized that the Marcellus/Utica will need such a storage facility. A month after the open season, Mountaineer announced it was successful and that they would move forward with the project (see Mountaineer NGL Storage Open Season Successful, Development Begins). Then in October, Mountaineer completed a test well in the salt formation–testing it for thickness. The test was a success (see Mountaineer NGL Storage Test in OH a Success, Construction in 2017). Plans, at that time, were for Mountaineer to begin construction later this year. Is the project still on track? Here’s an update…
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Antero Midstream | Energy Services

Antero Midstream Launches IPO – Hopes to Raise $930M
April 25, 2017April 25, 2017

We should have known. Last week MDN brought you the news that former MarkWest chief John Mollenkopf has just joined the board at Antero Midstream (see Former MarkWest Chief John Mollenkopf Joins Board of Antero Midstream). Mollenkopf helped architect the December 2015 Marathon Petroleum buyout of MarkWest. After the buyout, Mollenkopf was named executive vice president and chief operating officer for the new MarkWest unit–the guy running it. In August 2016, Marathon announced that Mollenkopf would ride off into the sunset as a very rich man (i.e. retiring), and that Gregory Floerke would take the reigns (see Senior Management Change at Marathon’s MarkWest Subsidiary). Last week we noted that Mollenkopf had joined the board of Antero Midstream (see Former MarkWest Chief John Mollenkopf Joins Board of Antero Midstream). Which makes sense. In February, Antero formed a joint venture with MarkWest in West Virginia (see Antero Forms JV with MarkWest to Service Combined 360K WV Acres). Mollenkopf has uncanny timing–turning up when there are “significant liquidity events.” So we should have known that Antero Midstream was about to launch an initial public offering. Yesterday, Antero Midstream announced an IPO of 37.2 million shares of stock, hoping to raise more than $900 million…
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Energy Services | Industrywide Issues | Pipelines | Tennessee Gas Pipeline

TGP’s Extraordinary Security to Build 2-Mile Pipeline in Mass.
April 25, 2017April 25, 2017

In March 2016–more than a year ago–the Federal Energy Regulatory Commission (FERC) approved Tennessee Gas Pipeline’s (TGP) $86 million Connecticut Expansion project (see FERC Approves TGP Connecticut Expansion Pipeline Project). The project includes building 13.42 miles of new pipeline loops in three states: Connecticut, Massachusetts and New York. When completed, the new looping will serve an additional 72,100 dekatherms of (mostly) Marcellus Shale gas to three utility companies in Connecticut. A pretty low-key project overall with just 13.42 miles of new pipeline. But anti-fossil fuel kooks object to very square inch of new pipelines–no matter where they are constructed. (Perhaps if pipelines flowed marijuana instead of fossil fuels, they’d feel differently about them? But we digress.) The State of Massachusetts did its best to block construction there, but eventually lost and was forced to grant an easement for a lousy 2 miles of pipeline. And now, more than a year after getting a green light from FERC, TGP is finally beginning construction. The security they must maintain to construct a lousy 2-mile pipeline is, in a word, extraordinary…
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Hydraulic Fracturing | Industrywide Issues | Research | Statewide WV | Wastewater | West Virginia

NRDC Study Finds No Groundwater Contamination from Fracking in WV
April 25, 2017April 25, 2017

MDN has previously chronicled bought-and-paid-for research done by Duke University’s Avner Vengosh, professor of geochemistry and water quality at Duke University’s Nicholas School of the Environment (see Duke Hit Piece on Shale Water Usage from Same Park-Sponsored Prof and Latest Case of Duke U Bought & Paid “Research” by Park Foundation). Here’s how it works: Park funds Dr. Vengosh’s “research,” and he conveniently “discovers” all sorts of nasty things about shale fracking, publishing his “research” in obscure, peer reviewed journals. Mainstream media picks it up and runs it. Readers who only scan headlines get the impression fracking is evil. Mission accomplished for Park (another hit on fracking) and for Vengosh (another buck in his pocket). But last October that pattern changed. Vengosh released new research that found there’s really nothing to worry about after all when it comes to Marcellus Shale wastewater (see Duke U Researcher Tries to Repair Reputation with Wastewater Study). He’s just done it again. Vengosh and researchers from Penn State, Ohio State, and Stanford University published a study on Monday in which they declare fracking “has not contaminated groundwater in northwestern West Virginia.” They did find that on occasion wastewater spills have fouled creeks–something everyone knows. But then, on occasion rail cars overturn with nasty chemicals not related to fracking that foul local water supplies. This is not news. Still, the fact that this study, which contains real research in monitoring water wells over a three-year period, coming from Duke University and Vengosh, marks a turnabout. The really interesting news is that the study was funded, in part, by the virulently anti-drilling National Resources Defense Council (NRDC). The NRDC did not get their money’s worth with this one! We doubt Vengosh can expect any more funding from the NRDC in the future. Below are details about, and from, the study that finds fracking in WV is peachy-keen…
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Industrywide Issues | Pipelines | Research

Report: Blocking Pipelines in Northeast an Economic Disaster
April 25, 2017April 25, 2017

Last year the U.S. Chamber of Commerce, via their Institute for 21st Century Energy intiative, launched a “What If…?” series to counter the radical “keep it in the ground” movement–a movement that irrationally hates the use of fossil fuels. In August 2016, the Chamber released their first such report, titled “What If…Energy Production was Banned on Federal Lands and Waters?” (see Chamber Report Details Why ‘Keep it in the Ground’ a Disaster). In September 2016, the Chamber released their second report (see Report: What If America’s Energy Renaissance Never Happened?). In October 2016, they released the third report (see Report: What If the U.S. was Forced to Pay EU Energy Prices?). And in November 2016, just prior to election day, the Chamber released the fourth report, titled “What If…Hydraulic Fracturing Was Banned?” (see Report: What if Fracking was Banned, as Hillary Wants?). The Chamber is back with a fifth report, titled “What if…Pipelines Aren’t Built Into The Northeast?” (full copy below). Like the Chamber’s other reports, it offers sobering details about what’s coming with a lack of pipeline construction. In the states examined–New England plus New York, New Jersey, Pennsylvania, Ohio, and West Virginia–the report finds that lack of additional pipeline infrastructure would cost over 78,000 jobs and $7.6 billion in GDP by 2020. New York State alone would see $1.6 billion less in state GDP, and the loss of 17,400 jobs. Scary stuff…
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Industrywide Issues | Lycoming County | Pennsylvania | Regulation

PA Enviro Justice Listening Tour Continues to Draw Almost No One
April 25, 2017April 25, 2017

Last December the Pennsylvania Dept. of Environmental Protection (DEP) said it would go on a “listening tour” in early 2017, to focus on so-called environmental justice (see PA DEP to Conduct ‘Listening Tour’ for ‘Environmental Justice’). The DEP finally set up a schedule for its listening tour, which began in March in Greene County (see PA DEP Conducting “Listening Tour” for “Environmental Justice”). Our take: “environmental justice” means asking poor people if they’ve been abused by the oil and gas industry in any way–and if they have a beef, the DEP will “do” something about it. The first session in the tour was interesting for several reasons. For one, just a handful of people turned out–a maximum of 30 in the crowd. For another, the po’ folk didn’t bother coming. It seems only radical activists bothered to turn up, claiming to represent the abused, repeating the same tired, old lies they always repeat. Another stop along the tour was held last week in Williamsport, PA. The pattern repeats. If anything, there were fewer people in the crowd–about 20 according to the local newspaper. Next to nobody turns up for these things. Why is the DEP wasting its time, and PA taxpayers’ money?…
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Best of the Rest

Marcellus & Utica Shale Story Links: Tue, Apr 25, 2017
April 25, 2017April 25, 2017

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: March construction starts up 5% thanks to Marcellus/Utica pipelines; NY hurts energy development over dubious concerns; Rover Pipeline’s early messes don’t inspire confidence; officials speak out re Rover’s spills; PA wants more oversight of gas industry hiring practices; oil investors who bet on higher prices, lost; Trump signing more exec orders this week on energy, environment; oil majors lead the pack in a mad dash for gas; nuclear power subsidies robbing wind and solar; and more!
Read More “Marcellus & Utica Shale Story Links: Tue, Apr 25, 2017”