“Cracker Effect” – Shell Plant Will Create 7,400 Permanent Jobs

Ever hear of the “cracker effect”? No, we hadn’t either. Not until we read about a new study by a husband and wife team from Washington & Jefferson College. The pair studied the economic impact of cracker plants on surrounding communities–some 34 ethane crackers in 16 counties around the country. Most of the cracker plants are located along the Gulf Coast. The purpose of the study is to accurately forecast what will happen with Shell’s new $6 billion ethane cracker currently under construction in Beaver County, near Pittsburgh. What might the real, measurable economic effect be from Shell’s cracker? According to the authors, the Shell cracker will generate ~7,400 permanent, long-term jobs. Crackers not only create new jobs, they boost wages in cracker counties by nearly 13% over counties without crackers. But counties without a cracker plant benefit too. Counties bordering counties with a cracker plant see lower unemployment rates. No mystery there. While the authors alluded to some negatives from crackers, we were hard-pressed to find any! It sure looks like everything is coming up roses with the Shell cracker. The numbers prove it…
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Is Certification Needed for Shale Producers? IES Says it Helps

Last week MDN told you that Southwestern Energy is participating in a program to get their gas “certified” (see Southwestern Sells 1st Certified “Responsible Gas” to NJ Resources). What is certified gas? Is that like “certified organic” fruits and vegetables? Actually, it is kind of like that. The Independent Energy Standards Corporation (IES) has launched what they call their TrustWell™ Responsible Gas Program certification program to certify that natural gas bearing that label is “responsibly developed.” Such a designation is meant to imply the company doing the extracting (Southwestern in this case) has followed certain guidelines and procedures to safeguard the environment. Certification is a marketing/public relations tactic to be sure. The question is, is it worth it? How much does it cost to become certified? What do you have to do to become certified? And ultimately, will such certification actually help you sell more of your gas? One thing is for certain, nutty antis won’t care–so if you’re trying to appease them with certification, you can forget it. Won’t work. But, there are others (more reasonable people) who may put stock in such a certification. Is it a trend? The next “big thing?” We don’t know. What we do know (or have) is an interview with Jory Caulkins, CEO of IES, talking about his organization’s new certification and what it can mean for drillers…
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Moxie Freedom Marcellus-Fired Plant Near Wilkes-Barre Online

Moxie Freedom

The 1,000-megawatt Moxie Freedom Marcellus-fired power plant located near Wilkes-Barre, PA is now “transitioning to commercial operation.” The plant is up and running and soon will be feeding the electricity it produces into the local power grid. In June 2014, MDN broke the news that Moxie Energy was in the hunt to begin a third new Marcellus gas-powered electric plant project in Pennsylvania, near Wilkes-Barre (see Moxie Energy in Hunt for Third Marcellus-Powered Electric Plant?). In November 2015, Moxie selected Gemma Power to build the plant, and construction began a month later (see Moxie Marcellus-Powered Electric Plant Breaks Ground in NEPA). In June 2017, Caithness Energy (the owner) issued an update to say the plant will go online in May of this year (see NEPA Moxie Freedom Power Plant on Track for May 2018 Launch). That didn’t happen. However, we spotted a local newspaper article that quotes plant officials as saying they are right now in the process of transitioning to commercial operation…
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EdgeMarc Energy Sued for Failing to Pay Overtime – Class Action

Last Wednesday a single person employed by EdgeMarc Energy in Ohio filed a lawsuit against the company in federal court claiming he was “misclassified” as an independent contractor when in reality he was functioning as a full-blown employee. Why does it make a difference? Because independent contractors (1099s) are paid a straight, per-hour rate no matter how many hours they work, whereas employees must, under federal (and state) law, be paid overtime for any hours worked over 40. The worker alleges the company intentionally uses independent contractor status to wiggle out of paying overtime, and that he’s not the only one. Normally one disgruntled employee suing an employer is not newsworthy–but in this case the law firm is attempting to get the lawsuit certified as a class action, potentially covering hundreds of workers. And that IS a big deal…
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7 Green Groups Attack Shell Ethane Pipeline “Exemptions”

Seven radical green groups–Sierra Club, Clean Air Council (CAC), FracTracker Alliance, Earthworks, PennFuture, Breathe Project, Environmental Integrity Project–sent a protest letter last week to the Pennsylvania Dept. of Environmental Protection objecting to a request by Shell that its 97-mile Falcon Ethane Pipeline be granted certain air permit exemptions. Shell is asking the DEP to determine whether or not (hopefully not) any emissions coming from the pipeline would be “minor sources,” exempting the pipeline from certain permits. The rads are telling the DEP to deny that request, in an attempt to slow or even stop the project. With no ethane, Shell’s $6 billion cracker plant, currently under construction, can’t begin operation. Will the DEP do the right thing and ignore these nutters?…
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Chesapeake Energy Gets $3B Line of Credit from 15 Banks

Chesapeake Energy “amended and restated” its “senior secured revolving credit facility” on Wednesday. What does that mean in everyday language? It means the company has talked a bunch of banks into allowing the company to borrow up to $3 billion on a line of credit backed by the value of the company and its assets. That’s some kind of line of credit! The 15 banks doing the loaning were actually willing to pony up $3.8 billion, but Chessy only wants to use up to $3 billion. Aside from a huge line of credit, this news indicates that the banks have confidence that Chesapeake will be an ongoing concern for the foreseeable future. That is, no serious danger of bankruptcy, even though the company still maintains a mountain-high debt load. Below are the banks willing to roll the dice on Chesapeake…
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Cracker Boost: FERC Approves Shell Falcon Ethane Pipeline Rates

Getting permission to build a new pipeline from the Federal Energy Regulatory Commission (FERC) is one thing. An important thing. But beyond permission to build, you also need permission to charge a particular rate for those using the pipeline. Shell is currently building a $6 billion ethane cracker in Monaca, PA, near Pittsburgh, to chemically “crack” ethane from shale wells into ethylene–the raw building material of plastics. Shell is also building a 97-mile, two-legged pipeline system called the Falcon Ethane Pipeline (see Exclusive: Shell Leasing Land for 2 Pipelines to PA Cracker Plant). Shell ran an “open season” to lock up shippers–drillers who will provide ethane to the plant via the pipeline–in October 2016 (see Shell Launches Open Season for PA-WV-OH Falcon Ethane Pipeline). The open season worked. Of course it worked! Shell wouldn’t be spending $6 billion to build a plant that can’t get cheap ethane to it!! However, the whole project took another (important) step forward last week when FERC approved the rate structures for using the Falcon Pipeline…
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PA Court Upholds $1.1M Fine on EQT re Wastewater Impoundment

Yesterday Pennsylvania’s Commonwealth Court upheld a PA Dept. of Environmental Protection (DEP) fine levied on EQT for $1.1 million related to a leaky wastewater impoundment in 2012. The case dates back to 2014 when the PA Dept. of Environmental Protection (DEP) slapped EQT with a $4.53 million fine for a leaky wastewater impoundment in Tioga County, something that happened two years earlier (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). EQT never said there wasn’t a problem with leaks at the site, but they did say the way the DEP calculated the fine was unreasonable and arbitrary. EQT appealed the fine and the case all the way to the PA Supreme Court, and in April of this year, the Supremes ruled in favor of EQT, saying that the DEP’s levied fine was excessive and that the DEP misinterpreted language in the 1937 Clean Streams Law (see PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak). We thought that was the end of the case. But it wasn’t. The Supremes ruled on “water to water” contamination in the case, but not on “ground to water” contamination. PA law allows for companies to be on the hook for each day a contaminant enters the water table. In May the court heard oral arguments over how to prove whether contaminants in the soil have moved into groundwater (see EQT Continues to Fight PA DEP Fine re Wastewater Impoundment). What lawyers argued was whether or not, and how, the DEP can prove contaminants in the ground, there because of EQT’s leak, can be proven to have leached into the water on any given day. DEP claimed to have a formula and calculated a revised $1.1 million fine based on assumptions about how many days the contaminants leaked out of the ground. Yesterday, Commonwealth Court agreed with DEP and upheld the fine…
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Penn Virginia Hires New Board Member to Help Sell the Company

Penn Virginia issued what may appear to most to be a low-key, innocuous press release yesterday, announcing the company has added a new board member. Penn Virginia said that V. Frank Pottow has joined the Board of Directors as a new independent member, effective September 10, 2018. Pottow is the co-founder of GCP Capital and has been a managing director and member of the investment committee of Greenhill Capital Partners since July 2002. Why is that significant? Because Penn Virginia, as of July, is trying to sell itself (see Penn Virginia Puts Itself Up for Sale – Again). They’ve just hired a venture capitalist with 25 years of experience to (we’re guessing) find a buyer for the company. Penn Virginia is an oil and gas driller headquartered in Radnor, PA (near Philadelphia). Although it’s based in the Keystone State, Penn Virginia has only a small presence in the Marcellus Shale–21,700 net acres with no drilled wells (at last check). They concentrate on oil drilling the Texas Eagle Ford Shale play. Penn Virginia is one of the Philly area’s oldest companies, started in 1882 by Philadelphia coal barons. It later transitioned into an oil company. Here’s yesterday’s announcement about their newest board member, come to help sell the company…
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Southwestern Sells 1st Certified “Responsible Gas” to NJ Resources

Bet you didn’t know that natural gas can be certified as “premium” and “responsible,” did you? No, we didn’t either. It was quite a surprise when we read that Southwestern Energy has, for the first time anywhere, sold natural gas to a customer (utility company New Jersey Resources) that has been certified as “responsible gas.” The certification comes from Independent Energy Standards Corporation (IES) and they call it their TrustWell™ Responsible Gas Program certification. And what does such a prestigious label certify? It certifies the gas was “responsibly developed.” As opposed to irresponsibly developed gas, which is what everybody sells. “Responsible” gas, according to IES, is gas that doesn’t leak as much methane during the extraction and transportation process, doesn’t spill as much water and chemicals on the ground, sources water from places that are, well, responsible (we suppose), and engages the community–to make them feel good about all this responsible-ness going around. Yes, you may detect a little bit of snark in our comments on this news–because we happen to think the industry at large is already doing a great job of being responsible–without having a label put on it. This is just marketing. Hey, if it floats your boat to have a “responsible” label on your gas (paying to do so), go for it. Such a designation will never impress the eco-nuts. IES says they think “in time” that some 25-50% of all gas sold in the U.S. will have such a certification/label as green-friendly. We think that’s an ambitious number, given the fact there are still only five Marcellus/Utica drillers who have gone through the rigors of receiving a certification from the Center for Sustainable Shale Development, an organization that’s been around since early 2013 and offers something similar to IES’ cert…
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Eclipse Resources Stock Hits New 1-Yr Low – $1.17/Share

We typically don’t report on the ups and downs of the stock price for Marcellus/Utica companies, primarily because the per-share price goes up, then it goes, down, then it goes up again…You get the picture. However, today we’re reporting on the share price for Eclipse Resources (as of last Friday) because it hit a new one-year low of $1.17 per share, before closing at $1.28/share. Bumping around the bottom of the barrel. Why pick on Eclipse about their stock price? Because they’re in the middle of getting bought out and merged into Blue Ridge Mountain Resources, the former Magnum Hunter Resources (see Eclipse Resources Merging with Former Magnum Hunter). And because it’s a shame the stock price is that low, given that Eclipse has had a stellar record of drilling long laterals–currently the record-holder for longest onshore laterals in the world! (All drilled in the Ohio Utica Shale.) We hate to see a star performer like Eclipse under-perform financially. It doesn’t seem to balance on the scales of cosmic justice. What now seems obvious, in retrospect, is that Eclipse has been in a financial pickle for some time–hence their sale to Blue Ridge Mountain…
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3 Counties, 5 Drillers Led OH’s 50% Increase in 2Q Gas Production

The Pareto Principle is alive and well in the Buckeye State. You may know it as the 80/20 rule, or in this case, the 75/25 rule. The rule that states roughly 80% of the results come from 20% of the effort. Last week MDN brought you the latest update from the Ohio Dept. of Natural Resources–their second quarter 2018 report showing all production coming from the Ohio Utica Shale (see Top 25 Producing Gas & Oil Wells in Ohio Utica for 2Q18). While MDN provided you with Top 25 lists showing the best-performing wells (both gas and oil) during 2Q, and while we provided you with a better spreadsheet to view the information than that provided by the ODNR itself, our analysis was basic and high level. Utica natgas production was up a big 42% over the same period last year, and Utica oil production was up 11%–a cumulative 50% increase when you convert it all into equivalents. The experts at S&P Global Platts have done a deep dive into the numbers and have found that three counties represent 75% of all production in 2Q18, and five drillers represent 75% of all production in 2Q18. Which counties and which drillers? Read on…
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Small Group of Old Hippies Oppose Shell Ethane Pipeline

A small group boasting a big name, The Breathe Project, recently sent a letter to the Pennsylvania Dept. of Environmental Protection proclaiming their opposition to Shell’s planned Falcon Ethane Pipeline–a 97-mile pipeline system with two “legs” that will feed Shell’s mighty ethane cracker plant now under construction in Monaca, PA. Right. So the DEP and Shell should simply give up on the $6 billion ethane cracker, which can’t operate without ethane to feed it–ethane that will flow through this pipeline. Of course the group’s opposition is for show, maybe for fundraising, and certainly not serious. The funny thing for us was in viewing a picture of some of the members of the group, standing around clutching signs that say SHELL FALCON PIPELINE with a big circle/slash through it. The group, when you look at them, is the geriatric squad. Old folks. In our opinion, they look like old hippies–people who likely protested the Vietnam War in the 60s and have now found their new reason for living–to defeat a small ethane pipeline. On Thursday a tiny protest of the Falcon Pipeline (under two dozen people) caught the interest of the Pittsburgh Business Times on a slow news day…
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Cabot O&G Fracks Its First OH Knox Well, Drilling 3rd OH Well

According to a news account from Ohio, Cabot Oil & Gas is either in the midst of, or just recently completed, fracking their very first shale well in central Ohio. The well is located in Ashland County’s Green Township. As we previously reported, Cabot is targeting the Knox formation (see Cabot O&G Opens Branch Office in OH – Hoping to Find Oil in Knox). Cabot has already drilled two wells, fracked one, and moved their drilling rig last week to Vermillion Township (also in Ashland County) to begin drilling a third well. The first three wells are all located in Ashland. As for the next two, Cabot isn’t 100% sure. Maybe another well in Ashland, but maybe a well in Richland County instead. Cabot’s George Stark says to stay tuned for the location of the final two test wells the company will drill. Cabot plans to have all five test wells drilled and fracked by the end of this year. “It should be a busy September and October,” according to Stark…
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Southwestern Sells Fayetteville Shale, Now Focused 100% on M-U

Some exciting news to share. Southwestern Energy, headquartered in Texas, has cut a deal to sell all of their Fayetteville Shale (Arkansas) assets to Flywheel Energy for $1.865 billion in cash. The sale makes Southwestern a pure play, 100% focused driller on the Marcellus/Utica region (i.e. Appalachia). What will Southwestern do with an extra $1.865 billion? According to their announcement: (1) Spend $900 million of it on retiring IOUs (“notes”) previously issued. That is, debt retirement. (2) Buy back up to $200 million in outstanding shares of stock. (3) Spend $600 million of it over the next two years (2019 & 2020) on more Marcellus/Utica drilling. But not just any M-U drilling. Southwestern owns acreage in both northeastern PA and the northern panhandle of WV (with a some acreage in Washington County, PA). According to Southwestern’s announcement, the extra $600 million will go to drilling in the company’s “liquids-rich Appalachia assets.” Northeastern PA is dry dry dry–no liquids. WV landowners brace yourselves–Southwestern will soon bring an extra $600 million (over half a billion dollars) worth of drilling to your area. If you’re signed with Southwestern and haven’t yet seen drilling, you now stand a much better chance! Here’s the exciting news, along with extra resources we’ve located to better help you understand the news…
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Rover Pipe Asks FERC to Start Up Final 2 Laterals, for Antero

We finally come down to the final two lateral pipelines for Rover. The Federal Energy Regulatory Commission (FERC) played a game of hardball with Energy Transfer (ET) over the Rover Pipeline. For months FERC refused to allow four Rover laterals–feeder pipelines to shuttle gas from where it’s produced into the main Rover pipeline–to start up (see FERC Plays Hardball with Rover – Refuses to Certify 4 Laterals). The reason? ET had not, according to FERC, lived up to its word on restoration work. Things like smoothing over the dirt and replanting grass/other vegetation over top of the buried pipeline. In early August ET assured FERC it would have the majority of restoration work done on two key laterals–the Burgettstown Lateral in southwestern PA, and the Majorsville Lateral in the northern panhandle of WV–by the end of August. FERC made ET sweat. Finally, near the end of August, FERC gave ET permission to start up both the Burgettstown and Majorsville Laterals on Sept. 1 (see FERC Finally Approves 2 Key Rover Pipeline Laterals, Sept 1 Start). That leaves just two final laterals, the CGT (Columbia Gas Transmission) and Sherwood Laterals, still not online. On Friday ET asked FERC to approve the startup for those two laterals, along with a compressor station and two meter stations associated with them. The driller with the most at stake in the startup of these two final laterals is Antero Resources…
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