Energy Companies

Beaver County | Braskem | Energy Companies | Energy Services | Ethane | Industrywide Issues | Odebrecht | Pennsylvania | Processing Plants | Shell | West Virginia | Wood County

WV Cracker Plant has Already Purchased Land for Future Site
January 20, 2014January 20, 2014

In November, WV Gov. Earl Ray Tomblin announced he finally had him a cracker (see WV Announces Brazilian Company to Build Ethane Cracker Complex). By Dec. 31, Odebrecht, the company that will build the ethane cracker, had purchased the future site for their proposed plant in Wood County, WV through a holding company–for $10.9 million. A chemical plant currently located on the site employing 130 people will close in 2015. But have no fear–when the cracker plant is built, it will (for a time) employ 10,000 people to build it. It’s a massive undertaking that will ultimately lead to an estimated $7 billion economic injection just for the state of West Virginia. Talk about an economic revolution!

Compare WV’s proposed cracker to the Pennsylvania proposed cracker plant. Shell announced their intention to build a PA cracker plant in June 2011. How long did it take Shell to purchase the property on which they plan to build their cracker plant? They still haven’t purchased it. Let’s see: under 2 months to purchase the property for the WV cracker, still no purchase after 2 1/2 years for the PA cracker. Which one do you think is serious about building, and which one will get built first?…
Read More “WV Cracker Plant has Already Purchased Land for Future Site”
Belmont County | Energy Companies | Lease & Royalty Payments | Ohio | Rice Energy | XTO

Belmont County School Gets Huge Checks from Utica Leases
January 20, 2014January 21, 2014

A local school district in Belmont County, OH–Union Local Schools–is reaping huge rewards from leasing land for Utica Shale drilling. Union Local Schools has already received a lease signing bonus check for $519,750, and a second check is on the way for $112,000–and that’s before a penny of royalties are paid (19% for one lease agreement, 20% for a second lease agreement).

Here’s the low-down…
Read More “Belmont County School Gets Huge Checks from Utica Leases”
Carrizo Oil & Gas | Energy Companies | Guernsey County | Ohio | Utica Shale

Carrizo Releases IP Numbers for Guernsey County, OH Utica Well
January 20, 2014January 20, 2014

Last week Carrizo Oil & Gas released a brief update on the initial production for their newest Utica Shale well, the Rector 1H in Guernsey County, OH. In addition, Carrizo said they plan to move a drilling rig into the OH Utica in early 2Q14 and keep it there through the balance of the year.

According to NaturalGasIntel.com, Carrizo’s acreage position is the smallest of the “major” drillers in the Utica with just 14,500 acres leased. Here’s Carrizo’s initial production (IP) numbers for the Rector 1H and their comments about their Utica drilling program:
Read More “Carrizo Releases IP Numbers for Guernsey County, OH Utica Well”
Blue Ridge Mtn Res/Magnum Hunter | Energy Companies

Magnum Hunter’s Proved Reserves Jump 23% Thanks to the Marcellus
January 16, 2014

Magnum Hunter Resources published numbers yesterday for their total proved reserves (how much recoverable oil and gas they have in the ground) for 2013–sort of a scorecard for how they ended the year. They report that total proved oil and natural gas reserves increased by 23% in 2013. Magnum Hunter CEO Gary Evans says the increase was primarily due to their Marcellus Shale drilling program. He said he expects 2014 to be another banner year for the company because of the Marcellus, and because of their drilling program just getting started in the Utica Shale. The company owns 97,000 acres of leases in the Utica and that program is just getting off the ground, so they expect to really pump up proved reserves in the Utica in 2014.

Here’s the full statement from Magnum Hunter. Lots of numbers–don’t go cross-eyed reading it. The interesting stuff is further down the statement…
Read More “Magnum Hunter’s Proved Reserves Jump 23% Thanks to the Marcellus”
Belmont County | Butler County | Carroll County | Energy Companies | Guernsey County | Noble County | Ohio | Pennsylvania | Rex Energy

Rex Energy 4Q13: Several Marcellus Experiments Paying Off
January 16, 2014January 16, 2014

The “little” driller in the Marcellus, Rex Energy, posted impressive gains in production for the fourth quarter of 2013. According to their 4Q13 update issued yesterday, Rex’s production, nearly all of which comes from the Marcellus and Utica Shale region, was 110 million cubic feet per day–a 12% increase over 2012. Of keen interest to investors is that 31% of net production for 4Q13 was oil and natural gas liquids (NGLs). The company gets a lot more money for those products than just plain “dry gas” methane.

Rex has operations in western PA and eastern OH. Of interest to MDN is that Rex is testing a strategy of drilling both the Marcellus and the shallower Upper Devonian layers in a single well, apparently with good success. They’re also experimenting with spacing wells closer together–at 600 feet apart instead of the traditional 750 feet. Rex is innovating, and reaping the rewards. Here’s their full 4Q13 update:
Read More “Rex Energy 4Q13: Several Marcellus Experiments Paying Off”
Energy Companies | Olympus/Huntley & Huntley | Pennsylvania | Range Resources Corp | Westmoreland County

Murrysville Park Lease to be Discussed at Meeting
January 16, 2014January 16, 2014

Last June MDN told you that Huntley & Huntley, a small conventional gas driller, had leased land surrounding the Murrysville Community Park in Westmoreland County, PA. At that time Huntley made overtures to Murrysville officials about leasing the land under the park for drilling from neighboring properties they already have under lease (see Conventional Driller Eyes Marcellus Under Murrysville, PA Park). Since that time MDN has learned that Huntley often works with and for Range Resources. Although it’s not clear if Range is the client in this case, we suspect that is the case.

Next Wednesday, Murrysville Council will take up a proposal from Huntley & Huntley (Range?) at their regularly scheduled public meeting. Both council members and Huntley want the public to attend and hear more about Huntley’s (Range’s?) plan, “in the interests of good communication.” Should be interesting…
Read More “Murrysville Park Lease to be Discussed at Meeting”
Alternative Energy | BP | Crude Oil | Economic Impact | Energy Companies | Hydraulic Fracturing | Industrywide Issues | Research

BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?
January 16, 2014January 16, 2014

Yesterday BP, a huge driller with a sizable acreage position in the Utica Shale (84,000 leased acres), issued its annual BP Energy Outlook 2035 (full copy embedded below). The 96-page report sets out BP’s view of the most likely developments in global energy markets to 2035, based on up-to-date analyses. BP experts expect global energy demand to rise 41% from now until 2035 with 95% of that growth coming from “emerging economies.” According to BP, gas as a source of energy is growing fastest among the fossil fuels and by 2035 gas is expected to be at parity with coal–each providing about 27% of power needs in 2035. BP says shale gas will make up 68% of U.S. gas production by 2035.

Of course, all of this speculation is fun to read, but frankly is just so much folly. MDN editor Jim Willis heard Charif Souki, CEO of Cheniere Energy address the predictions game at the Platts Global Energy Forum in New York City last December (see Energy Industry Leaders Gather at Platts Forum in NYC). At that forum, Souki said any kind of prediction beyond 2-3 years in the rapidly changing energy industry is meaningless. He said if you go back 20 years and look at those predictions about today, none of them predicted shale and how the industry would change so dramatically. We concur with Souki–making these kinds of predictions is a fool’s errand. Still, it’s fun to read and muse about what might be…
Read More “BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?”
Accidents | Energy Companies | Hydraulic Fracturing | Industrywide Issues | Jay-Bee Oil & Gas | Tyler County | West Virginia

Frack Tank Explosion in Tyler County Shuts Down Jay-Bee Pad
January 15, 2014January 15, 2014

Try as we might, sometimes an important news story slips by our otherwise keen eye on the Marcellus and Utica. Case in point: On Jan. 2 there was a rare accident at a shale drilling site in Tyler County, WV, a drill site operated by WV-based Jay-Bee Oil & Gas. A flow-back tank on the drill pad exploded, injuring a worker at the site and causing the spill of a “black sludge” onto a neighboring field. The West Virginia Dept. of Environmental Protection (DEP) shut down the Lisby drill pad operation, which is located along Big Run Road, roughly 6 miles southeast of Middlebourne, WV, and issued Jay-Bee a citation over the incident.

Jay-Bee was supposed to have provided a report to the DEP by yesterday outlining what happened and why. The DEP is also requiring Jay-Bee to provide a best management practices plan for flow-back tank systems at all of its operations in WV. In other words, Jay-Bee is now on the hot seat and needs to prove to the DEP that they can operate safely. Here’s what we can so far find about the accident, including the WVDEP’s statement about it…
Read More “Frack Tank Explosion in Tyler County Shuts Down Jay-Bee Pad”
Crosstex Energy | Devon Energy | Energy Companies | Energy Services | EnLink Midstream | Industrywide Issues | Pipelines | Processing Plants

Crosstex Energy Gets a Name Change, Merger with Devon Proceeds
January 15, 2014January 15, 2014

In October, Devon Energy (a major shale driller in several plays with midstream assets) and Crosstex Energy (a sizable midstream company) announced they will merge their midstream operations into a new company (see Devon Energy & Crosstex Energy Form New Midstream Company in JV). Both companies have major operations in the Marcellus/Utica. At the time of the announcement the new company was unnamed. No longer. Yesterday Devon and Crosstex announced that Crosstex would change its name to the name of the newly combined venture (which is majority owned by Devon). The new name is EnLink Midstream. Barry Davis, CEO of Crosstex will become (or remain) CEO of EnLink.

May we net-net this? Essentially Devon has purchased Crosstex and turned it into a semi-autonomous subsidiary, keeping the Crosstex management team in place. Here’s the statement issued yesterday with details of the legal structure for the new company, which on paper will be two companies for investment purposes–an LLC and an LP (master limited partnership)…
Read More “Crosstex Energy Gets a Name Change, Merger with Devon Proceeds”
Energy Companies | Industrywide Issues | Pennsylvania | Range Resources Corp | Regulation | Washington County

Mt. Pleasant Zoning Bd Says Range Water Impoundments in Violation
January 15, 2014January 15, 2014

Starting last August, Range Resources has been in a battle with the board of supervisors for Mt. Pleasant Township in Washington County, PA. The issue, the bone of contention, has been four water impoundments–three of which are for fresh water, essentially ponds (see Range Resources Argues with Mt Pleasant over Water Impoundment). The impoundments were originally used to drill nearby Marcellus Shale wells, several years ago. Since then, Range has continued using them, but now uses them to drill wells that are not nearby, in Mt. Pleasant Township. And the supervisors object.

In December it appeared there was a sliver of good news when the township said Range could proceed with converting one of the impoundments to an above ground enclosed tank impoundment for recycled waste water, subject to certain terms and conditions (see Range Strikes Deal with Mt Pleasant for 1 of 4 Water Impoundments). It now seems that was a bit too optimistic. On Monday the Mt. Pleasant Zoning Hearing Board (different group of people from the board of supervisors) voted unanimously to uphold notices of violation issued by the township’s zoning officer against the four Range impoundments, so here we go again…
Read More “Mt. Pleasant Zoning Bd Says Range Water Impoundments in Violation”
Energy Companies | Rice Energy

Rice Energy Launches IPO, Hopes to Raise $840M
January 14, 2014January 14, 2014

MDN told you last month that Marcellus and Utica Shale driller Rice Energy would soon launch an initial public offering (IPO) and start to trade publicly listed stocks (see Impending Rice Energy IPO Creating a Buzz). Rice Energy launched their IPO yesterday. Previous chatter was that the company would receive a valuation of $2.5 billion. That’s not how much the stock offering would generate–but the overall value the market would give to the company (market capitalization, or “market cap”).

Rice, in a statement issued yesterday (see below), announced they have now floated 40 million shares of common stock and hope to get $19-$21 per share (30 million of that for the company, 10 million for an unnamed “selling stockholder”). If that happens, the company and the selling stockholder together will receive $840 million. For comparison, a larger Marcellus/Utica driller, Antero Resources, went public last October and sold over 35 million shares with their IPO and raked in $1.57 billion ($44 per share)! The Antero IPO valued the company at $11 billion. Antero’s IPO did much better than they hoped. Will Rice’s?…
Read More “Rice Energy Launches IPO, Hopes to Raise $840M”
Energy Companies | Hydraulic Fracturing | Industrywide Issues | Litigation | New York | Norse Energy | Otsego County | Regulation | Statewide NY | Tompkins County

NY Pro-Drillers File Final Briefs in Dryden/Middlefield Cases
January 10, 2014January 10, 2014

According to Tom West, lead attorney in the New York “Dryden” court case that seeks to overturn bad lower court decisions that allow towns to completely ban fracking, the “last word” has been now been filed by landowners and (in the case of West’s client), drillers like Norse Energy. West, via his blog site, announced two days ago that the final briefs with counter-arguments have been filed for both the Dryden and Middlefield cases (copies of both final briefs are embedded below). According to West, additional friend-of-the-court briefs (called amicus briefs) will still be filed, but until oral arguments are heard in a few months, this is the final word from our side of the isle. Interestingly, when you read through the two briefs, they each make slightly different arguments–perhaps increasing the odds that something will resonate with the justices.

Here’s what West says via his blog site about the filings:
Read More “NY Pro-Drillers File Final Briefs in Dryden/Middlefield Cases”
Energy Companies | EQT Corp | Lease & Royalty Payments | Pennsylvania | Range Resources Corp | Washington County

Deal Done to Lease Washington County, PA Airport for Drilling
January 10, 2014January 10, 2014

MDN told you yesterday about an impending vote by Washington County, PA commissioners to lease portions of the county airport for drilling under (but not on) airport property (see Washington County, PA Airport Considers Offer to Lease). The vote was taken, and the deal was approved. In the end, it looks as though the county, which does not own the mineral rights for all 400 acres of airport property, does own the rights to at least 135 acres, which they leased for a signing bonus of $6,400 per acre and 18.25% royalties on any gas produced.

The taxpayers of Washington County should be happy that a check for $864,000 of “newfound money” is heading their way…
Read More “Deal Done to Lease Washington County, PA Airport for Drilling”
Energy Companies | WPX Energy

Shotgun Wedding: New Board Member Forced on WPX Energy
January 9, 2014January 9, 2014

Yesterday WPX Energy, the spin-off drilling company from midstream giant Williams Partners, announced the appointment of Karl Kurz to the board of directors. MDN previously told you that WPX is being jerked around by its second largest stockholder, Taconic Capital Advisors, which led to the firing of the WPX’s CEO (see CEO Shake-up Explained: Taconic Capital Jerking WPX’s Chain). It appears that Kurz, previously COO for Anadarko Petroleum, is Taconic’s toady on the board–there to do his masters’ bidding.

Here’s the interesting thing to MDN: Williams, WPX’s one-time parent that still has a major stake in WPX, was attacked by a Carl Ichan disciple at the same time WPX was attacked by Taconic–no coincidence if you ask us (see Bad News: Corporate Raiders Take Aim at Williams). Carl Icahn’s toady at Chesapeake Energy is it’s new CEO Doug Lawler–a one time executive at Anadarko (see The Great Chesapeake Massacre: Lawler Fires 800 People in One Day). Now we get a former Anadarko person on the board at WPX. See a trend here?…
Read More “Shotgun Wedding: New Board Member Forced on WPX Energy”
Energy Companies | EQT Corp | Lease & Royalty Payments | Pennsylvania | Range Resources Corp | Washington County

Washington County, PA Airport Considers Offer to Lease
January 9, 2014January 9, 2014

Washington County, PA commissioners will vote today on a proposed lease of the county’s airport property–to allow shale drilling under (but not on top of) the property. According to the deal offered, the county would receive $6,400 per acre as a signing bonus and 18.25% royalties on any gas produced. It’s unclear how much of the 360 airport-owned acres will generate revenue for the county because when the county purchased the property some landowners retained mineral rights. However, the deal, if signed, is sure to generate a boatload (or planeload) of money for Washington County.

Here’s more details about the proposed offer, and which drillers (plural) are cooperating to do the drilling…
Read More “Washington County, PA Airport Considers Offer to Lease”
Blue Ridge Mtn Res/Magnum Hunter | Energy Companies | Energy Services | Eureka Midstream | Industrywide Issues | Ohio | Pipelines | Statewide OH | Statewide WV | West Virginia

Eureka Hunter Boasts 360% Yearly Increase in Marcellus/Utica Flow
January 8, 2014January 8, 2014

Eureka Hunter, the wholly-owned midstream (pipeline) subsidiary of driller Magnum Hunter, published their month by month flow numbers yesterday for how much gas they pumped through their pipelines in West Virginia and Ohio during 2013. It was an impressive year for Eureka Hunter. The average daily flow or “throughput” in 2012 was 23,291 million Btus (or MMBtus), which equates to 23.3 million cubic feet per day (or MMcf/d). If the “average” well is producing, say, 3 MMcf/d, that’s the equivalent of having 8 wells connected to the pipeline. The average daily flow in 2013 was 83,828 MMBtus, or 83.4 MMcf/d, or 28 wells hooked up and flowing. That’s a 360% year over year increase–nearly quadruple the volume!

What the average doesn’t tell you, however, is that by the end of the year, Eureka Hunter’s pipeline flowed nearly 160,000 MMBtus, or 160 MMcf/d, which is production from an average 53 wells. They predict in 2014 the daily flow rate will hit 206,500 MMBtus. Somewhere between 40-50% of the gas they flow is from Triad Hunter, another Magnum Hunter subsidiary (sister company to Eureka Hunter). Below is the press release with Eureka Hunter’s monthly flow numbers. With our explanation above, you now know how to view it!…
Read More “Eureka Hunter Boasts 360% Yearly Increase in Marcellus/Utica Flow”