Seneca Resources 100% PA Utica Focused by ‘End of Fiscal Year’
While Buffalo “Marcellus” Bills owner Terry Pegula’s JKLM Energy has been “steadily increasing activity” in Potter County, PA (northcentral PA) grabbing headlines, another company, National Fuel Gas (NFG) subsidiary Seneca Resources, is also active in Potter and several neighboring northcentral PA counties (Cameron, McKean, Elk, and Lycoming). We spotted a pair of stories in a local newspaper recounting Seneca’s activity to date, and outlining plans for the future. One statement in particular stood out for us: Seneca will be “shifting to 100-percent Utica development by the end of this fiscal year.” At first blush, you might think “end of fiscal year” means by Dec. 31, 2017. However, NFG and subsidiary Seneca operate on a strange fiscal year. Fourth quarter 2017 (Oct-Dec) is NFG/Seneca’s first quarter 2018 fiscal period. Since the quote about focusing 100% on PA Utica drilling came at the end of November, we interpret the quote to mean “Seneca will be 100% focused on the PA Utica by September 2018.” At any rate, let’s not get caught up in semantics and timing. The takeaways from the pair of articles below, which appeared about a week apart at end of November/beginning of December, are: (1) Seneca is shifting to 100% Utica drilling; (2) Seneca spent 60% more on drilling in 2017 than 2016; (3) Seneca is currently running either 1 or 2 rigs, depending on which quote from which story you read; and (4) between royalty payments, impact tax payments and money spent with local PA businesses, Seneca has now spent nearly $1 billion on shale drilling–all of it in northcentral PA…
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Last week National Fuel Gas Company, headquartered in Western New York State with drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its fourth quarter (everyone else’s third quarter) 2017 update. In the accompanying analyst phone call, CEO Ronald Tanski blamed the delay of the Northern Access Pipeline project (delayed by the NY Dept. of Environmental Conservation) for lower earnings than the company would have otherwise realized. Thanks, business UNfriendly NY! You may recall in July NFG filed a lawsuit against the DEC for arbitrarily rejecting the project (see 
In August MDN introduced you to a new-to-us driller based in Akron, Ohio–Pin Oak Energy Partners (see 
An update in the ongoing case of a proposed injection well in Highland Township (Elk County), PA. In 2013 the radical leftist group Community Environmental Legal Defense Fund (CELDF) convinced ignoramuses in Highland Township to pass a so-called Community Bill of Rights. Seneca Resources, a driller with leases and an active drilling program in Elk, had planned to drill an injection well on their own property to dispose of their own flowback and produced water. The CELDF-inspired ordinance in Highland prevented it, and Seneca threatened to sue the town (see 
Yesterday we brought you the “Top 10” drillers in southwestern Pennsylvania, as ranked by the number of permits issued (see 
Last week National Fuel Gas Company, headquartered in Western New York State with drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its third quarter (everyone else’s second quarter) 2017 update. NFG produced 567 million cubic feet per day (MMcf/d) of natural gas last quarter, a 6% increase over the same quarter a year ago. NFG realized an average price of $2.94 per thousand cubic feet (Mcf), up $0.08 per Mcf from the prior year. Compare that with Antero’s hedged average of $3.41/Mcf (see today’s story about Antero 2Q17). NFG CEO Ronald Tanski had some interesting remarks with respect to the company’s stalled Northern Access Pipeline project. As you may recall, the Andrew Cuomo New York Dept. of Environmental Conservation (DEC) is blocking Northern Access, like they blocked the Constitution Pipeline and a tiny spur project for the Millennium. Because NFG’s Northern Access project is stalled, they are shifting their budget and drilling further west, to do Utica drilling in locations where there is already pipeline infrastructure. So this is yet another case of the NY screwing up Marcellus drilling PA that would otherwise be happening. Landowners in PA can thank NY Gov. Cuomo for screwing them over. Tanski also mentioned the court case for Northern Access, and that FERC (Federal Energy Regulatory Commission) may step in and overrule the NY DEC, as is now being considered in the Constitution Pipeline case (see today’s lead story). Here’s the update from NFG…
A somewhat obscure court case in Pennsylvania has potentially big implications for drillers who also own pipeline subsidiaries. In Lycoming County, PA, Seneca Resources (subsidiary of National Fuel Gas Company) drilled a series of wells on a pad called Well Pad E. Another NFG subsidiary, NFG Midstream, connected gathering lines to Well Pad E. NFG Midstream operates a compressor station to push the gas through the pipeline system. Both the well pad and the pipeline/compressor station are subject to air emissions regulations by the state Dept. of Environmental Protection (DEP). Each subsidiary on its own–the well pad, and the compressor station–don’t produce enough emissions to trip a costly upgrade in technology. However, if you combine both together into a single “source,” the two together do cross the threshold and would cost NFG big bucks in emissions technology to comply. The DEP lumped both together and told NFG to upgrade their emissions technology. Thing is, if another company owned the pipeline system, say Williams, the DEP would not have tried combining the two into a single source. So NGF appealed the DEP decision to the Environmental Hearing Board (EHB), a quasi-court set up to hear appeals of DEP decisions. The EHB found in favor of the DEP, so NFG appealed it again, this time to PA Commonwealth Court. Last week the court overturned the DEP decision and said just because two subsidiaries have the same parent, you can’t just lump them together as a single source for air emissions regulations… 
National Fuel Gas Company (NFG), headquartered in Western New York State, is making noises (threats) that Gov. Andrew Cuomo should be very concerned about. NFG covers the full span of the oil and gas business–from upstream (with its wholly-owned drilling subsidiary Seneca Resources), to the midstream (with wholly-owned subsidiary Empire Pipeline) to downstream (NFG’s natural gas utility service to 740,000 customers in NY and PA). It’s a big company that generates a lot of jobs and revenue for New York State. Yet NY is metaphorically crapping all over NFG–and the company is signaling its willingness to retaliate by leaving. No, not move the company HQ, or sell off its gigantic utility business. Nothing of that sort (yet, anyway). But NFG CEO Ronald Tanski said on an earnings call last Friday that NFG is “getting lousy regulatory treatment in New York State” and that “Given this type of regulatory treatment in the state, we have to take a serious look at our ability to achieve any reasonable growth in New York.” Translation: We’ll stop launching new projects that invest billions in the Empire State, and instead invest that money and the jobs it creates in PA and other states. The “lousy treatment” NFG is getting is related to NY’s corrupt Dept. of Environmental Conservation decision to deny it permits to build the Northern Access Pipeline (see 
The Pennsylvania Dept. of Environmental Protection has just fined driller Seneca Resources $325,000 for a series of violations that occurred between 2013 and 2015. It seems in moving dirt around when building drill pads, Seneca caused erosion to occur. They also spilled ~100 barrels of crude oil in one location, and ~500 barrels of wastewater at another location. The violations happened in Forest, McKean, and Elk Counties. Here’s the notice issued by the PA DEP…
Good news for Pennsylvania drillers: the PA Dept. of Environmental Protection (DEP) finally, after years of review, granted permission to two different companies to operate two new wastewater injection wells in the Keystone State. One well is located in Elk County, the other in Indiana County. With these two new injection wells coming online, the state will have a total of eight operating injection wells (vs. hundreds in Ohio). You may have seen news about the newly authorized injection wells from other news sources yesterday. But you read MDN for “the rest of the story.” And here it is, something you won’t find anywhere else (until other news sources read MDN): As soon as the DEP issued the permits for the injection wells, the DEP filed lawsuits against the two townships where the injection wells will be located, because both of those townships–Highland Township in Elk County, and Grant Township in Indiana County–had previously passed so-called Home Rule Charters in an attempt to prevent the injection wells from being located in their towns. The DEP has sued each of them (copy of the Highland lawsuit below) to correct laws that attempt to prevent the DEP from doing its job in authorizing the injection wells. We have the full news of the DEP’s decision to permit the injection wells, along with details about the lawsuits, below…
National Fuel Gas Company (NFG), the Buffalo-based utility giant with both a drilling subsidiary (Seneca Resources) and a midstream/pipeline subsidiary (Empire Pipeline) filed an application with the Federal Energy Regulatory Commission (FERC) in March 2015 for a pipeline project they call Northern Access 2016 (later renamed to simply Northern Access Project, dropping the “2016” part). The $455 million project includes building 97 miles of new pipeline along a power line corridor from northwestern Pennsylvania up to Erie County, NY. The project also calls for 3 miles of new pipeline further up, in Niagara County, along with a new compressor station in the Town of Pendleton (see 