NFG/Seneca Resources 1Q16: Big Paper Loss, Still Operating 1 Rig
National Fuel Gas Company (NFG), the utility giant headquartered in Buffalo, NY and parent of Marcellus driller Seneca Resources, issued what they call their second quarter 2016 update yesterday. NFG’s second quarter is everyone else’s first quarter–it covers January through March. Seneca was negatively impacted by low prices for the natural gas it drills for. NFG’s “upstream” unit (Seneca) lost $213 million in 1Q16, even though its hedging program got the company an average of $2.99 per thousand cubic feet (Mcf) for their gas–about $1.12/Mcf above the going Nymex rate. The loss was all a paper loss–not out of pocket money–due to a writedown of assets. If you take out the writedown, Seneca actually made $17 million in profit for the quarter. NFG’s other units fared better on paper. The midstream unit (pipelines and storage) made $21.2 million in profit for 1Q16; NFG’s utility division made $32 million for the quarter; and their energy marketing unit made $3.5 million. Seneca’s production was up nearly 10% from a year ago. They continue to operate a single rig in the Marcellus/Utica region. Here’s the NFG/Seneca update…
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Last Friday MDN brought you the news about a professor who devised a clever formula for evaluating the overall environmental impact of 20 Marcellus drillers (see 
Yesterday National Fuel Gas Company, the utility giant headquartered in Buffalo, NY and parent of Marcellus driller Seneca Resources, announced that Seneca has partnered up with energy investor IOG Capital to essentially fund Seneca’s Marcellus drilling program in Elk, McKean and Cameron counties in north-central Pennsylvania. The outlines of the deal are thus: IOG will provide the cash and Seneca will do the drilling on up to 80 Marcellus wells on 10,500 acres in the Clermont/Rich Valley area of PA. IOG will get an 80% working interest in the wells. In addition to drilling the wells, National Fuel’s midstream subsidiary will connect the wells and get the gas to market. What this deal means is that Marcellus drilling activity in the Clermont/Rich Valley area will pick up over the few years. Here’s the details of this somewhat complicated deal…
Finally! Some new takeaway capacity for Seneca Resources is about to become reality when they begin shipping Marcellus Shale gas from western Pennsylvania through Kinder Morgan’s Tennessee Gas Pipeline (TGP) Niagara Expansion into western New York State where it will connect to the TransCanada Pipeline (in Niagara County, NY) and from there send the gas into Canada. In 2013 MDN brought you the good news that TGP would expand service on the pipeline northward (see 
National Fuel Gas (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 for a pipeline project they call Northern Access 2016. The $451 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. We have a full description below for all of the new construction, modifications and add-ons that are part of the Access Northeast 2016 project. The pipeline, when complete, will flow Marcellus Shale natural gas from Pennsylvania northward to New York and on into Canada. Although NFG has bent backwards, forwards and has contorted itself into just about every yoga position there is to accommodate residents around Pendleton, nearby residents are still opposed to NFG building a new compressor station anywhere near them…
A pipeline upgrade project in western Pennsylvania is making excellent progress. In February 2014 National Fuel Gas Company (NFG) filed an application with the Federal Energy Regulatory Commission (FERC) for the Line N West Side Expansion and Modernization Project in Washington, Allegheny, Beaver, Venango and Mercer Counties, PA. The project calls for building some 23 miles of new pipeline next to an existing NFG pipeline in Washington and Beaver counties, along with compressor station and other upgrades along other portions of the existing Line N pipeline. NFG previously signed Range Resources and NFG’s own subsidiary, Seneca Resources, as customers for an increase in capacity to flow an additional 175,000 decatherms per day, Dth/d (175 million cubic feet per day, MMcf/d). The extra capacity allows Range and Seneca to move of the Marcellus Shale gas they produce in western PA to market. Although construction is still underway, NFG has asked FERC to begin partial service now, two months ahead of schedule…