Philly Antis Furious that ME2 Pipe Going Online by Christmas
Last week MDN picked up on news shared by top management for Energy Transfer that their long-delayed Mariner East 2 pipeline system will be up and running by the end of the year (see Energy Transfer 3Q18: Mariner East 2 Pipeline Online by Christmas). In order to get the full pipeline running, they’ve had to patch together substitute pipelines in a few areas where construction of the final pipeline is stalled due to problems like sinkholes. Antis have now picked up on the fact that ME2 will be live “by Christmas” and are furiously crying foul–that they couldn’t stop the project. They claim the “patchwork” of substitute pipelines will be dangerous and unsafe. Their complaints amount to a lot of spitting and sputtering.
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Yesterday the muckety-mucks from Energy Transfer (ET) held a conference call with Wall Street analysts to discuss the company’s third quarter 2018 update. Inevitably on such calls there’s talk about what’s coming up in addition to what happened in the previous quarter. ET is a big midstream (pipeline) company. Among their projects are the mighty Rover Pipeline, which reaches from Pennsylvania, West Virgina, and eastern Ohio all the way into Michigan, and the Mariner East 2 Pipeline, which runs from eastern Ohio all the way through Pennsylvania to the Philadelphia area. Rover flows natural gas, ME2 (and ME2X) will flow NGLs, mainly ethane and propane. According to Tom Long, ET’s Chief Financial Officer, ME2 will be up and running sometime this quarter. Since the end of this quarter is around Christmastime, we prefer to think of ME2 as a Christmas present for Marcellus/Utica drillers.
Last week MPLX (i.e. MarkWest Energy) issued its third quarter 2018 update. MarkWest, since merging into Marathon Petroleum, has become a big, major player in a number of shale plays across the country. Our interest and focus is, of course, on the Marcellus/Utica. Did this recent update yield any interesting insights? It sure did! Gathered and processed volumes in the Marcellus/Utica are up, significantly, for MarkWest. The amount of gas (and NGLs) gathered in the M-U was up a huge 35% from the same period last year (3.1 Bcf/d), and processed volumes at MarkWest plants was up 10% year over year (5.5 Bcf/d). Here’s a look behind the curtain at MarkWest/MPLX.
It would be great when you are drilling a well, or building a pipeline, that when a state government inspector swings by to check up on the project, they don’t spot any problems. Especially for big projects like pipelines that run hundreds of miles. It would be nice, but not reality. Something always happens here and there. Unforeseen. Like weather with torrential rain, resulting in runoff from a ditch you just dug. The inspector swings by the next day and notices water and dirt where it’s not supposed to be, and voila, a “notice of violation” (NOV) is issued. It happens. That’s the way the world works. For Mountain Valley Pipeline (MVP) and Atlantic Coast Pipeline (ACP), both with segments in West Virginia, NOVs have been and no doubt will continue to be issued. How many NOVs would you imagine have already been issued for each project in WV? How many is “too many” and indicates the project builders are being sloppy?
We have some exciting news to share. A company called New Fortress Energy is planning to build an LNG (liquefied natural gas) liquefaction plant in Wyalusing (Bradford County), PA. The $800 million (!) plant will supercool and liquefy locally extracted Marcellus Shale gas and ship it first by truck, eventually by rail, to “customers in the U.S. as well as abroad.” Meaning exports. How cool is that? It seems that LNG liquefaction plants no longer have to be located along a shoreline to engage in exports. Which company will provide the gas to liquefy and export? MDN has the exclusive answer, and yes, you need to be an MDN paying subscriber to find out…
From time to time we read about, and bring you news about, companies in our industry floating “notes”–what we call IOUs–a form of debt used to finance new spending or (in this case) refinance and pay off older debt. We’re not high finance experts, but it always looks to us like an elaborate shell game of robbing Peter to pay Paul. Just kick the debt can on down the road. But so many companies do it, there’s obviously some advantage. The latest, and biggest by far we’ve seen, is MPLX (MarkWest Energy). They just announced they are floating a whopping $2.25 billion of “unsecured senior notes.” MPLX will use $750 million of it to pay off older notes, and the rest to repay loans borrowed under the company’s revolving credit facility, and repay loans made to parent company Marathon Petroleum.
Miracle of miracles, two (!) Democrat FERC commissioners (Cheryl LaFleur and Dick Glick), along with one Republican commissioner (Chairman Neil Chatterjee), voted unanimously to extend the time frame by another two years for Williams to build the Constitution Pipeline. As you may recall, the Constitution was stopped cold by corrupt NY Gov. Andrew Cuomo and his lackeys at the state Dept. of Environmental Conservation (DEC). Constitution is planned to run from Susquehanna County, PA up into, and mostly situated in, New York State. Cuomo won’t be happy with this decision because it’s a very loud and clear signal that FERC believes the project *will* some day get built.
If all goes as planned, this Friday U.S. Well Services (USWS), a company that specializes in fracking shale wells using gas-fired electric (as opposed to diesel) engines, will begin to trade its stock publicly. USWS has operations in the Marcellus/Utica, as well as other plays. Does the company sound familiar? Last week we told you that Pittsburgh-based driller Huntley & Huntley has contracted with USWS to frack the wells it is drilling (see 
Last week National Fuel Gas Company (NFG), which operates drilling subsidiary Seneca Resources and pipeline subsidiary Empire Pipeline, issued its fourth quarter 2018 (everyone else’s 3Q18) update. Via Seneca Resources, NFG drills wells in northcentral and northwestern PA. Via Empire Pipeline, they build and maintain hundreds of miles of pipelines in PA and New York, where the company is headquartered. NFG operates a utility (gas and electric) company in addition to Seneca and Empire. A lot of spinning plates to watch. But they do a great job. Much of the focus of the update was on the upstream–on Seneca Resources. According to CEO Ron Tanski, in 2019 more than half of the company’s capital expenditures will go for Seneca’s drilling program. Seneca has and will continue to operate three drilling rigs, with plans to expand production by 24%.
Flashback: In May of this year, Energy Transfer CEO Thomas Long said Rover Pipeline would be fully online by June 1st (see 
MPLX, i.e. MarkWest Energy, has been slapped pretty hard by the federal Environmental Protection Agency, Pennsylvania Dept. of Environmental Protection, and several other state environmental agencies. Last Thursday the federal EPA serving as lead agency, announced a settlement with MPLX (and its various subsidiaries) to pay nearly $7 million in fines and corrective actions to cut down on air emissions at 21 of its plants in Pennsylvania, Ohio, West Virginia, Kentucky, Texas and Oklahoma. Of that total, $925,000 is a fine or “penalty” for violating clean air laws at the plants. The rest of the money will be spent on corrective actions to fix things and cut down on air emissions.
In September, MDN told you that Dominion Energy had sold two “merchant” (non-regulated) natural gas-fired electric generating plants for $1.23 billion to Starwood Energy. And at the same time, Dominion announced it was shopping its 50% ownership stake in Blue Racer Midstream (see