Energy Services

Energy Services | Industrywide Issues | Michigan | NEXUS Pipeline | Regulation | Statewide MI

DTE Energy Wants Ratepayers to Pay if NEXUS Pipe is Unprofitable
June 15, 2016June 15, 2016

NEXUS Pipeline Project – click for larger version

DTE Energy is a Detroit-based energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include an electric utility serving 2.2 million customers in Southeastern Michigan, and a natural gas utility serving 1.2 million customers in Michigan. DTE’s businesses include power and industrial projects, natural gas pipelines, gathering and storage, and energy marketing and trading. DTE has its fingers in a lot of energy pies. DTE is one of the main customers for the 255-mile, $2 billion NEXUS interstate pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada (see Spectra Energy Files Formal FERC Application for NEXUS Pipeline). DTE is also one of the backers/partners in NEXUS–providing money for the project. Spectra Energy will be the managing partner that actually builds and maintains NEXUS. DTE has asked Michigan regulators for a guarantee that it can pass along NEXUS costs to gas and electric ratepayers IF the utility’s gas supply costs from NEXUS prove to be unprofitable. That doesn’t sit well with many people, including Michigan’s Attorney General…
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Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | Lancaster County | Lebanon County | Pennsylvania | Pipelines | Regulation | Williams

Lancaster Antis Try to Bully Pipeline Supporters, FERC Reps
June 14, 2016June 14, 2016

MDN has attended several Federal Energy Regulatory Commission (FERC) “scoping hearings” in the past (see Vicariously Attend FERC Scoping Hearing on Constitution Pipeline). So we’ve seen first-hand the kind of antics that virulent anti-fossil fuelers engage in at such hearings. Which has led us to comment these hearings are often freak shows–a forum for these people to vent and verbally vomit all over FERC representatives. Such was the case last night in Lancaster, PA at a public hearing held by FERC for the much needed, largely noncontroversial Atlantic Sunrise Pipeline, to be built by Williams. A group of 250-350 (depending on the media source) showed up to listen, with some speaking, at last night’s hearing. Not all in the audience were antis–but many were. People who support the pipeline have better things to do with their time than listen to nutters bleat and blat and carry on. Let’s put the numbers in perspective. Lancaster and Lebanon counties have a combined total population of 653,000 residents. Of that, 350 showed up for the hearing. If all 350 were against the pipeline (which wasn’t the case, but bear with us), that would be .05% of the population–statistically zero. And yet this very small group with very big mouths get all of the media coverage from the event…
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Axiall | Energy Services | Ethane | Industrywide Issues | M&A | Marshall County | Processing Plants | West Virginia

Westlake Chemical Buys Axiall, Enters NE Cracker Market
June 14, 2016June 14, 2016

In December MDN told you that Axiall Corporation, a large petrochemical manufacturer, had made a final investment decision to move ahead and build a $3 billion ethane cracker/petrochemical facility in Louisiana (see Final Decision: Axiall Building Ethane Cracker in LA…NE Ethane?). Based on comments and various news accounts, we shared with you the opinion that its almost certain the plant will be supplied by shale gas from the Marcellus/Utica region (see Axiall Announces New Cracker Plant for LA, Fed by NE Ethane). Axiall owns, among other things, a large petchem plant in Marshall County, WV, the former PPG chemical plant along W.Va. 2 which Axiall bought just three years ago. Last Friday Westlake Chemical, another large petchem manufacturer, announced they are buying Axiall lock, stock and barrel–for $3.8 billion. Among the comments Westlake made is that it “looks forward” to working on the ethane cracker plant in Louisiana. Welcome to the Marcellus, Westlake!…
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Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Williams

Will ETE Use FTC’s “Condition” to Scuttle Proposed Williams Merger?
June 13, 2016June 13, 2016

Gulfstream Natural Gas System map

As MDN reported on Friday, the Federal Trade Commission has granted conditional approval of the Energy Transfer Equity (ETE)/Williams merger deal. The one condition FTC made is that Williams must sell its 50% ownership in Gulfstream Natural Gas System LLC, located in Florida (see As the (Midstream) World Turns: FTC Approves ETE/Williams Merger). ETE has been looking for a way to back out of the deal without losing its shirt in the process. So the question becomes, Will ETE use the FTC condition to scuttle the deal? Or at a minimum, use it to drive Williams back to the table to renegotiate the deal?…
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Braskem | Energy Services | Ethane | Industrywide Issues | Odebrecht | Processing Plants | West Virginia | Wood County

A Pulse! WV Ethane Cracker Project Comes Back from the Dead
June 10, 2016June 10, 2016

What’s this? The all-but-dead ethane cracker project planned for West Virginia has new life! (Perhaps the Shell announcement has something to do with it?) Brazilian company Odebrecht has pulled out of the Appalachian Shale Cracker Enterprise (ASCENT) project previously announced for the Parkersburg, WV area (see Odebrecht Pushes the Pause Button on WV Ethane Cracker). However, Odebrect subsidiary Braskem has confirmed they will now move forward with developing the project on their own. If this bears out, it is fantastic news for a state that (in our opinion) deserves a cracker. But before you get overly excited, Braskem’s announcement that they are now the lead on the project is still not a confirmation they will build it. Braskem is still in the evaluation stage…
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Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | Lease & Royalty Payments | NEXUS Pipeline | Ohio | Pipelines | Spectra Energy | Statewide OH

CORNballs Claim Most OH Landowners Won’t Sign NEXUS Pipeline Lease
June 10, 2016June 10, 2016

The NEXUS Pipeline is a $2 billion, 255-mile interstate pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada (see Spectra Energy Files Formal FERC Application for NEXUS Pipeline). It is a critically needed pipeline to move Utica and Marcellus Shale gas from an over-saturated market in the northeast to markets in the Midwest and Canada. A group of anti-fossil fuelers calling themselves the Coalition to Reroute Nexus, or CORN, is trying to stop the project (not reroute it). We affectionately call the nutters, “CORNballs” here at MDN. Earlier this year the CORNballs tried to incite trouble by telling landowners to call the police if NEXUS surveyors showed up on their doorstep to ask permission to survey (see CORNballs Tell OH Landowners to Call Police & AG to Stop Pipeline). The CORNballs are back, claiming that the vast majority of landowners along the proposed route for NEXUS have not, and will not, sign an easement to allow the pipeline…
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Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Regulation | Williams

As the (Midstream) World Turns: FTC Approves ETE/Williams Merger
June 10, 2016June 10, 2016

In our ongoing soap opera of whether or not Energy Transfer Equity and Williams will tie the knot, another new development to report. Yesterday the Federal Trade Commission (FTC) gave the deal its stamp of approval–providing Williams sells its 50% ownership in Gulfstream Natural Gas System LLC (located in Florida). Yesterday both Williams and ETE issued the same, nearly word-for-word identical statements, indicating some level of communication between the two still exists…
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Accidents | Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Spectra Energy | Westmoreland County

TETCO PA Pipeline Explosion Still Limiting NatGas Flow Month Later
June 9, 2016June 9, 2016

An update on Spectra Energy’s Texas Eastern Transmission’s “Delmont Line 27” which exploded in Westmoreland County, PA on April 29 (see Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate). We previously told you that not only was Line 27 out of commission, so too were three other pipelines running through the same corridor, meaning 1 billion cubic feet of natural gas per day is not reaching certain mid-Atlantic markets (see Update on Spectra Pipeline Explosion Near Pittsburgh). The early evidence points to corrosion along welded seams, although the jury is still out and the exact cause may not be known for months (see Preliminary Guess on TETCO Pipeline Explosion Cause: Corrosion). One of the four lines that was offline (Line 19) was examined and certified by the Pipeline and Hazardous Materials Safety Administration (PHMSA) in early May to go back online (see TETCO Pipeline Up & Running Post-Explosion; Antis Exploit Accident). But since that time the other three lines have remained idle. When will the other three lines go back into service? And, did the Line 27 explosion cause any lasting airborne hazards?…
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Energy Services | Energy Transfer Partners | Industrywide Issues | Marathon Petroleum | NEXUS Pipeline | Ohio | Pipelines | Spectra Energy | Statewide OH

Updates on 3 Major OH Pipelines at Utica Midstream Seminar
June 9, 2016June 9, 2016

Some 160 people showed up for the Utica Midstream Seminar held yesterday at the National Football Hall of Fame in Canton, OH. The event, sponsored by the Canton Regional Chamber of Commerce and ShaleDirectories.com, provided updates on three major pipeline projects either under construction or soon to be under construction in the Buckeye State: Marathon Petroleum’s Cornerstone Pipeline, Spectra Energy’s NEXUS pipeline project, and Energy Transfer’s Rover pipeline project. Here’s what reps from each organization had to say about their respective projects…
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Energy Services | Rice Midstream

Rice Midstream Floats Another Public Offering – Feed the Beast!
June 9, 2016June 9, 2016

On Tuesday Rice Midstream, the pipeline subsidiary of Rice Energy (operating in the Marcellus/Utica region) announced they will offer new “units” (think shares of stock) in the company. Rice said they will float an initial 8 million units, with an option of selling an additional 1.2 million units. The company hopes to get $18.50 per unit, meaning they are looking to raise $148 – $170 million by selling off more of the company. Rice first spun the midstream division into its own company (on paper) in December 2014. They got $16.50 per unit at the time, a total of $441.6 million (see Rice Midstream IPO Falls Short of Goal by Approx. $134M). Since that time Rice has continued to sell off pieces of ownership in the midstream division. Last December Rice received a $500 million investment in the midstream company in return for an ownership stake from an unnamed investor (see Rice Energy Sells Part Ownership in Rice Midstream for $500M). In February, Rice sold an 8.5% stake in the midstream company to EIG for $375 million (see Rice Sells 8.5% Ownership of Rice Midstream to EIG for $375M). And now they’re looking for another $150 million or so. Are you getting the idea (like us) that Rice Midstream has some pretty big plans ahead? Plans that require a LOT of money…
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Crestwood Midstream | Energy Services | Industrywide Issues | Pipelines

Con Ed & Crestwood Seal the Deal on Marcellus Pipeline/Storage JV
June 9, 2016June 9, 2016

In April MDN brought you the news that New York City’s largest utility company–Consolidated Edison Inc.–had formed a 50/50 joint venture to purchase ownership of pipelines and storage facilities from Crestwood Equity Partners in the PA and NY Marcellus region (see Utility Giant ConEdison Buys a Piece of the Marcellus Midstream). The newly formed jv, called Stagecoach Gas Services, will be operated by Crestwood and includes four natural gas storage facilities (Stagecoach, Thomas Corners, Steuben and Seneca Lake) with a combined storage capacity of approximately 41 billion cubic feet; and three natural gas pipelines (MARC I, North/South and the East Pipeline) with a combined throughput capacity of 2.96 billion cubic feet per day. The deal closed earlier this week. Con Ed ponied up $945 million, and together with the pipelines and facilities “donated” by Crestwood to the jv, the new Stagecoach Gas Services company is worth an estimated $2 billion…
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Baker Hughes | Energy Services | Halliburton | Industrywide Issues | M&A

Moodys Downgrades Halliburton/Baker Hughes Debt Post-Failed-Merger
June 9, 2016June 9, 2016

Ever hear the phrase, “Better to try and fail than never to try at all.” That’s actually the name of a poem from William O’Brien (dead poet, read his famous poem here). Contrary to the wisdom of O’Brien’s poem, in some cases it may be better to never have tried in the first place. At least that’s what Halliburton and Baker Hughes may be thinking about their failed attempt to merge (see Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated”). Halliburton ended up having to pay Baker Hughes a $3.5 billion break-up fee (see The Road Ahead for Baker Hughes – Post Halliburton Deal). Ouch. But that’s not all. Last week Moody’s Investors Service downgraded the debt for both Halliburton and Baker Hughes–from A2 to Baa1. Why? In part because of the failed merger deal. That’s what Moody’s says. What does the credit downgrade mean? It means their outstanding debt is harder to buy and sell, affecting $12.8 billion of debt for Halliburton and $3.9 billion of debt for Baker Hughes. It also means should either company want to borrow more money, the cost will be higher to do so…
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Energy Services | Seventy Seven Energy

Seventy Seven Energy Officially Files for Prepackaged Bankruptcy
June 8, 2016June 8, 2016

In May MDN told you that Seventy Seven Energy (SSE), the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago, was planning to screw shareholders by devaluing their shares to worthless status and converting the company’s considerable outstanding debts into new shares of ownership (see Seventy Seven Energy Makes Progress in “Pre-Packaged” Bankruptcy). It’s called a “pre-packaged” bankruptcy–where a company cuts a deal with note holders (those who hold IOUs) to convert the debt into equity. Magnum Hunter Resources did it to their shareholders (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). A number of other companies with operations in the Marcellus/Utica are also trying it, including Warren Resources, Halcon Resources, Penn Virginia and Ultra Petroleum. A couple of others are on the cusp of doing it: Stone Energy and EXCO Resources. SSE announced yesterday they have all of their ducks in a row with debt holders and they have officially filed for their “pre-packaged” bankruptcy…
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Baker Hughes | Energy Services | Industrywide Issues | Research

May 2016 Rig Counts Continue to Slide in US, Marcellus/Utica
June 8, 2016June 8, 2016

Baker Hughes released their monthly rig count, for May, yesterday. While the worldwide rig count went up by 9, it continued to crash here at home in the U.S. May’s rig count in the U.S. was down another 7% (in one month), from April’s count. Sadly the trend was the same in the northeast. While PA’s count averaged the same month over month–16 active rigs–both OH and WV slid, with 10 rigs operating in each state. Overall the Marcellus/Utica rig count was down by 3 in the past month…
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Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Williams

Tulsa Mayor, 3 Former Williams CEOs Blast ETE Merger Deal
June 8, 2016June 8, 2016

Last week three former CEOs of the Williams Companies sent a letter to Williams shareholders outlining their reasons for voting against the proposed merger with Energy Transfer Equity (copy of the letter embedded below). The CEOs urge all shareholders to “strongly consider” voting against the deal. The CEOs say the deal would give Williams shareholders a permanent second class status. The mayor of Tulsa, Oklahoma–where Williams is headquartered–is also voicing his opposition to the proposed merger. Mayor Dewey Bartlett Jr. said in his own letter that the merger has no “economic merit” and would be “tragic” for both the city shareholders. MDN told you yesterday we’re dubious the deal will actually happen, based on all of the legal posturing we see (see ETE & Williams Engage in More Posturing Before June 24 Deadline). Will the letter from the CEOs and Tulsa mayor have any effect on the deal?…
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Electrical Generation | Energy Services | Industrywide Issues | Pennsylvania | Statewide PA | Talen Energy

Talen Energy Converting Moutour, PA Plant to Burn Coal AND NatGas
June 8, 2016June 8, 2016

It was just two days ago MDN told you about a Pennsylvania-based electric power generating company–Talen Energy–getting bought out by an investment company (see Investment Firm Buying Talen Energy – PA Electric Generating Co). We have more Talen news. The company just announced that one of its coal-burning electric generating plants, located in Montour County, PA, will get an upgrade to burn natural gas in addition to burning coal. The Montour Power Plant went online in 1972/73 and generates 1,504 megawatts of electricity. The $70 million upgrade planned by Talen (requiring a 15-mile pipeline) will continue to produce the same amount of electricity, but will give the plant the option to power it with either natgas or coal, depending on which is cheaper. More yummy, clean-burning Marcellus Shale gas on the way!…
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