Energy Services

Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Williams

ETE CEO Kelsey Warren Says Williams Merger “Can’t Close”
May 6, 2016May 6, 2016

Last year midstream giant Energy Transfer Equity and its CEO Kelsy Warren pursued Williams, for months, and finally got Williams to agree to a deal to sell itself to Warren for $38 billion (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Over the following months, the gas market tanked price-wise, and Warren got cold feet (see ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee). Then he wanted to change the deal, making it an all stock-swap deal instead of having to pony up billions in cash–because of tax implications. Along the way Warren got his board to issue a sweetheart stock deal to himself and other top managers/investors as a hedge against the deal, which enraged Williams (see Merger Turns Sour: Williams Sues ETE/CEO Kelcy Warren). On a quarterly earnings call yesterday, ETE’s top brass addressed the Williams merger controversy. CEO Kelsy Warren said point blank: “I’d like to be really direct about this. We can’t close. We don’t have a transaction that can close. So I want to be very clear: We can’t close this transaction … So, absent a substantial restructuring of this transaction — which Energy Transfer has … been very willing and … actually desiring to do — absent that, we don’t have a deal.” Apparently the deal as proposed by Warren, with a cash component, will be taxable in ways he didn’t plan–so he either wants Williams to accept a stock swap, or bail from the deal. Here’s what was said on yesterday’s phone conference…
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Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Regulation | Statewide PA | Williams

Williams’ Atlantic Sunrise Pipeline Gets Positive EIS from FERC
May 6, 2016May 6, 2016

Atlantic Sunrise Pipeline map – click for larger version

The sun continues to rise on on Williams’ Transco Atlantic Sunrise pipeline project. It seems like we’ve covered the story of Atlantic Sunrise forever–a $2.1 billion project consisting of compression and looping of the Transco Leidy Line in Pennsylvania along with a greenfield (brand new) pipeline segment of 178 miles, called the Central Penn Line, connecting the northeastern Marcellus producing region to the Transco mainline near Station 195 in southeastern Pennsylvania (see Atlantic Sunrise Will Pump $1.6B into Economy, Create 8K Jobs). There’s been some opposition from wackos and nutjobs–but for all their bluster, they are relatively few in number. In April 2015 Williams filed an official application with the Federal Energy Regulatory Commission (see It’s Official: Williams Files with FERC for Atlantic Sunrise Pipeline). A major step in the approval process is to receive a favorable environmental impact statement (EIS) from FERC. That happened yesterday. FERC says that although there are “some impacts on the environment,” those impacts “would be reduced to less-than-significant levels” with proposed mitigation by Williams. This is really terrific news–an indication that FERC will grant final approval later this year or early next year…
Read More “Williams’ Atlantic Sunrise Pipeline Gets Positive EIS from FERC”
Energy Services | Industrywide Issues | New York | Pipelines | Regulation | Statewide NY | Williams

Analyst Says Check Your History, Constitution Pipe Won’t Get Built
May 6, 2016May 6, 2016

Constitution Pipeline map – click for larger version

An analyst with a Washington, D.C. policy and research firm believes that Gov. Andrew Cuomo’s recent action in denying Williams stream crossing permits for the Constitution Pipeline means that project is dead. He cites another pipeline project from a decade ago–the Islander East project–that faced a similar situation. In the end, Islander East didn’t get built. He believes the same fate is in store for the Constitution. We sincerely hope he’s wrong and that FERC (Federal Energy Regulatory Commission) will “grow a pair” and not let Gov. Cuomo bully them. At its heart this is a battle over the trampling of federal authority. We find it curious that Obama and his sycophants throughout the government are hellbent on expanding federal authority over every aspect of our lives–from health care, to what we eat, to what forms of power we can use. And yet these same people stand by and are silent when a federal agency like FERC is emasculated by a state like NY. Of course it should be the opposite. This is one time when the federal government Constitutionally has the authority to act, and that authority has been illegally co-opted by a state. FERC needs to force the issue in court to overrule NY’s abuse of power. The analyst, however, doesn’t see it that way…
Read More “Analyst Says Check Your History, Constitution Pipe Won’t Get Built”
Accidents | Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Spectra Energy | Westmoreland County

Preliminary Guess on TETCO Pipeline Explosion Cause: Corrosion
May 5, 2016May 5, 2016

There was an explosion and fire in Spectra Energy’s Texas Eastern Transmission’s (TETCO) “Delmont Line 27” pipeline last Friday (see Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate). The explosion occurred in Salem Township in Westmoreland County, PA, about 30 miles east of Pittsburgh. Although the cause of the explosion is still not known for sure, investigators do have a working theory–corrosion along welded seams in the pipeline. Investigators from the U.S Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) still say, officially, that the cause is “unknown” and the investigation “ongoing.” However, those same investigators have said they found evidence of corrosion and they’ve ordered another section of the pipeline in the area to be dug up, removed, and sent for analysis. Here’s the latest on the situation, along with an estimate of when service might be returned on this very important pipeline…
Read More “Preliminary Guess on TETCO Pipeline Explosion Cause: Corrosion”
Belmont County | Energy Services | Ethane | Industrywide Issues | Ohio | Processing Plants | PTT Global

PTT Global Says OH Cracker Decision “Delayed” Until 2017
May 5, 2016May 5, 2016

It’s only been one year since Thailand-based PTT Global Chemical announced they are interested in building a $5 billion ethane cracker plant complex in Belmont County, OH (see It’s Official: Belmont County Chosen as POSSIBLE Cracker Plant Site). Since that time PTT has been busy, spending (by our estimates) at least $150 million on the project (see our list of PTT stories here). However, from the very beginning, PTT let it be known a final decision on whether or not to invest the whole $5 billion would not come until 2016 or 2017. We know have confirmation from PTT that the final decision will (disappointingly) come in 2017. The reason for the “delay” in the decision? Falling oil prices…
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Energy Services | Patterson-UTI

Patterson-UTI Rig Count for April Hits Another New Low
May 5, 2016May 5, 2016

As we do every month, MDN tracks how many rigs oilfield services company Patterson-UTI Energy reports operating–as a proxy for when/if the drop in rig counts for the Marcellus/Utica will turn around. Patterson operates a number of rigs in the northeast, as well as other areas of the continental United States (and Canada). Month by month Paterson’s rig count has declined over the past year plus. April was no different. Patterson reports operating an average of 56 rigs in April, versus 64 in March–a big 12.5% drop and a new low. Once again we ask, how low can it go? Below is our running Patterson-UTI rig count chart that shows the sad story…
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Columbia Pipeline Group | Energy Services | Industrywide Issues | M&A | TC Energy/TransCanada

TransCanada to Refile FTC Merger Notification in Columbia Deal
May 5, 2016May 5, 2016

In March MDN reported that Canadian midstream giant TransCanada wants a bigger piece of the Marcellus/Utica midstream (i.e. pipeline) pie and has decided to buy Columbia Pipeline Group for $10 billion (see TransCanada Makes Play to Buy Columbia Pipeline for $10B). Columbia Pipeline shareholders are due to vote on the deal in June (see Columbia Pipeline Shareholders to Vote on TransCanada Deal June 22). But what’s this? Apparently there’s been a small bump on the road to a happy union. TransCanada announced yesterday they have withdraw their pre-merger notification with the U.S. Federal Trade Commission (FTC) and will refile the notification again on May 6 (tomorrow). Why? To restart the clock for FTC regulators who are reviewing the deal. Apparently there is a 30-day period at the end of which the FTC must render an opinion. Sometimes big, complex deals like this one take longer than 30 days, so a common practice is to pull the notification and re-file to buy the FTC more time…
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Energy Companies | Energy Services | Rice Energy | Rice Midstream

Rice Energy 1Q16: Prod. Up 53%; Drilled 19 New Wells; Lost $21M
May 5, 2016May 5, 2016

Rice Energy, one of the newest and brightest drillers in the Marcellus/Utica, released their first quarter 2016 update yesterday. The company reports production averaged 675 million cubic feet equivalent per day (Mmcfe/d) during 1Q16, a 53% increase over 1Q15 (and up 8% from 4Q15). On the financial side the company lost $21 million during 1Q16, versus making $152,000 in 1Q15. Pretty mild compared to most. During 1Q16 Rice drilled 11 new Marcellus wells and 8 new Utica wells. Good to see someone is still drilling! Here’s the update, along with a great PowerPoint slide deck…
Read More “Rice Energy 1Q16: Prod. Up 53%; Drilled 19 New Wells; Lost $21M”
Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | Litigation | PennEast Pipeline

PennEast Responds to Sham NJ Lawsuit Re Surveying w/o Permission
May 4, 2016May 4, 2016

PennEast Pipeline Route Map – click image for larger version

A couple of radical anti-fossil fuel groups, aided and abetted by a few landowners (members of said groups) have filed a frivolous lawsuit on Monday in New Jersey Superior Court against PennEast Pipeline claiming surveyors have illegally trespassed on private property to conduct surveys–against the wishes of said radicals, some of whom happen to be landowners in the path of the proposed pipeline. PennEast Pipeline is a $1 billion, 118-mile pipeline project that will run from near Wilkes-Barre, PA to near Trenton, NJ. The two groups behind this latest sleazy lawsuit are Homeowners Against Land Taking – PennEast Inc. (HALT PennEast) and the New Jersey Conservation Foundation. There’s nothing like a good lawsuit to drive more donations. “Help! We’re David and we’re suing Goliath. We need YOUR money.” Pathetic. PennEast has responded that the claims of trespassing to survey are (our words) horse manure. PennEast checks carefully before entering a property to survey. The pipeline company said when they get a copy of the frivolous lawsuit they will mount a vigorous defense. The radicals just may have bitten off more than they can chew this time…
Read More “PennEast Responds to Sham NJ Lawsuit Re Surveying w/o Permission”
Baker Hughes | Energy Services | Halliburton

Halliburton CEO Talks About Failed BH Merger, Industry Turnaround
May 4, 2016May 4, 2016

David Lesar

Halliburton, the second largest oilfield services company in the world, released its first quarter 2016 update yesterday. Along with it, Halliburton CEO Dave Lesar held court with stock analysts on a ubiquitous quarterly earnings call. Among Lesar’s comments is that he thinks the oil and gas industry is right now beginning to turn more positive. Lesar believes that drilling will begin to pick up again later this year. He also had a number of comments, and questions, about the failed takeover/merger attempt with Baker Hughes (see Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated”). We found Lesar’s prepared remarks interesting and thought you would too…
Read More “Halliburton CEO Talks About Failed BH Merger, Industry Turnaround”
Energy Services | NiSource

NiSource 1Q16: The Gas & Electric Business is Quite Profitable
May 4, 2016May 4, 2016

NiSource service area

NiSource and Columbia Pipeline split up last summer (see NiSource/Columbia Pipeline Divorce is Final). Columbia retained the midstream business and is the more active of the two in the Marcellus/Utica Shale. However, NiSource with its Columbia Gas utility business is still an important user of Marcellus/Utica Shale gas–and therefore of interest to us. Yesterday NiSource issued their first quarter 2016 update. Being in the utility business ain’t a bad life. Pretty reliable income, even if it is regulated. In 1Q16 NiSource made $309.5 million before income taxes were paid, compared with $275.4 million in 1Q15 (a 12% increase). Below is the update for NiSource’s natgas and electric utility businesses…
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Columbia Pipeline Group | Energy Services | Iroquois Gas Transmission | TC Energy/TransCanada

TransCanada 1Q16: Sets its Sights on the Marcellus/Utica
May 4, 2016May 4, 2016

TransCanada Corporation is Canada’s largest midstream (i.e. pipelines and storage) company. TransCanada is the company that wanted to build out the Keystone XL oil pipeline into the United States, but the Obamadroids squashed it (it would flow nasty, icky oil through it). TransCanada is also making a major play to move into the Marcellus/Utica region by buying out/merging in Columbia Pipeline (see Rumor Comes True: TransCanada Buying Columbia Pipeline for C$13B). What’s happening with the buyout? We learn quite a bit from TransCanada’s first quarter 2016 update, released last Friday…
Read More “TransCanada 1Q16: Sets its Sights on the Marcellus/Utica”
Accidents | Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Spectra Energy | Westmoreland County

Update on Spectra Pipeline Explosion Near Pittsburgh
May 3, 2016May 3, 2016

Yesterday MDN told you about the Texas Eastern Transmission Company (TETCO) pipeline explosion last Friday in Westmoreland County, PA (see Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate). We still don’t know what caused the explosion. Spectra Energy, TETCO’s owner, is working with the Pipeline and Hazardous Materials Safety Administration (PHMSA) to investigate the incident and several pipelines in the area back to service. Spectra shut down the flows of our pipelines in close proximity to the explosion “out of an abundance of caution.” The stoppage means about 1 billion cubic feet per day of natural gas is not going to New York and New England, causing a price spike in the region. One local homeowner was seriously burned and sent to the UPMC Mercy Hospital burn unit in Pittsburgh. His condition has been upgraded from critical to serious. Below is an update with the latest we can find about the explosion and aftermath…
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CNG/LNG | Energy Services | Exporting | Industrywide Issues | Pipelines | Regulation | Spectra Energy

Critical Project for Canadian LNG Exports Gets Favorable FERC Review
May 3, 2016May 3, 2016

Click for larger version

Spectra Energy’s Atlantic Bridge project has just gotten an important “favorable” Environmental Assessment (EA) from the Federal Energy Regulatory Commission. A favorable EA is a signal that FERC will, later this year, grant a full approval for the project. And that’s really good news for Canadian LNG export plants–and equally good news for Marcellus drillers. Here’s how this news all ties together. The Atlantic Bridge project is a series of upgrades to two different pipeline systems already in existence: the Algonquin Gas Transmission (AGT) pipeline and the Maritimes & Northeast Pipeline (M&NE). The two pipelines will be connected along the coast of Massachusetts, near Boston. Thing is, right now the M&NE flow gas from north to south, from Canada to the U.S. Part of the Atlantic Bridge project is to make M&NE bidirectional, able to flow gas from south to north. The AGT will collect gas from the prolific Marcellus via a third Spectra-owned pipeline–the Texas Eastern Transmission Company (TETCO) pipeline–delivering Marcellus gas to New England. Yes, much/most of the gas will go to New England, but excess gas produced during periods of the year when not as much gas is used in New England will then be available to flow on up to Canada and to one of several new LNG export facilities either in planning or under construction. It all starts with a favorable EA…
Read More “Critical Project for Canadian LNG Exports Gets Favorable FERC Review”
Baker Hughes | Energy Services | Halliburton | Industrywide Issues | M&A

The Road Ahead for Baker Hughes – Post Halliburton Deal
May 3, 2016May 3, 2016

Yesterday MDN brought you the news that the Halliburton buyout of Baker Hughes is now officially dead (see Obama DOJ Kills Halliburton/Baker Hughes Merger, Deal “Terminated”). So what’s ahead for Baker Hughes? First up is that they will get a $3.5 billion (with a “b”) payment from Halliburton tomorrow. At least, they’re supposed to. Baker Hughes says they will use $1.5 billion of the money to buy back company stock, and the other $1 billion to pay off certain debts. The company will also “rationalize” (i.e. downsize/cut) certain segments of its business–like the onshore pressure pumping business. You have to wade through lots of euphemisms and management gobbledygook speak, but here’s the Baker Hughes “path to the future” statement they issued yesterday…
Read More “The Road Ahead for Baker Hughes – Post Halliburton Deal”
Accidents | Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Spectra Energy | Westmoreland County

Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate
May 2, 2016May 2, 2016

There was an explosion and fire in Spectra Energy’s Texas Eastern Transmission’s “Delmont Line 27” pipeline last Friday. The explosion occurred in Salem Township (Westmoreland County), PA, about 30 miles east of Pittsburgh. One man was seriously burned when his house caught on fire (his house was destroyed). Nine homes in the area of the explosion/blaze were evacuated. As of yesterday six of the nine were able to return to their homes. Texas Eastern Transmission is one of the largest natural gas pipelines in the U.S.–running from the Gulf Coast through Marcellus/Utica country to New Jersey. The really disgusting part was the way the NJ chapter of the radical Sierra Club immediately, with a few hours, used the explosion by implying this is what awaits homeowners if the PennEast Pipeline is built. FYI, the Texas Eastern pipeline was built in 1981 and the portion that exploded was last inspected in 2012. Below are pieces of news accounts and the running response from Spectra about the accident…
Read More “Texas Eastern Pipeline Explodes near Pittsburgh, Antis Celebrate”