Energy Services

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

ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee
February 26, 2016February 26, 2016

It was a long courting period before Energy Transfer Equity finally cajoled, harangued, and eventually forced the board of Williams to agree to a merger/takeover. ETE’s billionaire CEO Kelsy Warren revealed he had been propositioning Williams for over six months–offering Williams $64 per share to buy the company, totaling $48 billion (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). Williams resisted, but eventually they caved and agreed to the deal–although the deal price went down $10 billion by the time they accepted (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Like a lover who finally had his way and then finds out it wasn’t “all that”, it seems Warren is having second thoughts. The New York Times is reporting that the deal “has become a nightmare” and Warren wants out and is offering to pay Williams a $2 billion break-up fee…
Read More “ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee”
Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Statewide PA | Sunoco Logistics

Sunoco LP Delays Construction of Mariner East 2 Pipeline
February 26, 2016February 26, 2016

On a quarterly analyst phone call yesterday, Sunoco Logistics Partners CEO Mike Hennigan admitted applying for and receiving “hundreds of permits” has delayed construction of the Mariner East 2 pipeline. There is no worry that the project won’t happen–it will. It’s just that the timetable for when construction begins (and ends) has changed from a year ago when they first announced the project. In prepared remarks, and then later under questioning from several analysts, we have discovered that Sunoco LP will not make a definitive go/no go decision on whether to build a second pipeline as part of the Mariner East 2 project, until the backhoes begin to dig for the original Mariner East 2 pipeline. When will that be? Hennigan was hard to pin down. One analyst made a reference to ME2 being ready in either first or second quarter 2017–but Hennigan would not verify that timeline. Below are select portions of the phone call transcript where Hennigan and others are talking about Mariner East 1, 2, 2X and the Marcus Hook refinery…
Read More “Sunoco LP Delays Construction of Mariner East 2 Pipeline”
Chesapeake Energy | Energy Companies | Energy Services | Southwestern Energy | Williams

Southwestern, Chesapeake Negotiate Lower Midstream Rates from Williams
February 26, 2016February 26, 2016

Used to be when a driller signed a contract with a midstream company to gather, process and transport the company’s gas (or oil) to market, the driller was locked in for a minimum of 15-20 years. The rates NEVER change. Midstream companies will build expensive pipeline systems and all of the associated infrastructure only if they’re guaranteed a certain return. Which is why investors love midstream companies–it’s like investing in an annuity, a guaranteed rate of return for 15-20 years to come. And then the bottom fell out of the market. As we wrote about Wednesday, some bankrupt drillers are seeking court action to dissolve those contracts (see Shock: Judge May Allow Drillers to Cancel Gathering Pipeline Deals). We have another new development to tell you about: drillers not in bankruptcy are renegotiating once sacrosanct, set-in-stone contracts, to reduce the amount they pay midstreamers. Southwestern Energy and Chesapeake Energy have both recently negotiated lower rates with Williams. The beginning of a trend?…
Read More “Southwestern, Chesapeake Negotiate Lower Midstream Rates from Williams”
Energy Services | GreenHunter Resources | Industrywide Issues | Regulation | Wastewater

Coast Guard Caves to Political Pressure, No Wastewater Barging
February 25, 2016February 25, 2016

What a major shame and disappointment. The Obama bullies have gotten to the U.S. Coast Guard (USCG) and convinced the once-proud protector of our waterways to withdraw a proposed policy they previously floated in 2013 to allow frack wastewater to be shipped on barges down rivers, like the Ohio. The USCG has officially withdrawn their previously published draft policy–a policy that never went into effect–and says drillers and barge operators can still potentially barge wastewater–but it will be on a case by case basis (they’ve yet to approve a single case). Lots of red tape and hoops to jump through, making it virtually impossible to get a shipment approved. It was one year ago this month that a controversy erupted when GreenHunter Resources said an existing USCG regulation from 1987 already grants them the right to barge produced water–i.e. brine, or the water that comes out of the hole long after frack wastewater or flowback is done coming out. The USCG disagreed (see GreenHunter/Coast Guard War of Words — MDN Explains It). GreenHunter kept up the pressure and said they would begin brine shipments without authorization from the USCG (see GreenHunter to Coast Guard, We’re Barging While You Fiddle Around). It is unclear to MDN whether or not that ever happened–we don’t believe GreenHunter ever did send a brine shipment via barge. What happens now? Can GreenHunter and others potentially barge brine “case by case”?…
Read More “Coast Guard Caves to Political Pressure, No Wastewater Barging”
Energy Companies | Energy Services | Ethane | Exporting | Industrywide Issues | Pipelines | Range Resources Corp | Sunoco Logistics

Marcellus Ethane Export Sets Sail “Within a Week” from Philly
February 25, 2016February 25, 2016

We’ve been predicting for some time, but the day is almost here when the first export shipment of Marcellus and Utica ethane will leave the Marcus Hook terminal in Philadelphia and head to Norway. Genscape, which monitors pipelines and trucks and ships and uses really cool technology to alert them of when these things are about to happen says the first ethane export from Philly will happen “within a week”…
Read More “Marcellus Ethane Export Sets Sail “Within a Week” from Philly”
Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | PennEast Pipeline | Pennsylvania | Pipelines | Statewide PA

THE Delaware Riverkeeper Hosts Class to Stop PennEast Pipeline
February 24, 2016February 24, 2016

THE Delaware Riverkeeper, Maya van Rossum, has staked much of her credibility on stopping the PennEast Pipeline. The PennEast, as you may recall, is a $1.2 billion, 114-mile, 36-inch diameter pipeline that will deliver approximately 1 billion cubic feet of natural gas per day from the Marcellus gas fields of northeastern PA to locations in southeastern PA and across the border to Trenton, NJ (see PennEast Pipeline Files Official Application with FERC, Antis Mad). It’s a pipeline, buried in the ground and after a few years no one even knows where it’s buried without calling 811. And yet van Rossum and her ilk vehemently (we’d say irrationally) oppose it for one reason: it flows a fossil fuel through it. And so she’s staked her own credibility, and the credibility of the organization she leads (with Big Green money backing it) by stopping the PennEast. One way she’s trying to slow it down is by registering children as “intervenors” with the Federal Energy Regulatory Commission (FERC), the organization charged with reviewing and approving the project (see Delaware Riverkeeper Scams FERC in Review of PennEast Pipeline). Her latest angle of attack? Conduct a 6-hour “workshop” to train people as “volunteer monitors” to “document natural features that would be in jeopardy” from the pipeline–whatever that means…
Read More “THE Delaware Riverkeeper Hosts Class to Stop PennEast Pipeline”
Crestwood Midstream | Energy Services

Crestwood 2015: $2.3B Paper Loss, Marcellus Pipeline Volumes Up
February 24, 2016February 24, 2016

Houston, TX-based Crestwood Midstream, which these days calls itself Crestwood Equity Partners, operates midstream businesses in multiple shale resource plays across the United States, including the Marcellus. Crestwood is engaged in gathering, processing, treating, compression, storage and transportation of natural gas, among many other activities. Crestwood owns the facility along the shore of Seneca Lake in New York where they want to convert a depleted underground salt cavern into a propane storage facility–something that protesters frequently get arrested for opposing (see Criminals Arrested Blocking Crestwood Seneca Lake Facility). Yesterday Crestwood issued their fourth quarter and full year 2015 update. The distressing news is that Crestwood lost $2.3 billion for the year. But let’s put that in context. Almost all of it was a paper loss. Of the $2.3 billion lost, $821 million was for depreciation of assets, and $1.4 billion was “goodwill impairment”–meaning the overall perception of the company’s value took a hit. In 2014 Crestwood lost just $10 million. We suspect the true money-out-of-pocket loss for Crestwood in 2015 was closer to $100 million, not nearly as bad as it seems at first. Below is a portion of the update, including a couple of Marcellus pipeline updates from the company…
Read More “Crestwood 2015: $2.3B Paper Loss, Marcellus Pipeline Volumes Up”
Energy Services | Industrywide Issues | Pipelines | Spectra Energy | Tennessee Gas Pipeline | Transco

Marcellus/Utica Gas May Head to GA & FL via Alabama Pipeline
February 23, 2016February 23, 2016

Marcellus and Utica Shale gas will get access to an important new market, but not until 2019. Northeast gas will be able to service the very populous southeastern states of Georgia and Florida in about three years’ time with the construction of two new pipelines. The first pipeline is called the Sabal Trail, a 516-mile pipeline from Alabama through Georgia and then through much of Florida. Sabal Trail is a Spectra Energy, NextEra Energy and Duke Energy joint venture with Spectra taking the lead. Two weeks ago, after a 2 1/2 year-long process, the Federal Energy Regulatory Commission (FERC) approved the Sabal Trail project. But how would northeast gas get to Alabama? Good question! That’s where a shorter intrastate (Alabama only) pipeline project comes into play. Yesterday American Midstream Partners announced an “open season” to elicit shippers to sign up for capacity on a 45-mile extension of the Magnolia Intrastate pipeline. If built, the Magnolia expansion would connect Kinder Morgan’s Tennessee Natural Gas Pipeline’s 500 Line, which brings gas from north to southwest, with Williams’ Transco pipeline. Transco has a number of branches in the south, including a connection to the Sabal Trail when it gets built (see the map below). The Magnolia expansion, if built, will not be in service until 2019…
Read More “Marcellus/Utica Gas May Head to GA & FL via Alabama Pipeline”
Energy Companies | Energy Services | Rice Energy | Rice Midstream

Rice Sells 8.5% Ownership of Rice Midstream to EIG for $375M
February 23, 2016February 23, 2016

Rice Energy has sold an 8.5% ownership stake in Rice Midstream to EIG Global Energy Partners for $375 million. Rice plans to use the money to help fund its 2016 pipeline expansion program in the Marcellus/Utica. EIG is also on the hook for another $125 million investment in the next 18 months if Rice chooses to exercise it. Here’s the details for how Rice Midstream is dealing with the downturn in the market…
Read More “Rice Sells 8.5% Ownership of Rice Midstream to EIG for $375M”
Accidents | Energy Services | Industrywide Issues | MarkWest Energy | West Virginia | Wetzel County

MarkWest’s Mobley Processing Plant Spills Hazardous Oil into Creek
February 22, 2016February 22, 2016

There’s been an accidental release of a hazardous chemical at the MarkWest Energy cryogenic processing plant in Mobley (Wetzel County), WV. The spill was discovered Saturday morning by MarkWest workers. MarkWest’s Mobley plant separates natural gas from natural gas liquids (NGLs). The NGLs are sent on for further separation into their component parts at a fractionation facility. The fluid in question is DOWTHERM™ MX Heat Transfer Fluid, a chemical used as as a heat transfer fluid meant for closed-loop systems. An estimated 3,000 gallons of the fluid spilled, some of it reaching the North Fork of Fishing Creek and some of that entered the water intake for the community of Pine Grove, WV. The fluid was contained at the water plant and did not get into the public’s water supply–but just to be absolutely safe, some 360 households connected to the public water supply were cautioned to not drink or bathe in the water until further notice. MarkWest is providing bottled water to residents. Here’s what’s known so far…
Read More “MarkWest’s Mobley Processing Plant Spills Hazardous Oil into Creek”
Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | Litigation | Pennsylvania | Pipelines | Regulation | Susquehanna County | Williams

Judge Tells NEPA Family to Let Williams Cut Maple Trees, Or Else
February 22, 2016February 22, 2016

Starting this week the sugar maples along the path of the Constitution Pipeline will come down. MDN previously told you about the Holleran family in New Milford, PA who make maple syrup by tapping the trees on their five acres of land (see Maple Syrup Farm in Path of PA Pipeline, Antis Make Most of It). While it’s unfortunate that Williams, the builder of the pipeline, could not find an alternate route (they did try), and unfortunate that media reports say up to 80% of their maple trees (~200) will need to be cut, we’re not sympathetic. The Hollerans have steadfastly refused any kind of offer from Williams to compensate them, instead aligning themselves with some of the most radical of radical anti-drillers in a publicity quest to pressure Williams to stop. It didn’t work and now a federal judge is telling the family if they prevent the trees from coming down, starting today, they’re going to the clink…
Read More “Judge Tells NEPA Family to Let Williams Cut Maple Trees, Or Else”
Energy Services | Energy Transfer Partners | Industrywide Issues | Ohio | Pennsylvania | Pipelines | Regulation | Statewide OH | Statewide PA | Statewide WV | West Virginia

FERC Says Rover Pipeline as Planned Negatively Impacts Environment
February 22, 2016February 22, 2016

In December 2014 Energy Transfer Partners filed their draft Resource Reports of environmental survey data with the Federal Energy Regulatory Commission (FERC) for the ET Rover pipeline (see ET Rover Pipeline’s 800-Mile Journey Begins with FERC Filing). Rover is an 800-mile, $4.4 billion pipeline that will connect Pennsylvania, West Virginia and Ohio, crossing pretty much the entire state of Ohio heading northwest before entering Michigan and eventually taking a dog-leg into Ontario. In February of 2015, exactly a year ago, ET filed a full application with FERC. Last week FERC responded with a Draft Environmental Impact Statement (DEIS)–and the news was not so good for Rover. FERC found “adverse and significant” impacts from the project as planned and delivered to ET nearly 25 pages of recommendations that ET will need to fix before they get an approval. Is this a fatal blow to Rover? Or just a speed bump? Time will tell…
Read More “FERC Says Rover Pipeline as Planned Negatively Impacts Environment”
Industrywide Issues | Jobs | Lewis County | U.S. Well Services | West Virginia

US Well Services Lays Off Nearly 50 in Jane Lew, WV
February 19, 2016February 19, 2016

U.S. Well Services, headquartered in Houston, TX but with a sizable office in Jane Lew, WV, is an oilfield services company providing hydraulic fracturing services in unconventional oil and natural gas basins–including the Marcellus and Utica Shale. According to their website, U.S. Well Services operates both diesel and electric fracking fleets. On Wednesday, with no warning, they laid off most of their workers in the Jane Lew office–just under 50 people, meaning the company was not required to give advance notice under the WARN Act. Here’s what happened on Wednesday, what U.S. Well Services calls an “unfortunate reduction”…
Read More “US Well Services Lays Off Nearly 50 in Jane Lew, WV”
Chesapeake Energy | Energy Companies | Energy Services | Williams

CEO: What Williams Would Do if Chesapeake Declared Bankruptcy
February 19, 2016February 19, 2016

Alan Armstrong, president and CEO of Williams, spoke on an investor/analyst phone call yesterday to discuss Williams’ fourth quarter and full year financial and operational results. He had a lot to talk about. As we reported yesterday, the company saw massive losses in 2015 (see Williams 2015: $1.6B Loss in 4Q15, $1.4B Loss Full Year 2015). However, early in Armstong’s talk, he addressed an issue that’s gotten a fair bit of press lately: What would Williams do if Chesapeake Energy declared bankruptcy? Armstrong spent several minutes discussing such a possibility and how it might affect Williams. Here’s what he said on the call about a potential Chesapeake bankruptcy scenario…
Read More “CEO: What Williams Would Do if Chesapeake Declared Bankruptcy”
Energy Services | Industrywide Issues | Litigation | Pennsylvania | Pipelines | Sunoco Logistics | Washington County

Judge Hears Eminent Domain Case Against Mariner East 2
February 19, 2016February 19, 2016

Five Washington County, PA property owners had their day in court yesterday with their case against Sunoco Logistics Partners and the Mariner East 2 pipeline project. The attorney for the plaintiffs argued that Mariner East 2 is an interstate pipeline (begins in Ohio, crosses the northern panhandle of West Virginia and then crosses Pennsylvania from west to east) and therefore it does not fit the definition of a public utility under PA law. Public utilities in PA have the right to use eminent domain, which is what this case appears to be about–denying Sunoco the right to use eminent domain in cases where it cannot come to an agreement with the landowner. But as you’ll see below, we don’t think that’s what this case is REALLY about. Sunoco argued that the pipeline is both an interstate and intrastate pipeline with “numerous public benefits.” He hastened to add one of those benefits is a $1.9 billion investment that will result in a $4.2 billion economic impact on the state…
Read More “Judge Hears Eminent Domain Case Against Mariner East 2”
Columbia Pipeline Group | Energy Services | Industrywide Issues | Pipelines

Columbia Pipeline 2015: $267M Income; Project Updates Galore
February 19, 2016February 19, 2016

Columbia Pipeline Group (CPG) turned in their fourth quarter and full year 2015 financial and operational update yesterday. Unlike Williams that lost $1.4 billion in 2015, CPG made $267.6 million in 2015. Along with a financial update, CPG also gives an extensive update on a number of Marcellus/Utica pipeline projects. Well worth the read! Here’s yesterday’s CPG update…
Read More “Columbia Pipeline 2015: $267M Income; Project Updates Galore”