White Paper Says E&P Management Compensation “Out of Alignment”

Kimmeridge Energy Management Company is a private equity investment firm focused on the upstream energy sector (drillers). Last week the firm published a white paper entitled, “Bringing Alignment and Accountability to the E&P Sector” (full copy below). The thesis of the paper is this: the alignment between drilling company executives and shareholders is “broken” and “a root cause” for the problem of poor earnings at drilling companies.
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Shale POWER Launches to Connect Manufacturing to Shale Energy

A cool new initiative called Shale POWER was unveiled yesterday at the Third Annual Marcellus to Manufacturing Conference hosted by the Pennsylvania Independent Oil & Gas Association (PIOGA) in Wheeling, WV. Shale POWER provides technical assistance and business support to small and medium manufacturers and companies seeking to expand business, production, and jobs in the growing shale gas and downstream manufacturing sectors in the Marcellus/Utica region.
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Shale Energy Saving Manufacturing Plants, Jobs in Appalachia

Eagle Manufacturing, located in Wellsburg, WV, was struggling in the early 2000s. The company makes plastic safety products. Foreign competition was hammering the company (tough to compete with children in China who work in factories for a dollar an hour). The company almost offshored production to China, but decided to stick it out a few more years here at home. And then the Marcellus/Utica Shale miracle happened.
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SWPA Unions Join Shale Cos. to Back House ‘COVID Comeback’ Bills

Back in March, just as the COVID-19 pandemic was beginning to enter the public consciousness, some 500 people from labor unions and industry met in Pittsburgh to launch an organization called Pittsburgh Works Together (PWT), dedicated to fighting back against those who want to end southwest PA industries including steel, natural gas, and petrochemicals (see CNX CEO Backs New SWPA Group to Counter “Elites and Extremists”). The alliance is going strong. Last week MDN editor Jim Willis had the pleasure of interviewing (via phone) Jeff Nobers, Executive Director for both the Builders Guild of Western Pennsylvania and PWT.
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WV Announces New $350M Methanol Plant in Pleasants County

methanol

Some exciting news to share! A company called West Virginia Methanol Inc. has selected a site in Pleasants County, WV to develop to build a $350 million methanol plant. Methanol plants convert natural gas into methanol, used as a chemical feedstock (raw material) to create other things, like gasoline, antifreeze, plastic bottles–even LED and LCD screens. Methanol plants use a LOT of natural gas.
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Diversified Gas & Oil Employs 425, Spends $100M per Year in WV

Rusty Hutson, Jr. – DGO CEO

Diversified Gas & Oil (DGO) is a fascinating company (see our DGO stories here). DGO’s strategy is to seek wells in “the long tail.” That is, wells already drilled with production along the decline curve. DGO CEO Rusty Hutson, a West Virginia native, recently wrote a column for the Charleston Gazette-Mail expressing his company’s love for and investment in the Mountain State. DGO’s commitment to WV is extensive.
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How to Make Investing in O&G Companies Cool Again

Exploration and production (E&P) companies, what we usually call drillers here on MDN, need capital (money), like any other big company. Cash is the oil in the engine that keeps any company operating (pun intended). E&Ps get money to keep operating from various sources, including banks and investment firms. According to an article appearing in Hart Energy’s Oil and Gas Investor magazine, E&Ps are currently “the most hated sector on Wall Street.” Ouch. The money has dried up. What will E&Ps do?
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Shale Insight 2020 Day #2: Renewable Energy Myth; Unions Love Gas

Mark Mills – Manhattan Institute

Yesterday the second day of Shale Insight began with a keynote delivered by West Virginia U.S. Senator Joe Manchin (D). He mouthed support for the shale industry in an unremarkable talk. We’re not all that thrilled with Manchin. The American Energy Alliance Report Card says Manchin voted only 67% of the time to support affordable energy and fossil fuels (see House/Senate Energy Scorecard: Who to Vote For/Against PA-OH-WV). The real belle of the ball yesterday was another speaker: Mark Mills.
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Newly Passed Act 66 Petchem Bill Lights a Fire for PA Econ Dev

In July Pennsylvania Gov. Tom Wolf signed into law House Bill (HB) 732, a bill that will grant tax breaks to companies willing to build brand new petrochemical plants in the Keystone State–plants that use huge quantities of Marcellus Shale gas (see Victory Lap! Gov. Wolf Signs Tax Break Bill for New Petchem Plants). HB 732 has become Act 66 in PA’s codes and regulations.
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Sec. of Energy Dan Brouillette Touts Ohio Fossil & Petchem Energy

DOE Secretary Dan Brouillette

U.S. Dept. of Energy Secretary Dan Brouillette published an op-ed in the Warren, OH Tribune Chronicle to tout Ohio’s place as the fifth-largest natural gas producer in the country, and the Trump Administration’s support for and hope that it continues. Brouillette says Ohio has “only scratched the surface” of its energy and economic potential, thanks to the Utica Shale.
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Why is the Oil & Gas Sector Not Bouncing Back More Quickly?

Have you caught yourself thinking lately (as we have), “When in the world is the price of natural gas (and oil) going to go up again?” And, “Why is more drilling not happening?” Perhaps you answer yourself with the obvious answer: It’s the pandemic, stupid. If you have said/thought that, you are correct. But what is there about the pandemic (which seems to be getting better) that is causing this ongoing slowdown and low prices for oil and gas?
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Pipeline Foes in NY, NJ, PA Killing $3.5B Investment, 17K Jobs

The Consumer Energy Alliance (CEA) released an important new study yesterday. Titled “How Pipelines Can Spur Immediate Post-COVID Economic Recovery,” the new study finds delays, obstruction, and cancellation of pipeline infrastructure projects are threatening at least $13.6 billion in economic activity, over 66,000 jobs, and more than $280 million a year in state and local tax revenue at a time when America’s financial recovery from COVID-19 requires MORE investment and tax revenue. A section of the report finds anti-pipeline fanatics in NY, NJ, and PA threaten $3.5 billion worth of investments and 17,000 jobs in our region alone.
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Clinton County, PA Petchem Plant to Drill 25 New Marcellus Wells

Clinton County, PA

Earlier this year MDN brought you news about a new half-billion-dollar petrochemical plant that will convert Marcellus Shale gas into feedstock (chemicals) to be used in agriculture, manufacturing, medicine, and transportation, coming in Clinton County in central Pennsylvania (see $500M Marcellus-Fed Petchem Plant Coming to Clinton County, PA). The project is progressing and we have more details about what, exactly, the plant will produce.
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Oil & Gas Supply Chain Heading for Permanent Downsize

It’s been a tough past five months in the shale industry. While it’s been tough in the gas-focused plays like the Marcellus/Utica, it’s been tougher in the oil-focused plays like the Permian. Employment in the O&G space has shrunk, by one account, by some 86,000 jobs. We’re now at the same employment level as we were following the downturn in 2014-2016. “But everyone knows this industry is cyclical. It’ll bounce back again, right?” This time it may be different. According to analyst John Kemp, this time some of the jobs (and companies) leaving the industry will be gone for good…
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Victory Lap! Gov. Wolf Signs Tax Break Bill for New Petchem Plants

It’s time for a victory lap. Pennsylvania Republicans, with the help of some brave Democrats (and former Democrats), passed and convinced Gov. Wolf to sign a bill into law that will grant tax breaks to companies willing to build brand new petrochemical plants in the Keystone State–plants that use huge quantities of Marcellus Shale gas. Wolf signed the bill yesterday, after vetoing a similar bill earlier this year. The normally chatty Wolf press operation barely mentioned his signature on the bill.
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10 Democrat Senators Ask Warren Buffet to Invest in WV NatGas

Waaaiiit just a minute. Did we just slip through the looking glass? Ten Democrat State Senators from West Virginia sent a letter earlier this week to Warren Buffett asking the billionaire to consider investing in natural gas projects in the Mountain State. The letter states their sadness that Atlantic Coast Pipeline was canceled, but expresses hope that Buffett’s purchase of Dominion’s other pipeline assets augurs a bright future. We could have sworn this letter was sent by conservative Republicans!
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