Economic Impact

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    PA Biz Affected by Drilling Slowdown, but Hope is on the Horizon

    Don't Stop BelievinYesterday MDN told you the sad news that southwest PA hotel owners have hit a rough patch and some of them are putting their properties on the auction block (see SWPA Hotel Owners Catering to Marcellus Auctions Properties). We have more news today about businesses being adversely affected by the drilling slowdown in PA. This time the stories come from the eastern part of the state. And yes, once again one of the affected businesses is a motel. And also a cleaning service. Even though “it’s tough and getting tougher out there” as well all know, we also spotted a story of hope. George Stark, spokesman for Cabot Oil & Gas, says shale drilling WILL return to PA, and it will return “with a vengeance.” What does that mean?…
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    Shell has Spent “Half a Billion Dollars” on PA Cracker Already!

    money-bag.jpgThe Pittsburgh Business Times hosted an event yesterday in Beaver County, PA–the place where Shell is spending money to explore whether or not to build an ethane cracker plant. Seems like we’ve been writing about Shell’s potential ethane cracker forever. We’ve chronicled just about every up and down. We’ve also highlighted various initiatives they’ve undertaken since announcing Monaca, PA as their chosen site–something they did back in March 2012, now four years ago (see Shell Announces Location of Ethane Cracker Plant). Since that time Shell has purchased the property where they want to build the plant; they’re building a bridge and roads to the plant site; they’ve leased office space near the plant site. They’ve done a whole lot more. What we didn’t realize is that when you add it all together, according to Pat Nardelli, a partner at Castlebrook Development and speaker at the PBT event, Shell has spent “half billion to date if not more, and it’s going up every day.” Yikes! In this economy nobody blows a half bil on something they just decide to walk away from…
    Read More “Shell has Spent “Half a Billion Dollars” on PA Cracker Already!”

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    U.S. Chemical Industry Investment Linked to Shale Gas Tops $164B!

    The American Chemistry Council (ACC) participated in a Hudson Institute event yesterday. During a presentation made by the ACC, they announced that U.S. chemical industry investment linked to plentiful and affordable natural gas and natural gas liquids (NGLs) from shale formations has reached an astonishing $164 billion. Some 40% of that investment is for the 264 projects – new facilities, expansions and factory re-starts – that is either completed or underway. Another 55% are for projects in the planning phase. This is a big deal folks. ACC’s research shows the investments tied to shale will lead to $105 billion per year in new chemical industry output and support 738,000 permanent new jobs across the U.S. economy by 2023–including 69,000 new chemical industry jobs, 357,000 jobs in supplier industries and 312,000 jobs in communities where workers spend their wages. Below we have a variety of resources for you. We have the ACC announcement with many interesting facts and figures. We also have a fact sheet summarizing their research, a copy of the slide deck used for the presentation (with really cool slides), and a copy of a study the ACC published in 2013 with a list of the companies who, at that time, had announced major downstream projects using shale-related natural gas and liquids…
    Read More “U.S. Chemical Industry Investment Linked to Shale Gas Tops $164B!”

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    Philly Chamber Publishes Roadmap to Turn Region into “Energy Hub”

    Yesterday a large group of business, labor and political leaders gathered in Philadelphia to hear about plans to turn Philly into an “energy hub” with more pipelines delivering natural gas and natural gas liquids to the region. Chemical plants and manufacturers would spring up to use the gas and gas liquids–creating a huge economic impact for the region. According to press reports there were 200 or more gathered for the unveiling of a new report from the Greater Philadelphia Chamber of Commerce’s Greater Philadelphia Energy Action Team (GPEAT). The report is titled, “A Pipeline for Growth, Fueling Economic Revitalization with Marcellus and Utica Shale Gas” (full copy embedded below). Meanwhile, 20-30 silly anti-drillers (who don’t have lives apart from protesting) stood outside and tried their darnedest to shout and disrupt the meeting. How did they react inside? By making fun and laughing at them! Philip Rinaldi, GPEAT Chair and President/CEO of Philadelphia Energy Solutions said this to the crowd as he took the stage: “I’m inclined to ask for a brief moment of silence to hear the protesters a little better.” Love it! You had to have a ticket into the private event–and the antis couldn’t score any tickets to disrupt the event–something they bitterly complained about. We say it’s about time someone pushed back against these disorderly ne’er do wells. Here’s how it went down inside the event, a place the antis couldn’t go…
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    Harvard Says Shale Spells the End of Boom & Bust Cycle in Oil/Gas

    Thanks to our right hand, Chris Acker, MDN was alerted to a fascinating article in the Harvard Business Review. The very first time MDN heard Cornell professor and climate change huckster Tong Ingraffea (see Cornell Hydraulic Fracturing Expert Headlines First Meeting of New York Residents Against Drilling (NYRAD) in Vestal, NY), was the first time we’d heard of “boom and bust” cycles in relation to natural resources. During that meeting Ingraffea discussed “Gilmore’s 4 Stages of Boomtown Attitudes” and described how extracting coal, or cutting timber, etc. leads to cycles where communities are rapidly built up, only to later be devastated when that industry runs it course and leaves town–after exhausting the natural resource it sprang up to tap. Ingraffea described nightmare scenarios that awaited communities “foolish” enough to buy into shale gas development. Our response was and always has been–we’ll take that development, and any “bust” that comes with it–over never having had any investment at all! No industry stays in a particular geography forever. Back to the HBR article. The authors theorize that boom and bust–at least for oil and gas–may now be over. Why? Because with shale drillers can literally overnight begin producing more oil and gas when prices reach an attractive level. Meaning the price of oil will eventually hit and likely stay at around $50 barrel–like, forever…
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    Connecticut NatGas Electric Plant Gets Funding, Construction Soon

    Competitive Power Ventures (CPV) and GE Energy Financial Services announced last week they have closed financing on the 785 megawatt CPV Towantic Energy Center in the western Connecticut town of Oxford. Some 16 investors ponied up a combined $753 million and the project, green lighted back in 1999 but on hold until it made sense economically, will now be built. The plant will be powered by clean-burning natural gas. No doubt it will be Marcellus/Utica gas flowing to the plant to power it. The project represents one of the largest private-sector infrastructure projects in the state. And it’s all thanks to shale gas. Here’s the announcement with details…
    Read More “Connecticut NatGas Electric Plant Gets Funding, Construction Soon”

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    Somber Milestone – US Rig Count Hits Lowest Level in 68 Years

    Baker Hughes released their weekly rig count numbers last Friday (see full report below). We typically don’t report on the weekly ups and downs of rig counts, preferring to check in on a monthly basis to get an idea of the overall trend. But last week’s weekly report was historic, which is why we’re commenting on it now. Baker Hughes began tabulating weekly rig counts 68 years ago. The number of working rigs in the United States last Friday hit 480–the lowest number on record since Baker Hughes began keeping records. While the Marcellus count went up by 3 last week, right now there are only 19 rigs operating in Pennsylvania–less than before the Marcellus boom began and down from the high water mark of 114 rigs operating in 2012. When rigs are operating, it means jobs and economic stimulus for a community and region. It also means landowners get royalties, and that money gets invested and/or spent in a community. The converse is also true: no rig activity, fewer jobs and economic impact. Therefore the number of rigs operating is always of keen interest…
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    Super Secret Study Details Plan to Transform NEPA Using NatGas

    Shhhh. It’s a secret. A super secret. Well, sort-of a secret. The Institute of Public Policy and Economic Development, a cooperative between a bunch of colleges located in northeastern PA, researched and compiled a new study–more than a year ago–for how northeastern PA can make the most out of the abundant, cheap and clean-burning natural gas that sits beneath them. The Institute tapped local drillers for $50,000 to research the project–and the findings are being kept secret. Why? Think of it as an NFL playbook. You don’t share your plays with the opposing team. In this case, opposing teams are other economic development agencies in other regions–like southwestern PA, eastern OH and WV. The secret study is very specific in naming names for how the region can attract new businesses that use cheap Marcellus Shale gas. The Institute doesn’t want to give away their best thinking so other regions can use the same strategies and target the same companies. Want to know what we think?…
    Read More “Super Secret Study Details Plan to Transform NEPA Using NatGas”

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    Report: Benefits of a Second American Shale Boom

    A fascinating new research paper just published by conservative think tank Manhattan Institute says there IS an antidote to being manipulated by America’s enemies, many of them members of OPEC. There IS an antidote to wild price swings in oil and gas prices. There IS an antidote to the poor economic conditions we experience here in the U.S. under Barack Obama. Know what it is? A second shale boom. IF the U.S. were to become the dominant exporter of energy around the world, we reap economic and geopolitical benefits like you can’t believe. In “Expanding America’s Petroleum Power: Geopolitics in the Third Oil Era” (full copy below), the author notes that the number of cars in use worldwide has risen threefold, aviation miles have gone up sevenfold, and maritime shipments increased threefold in the last 40 years. What powers 95% of that transportation? Oil and its derivatives. We need a second American shale boom and we need it soon. Read about it below…
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    More Evidence of the Slowdown in the Marcellus

    We won’t continue to beat the drum indefinitely that “it’s bad out there.” Everyone knows it. However, we did honestly and truthfully report when the Marcellus industry was on the upswing and it seemed like everything was coming up roses. So we will now honestly and truthfully report when our beloved industry is on the downswing. We don’t sugarcoat it here at MDN. The latest bit of “it’s bad out there” evidence comes from Greene County, PA and Hot Rod’s House of Bar-B-Que where it used to be you couldn’t get a seat at lunchtime, but now it’s “walk right in, sit right down”…
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    WV Oilfield Services Co. Extreme Plastics Files for Bankruptcy

    Extreme Plastics Plus, Inc. is an oilfield services contractor that provides environmental lining services for oilfield and other commercial markets. The company offers above ground water containment, environmental lining, steel wall secondary containment, and rig mat services. The company’s environmental lining services include freshwater impoundments, double lined with a leak detection system, wastewater impoundments, primary and secondary lining, and rig pads. Extreme Plastics Plus was founded in 2007 and is based in Fairmont, West Virginia with other offices in eastern Ohio, northeastern Pennsylvania, Texas and Oklahoma. Other names used by the company are Three Amigos Rentals and American Well Services. On January 31, Extreme Plastics Plus filed for bankruptcy protection…
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    MSC’s Dave Spigelmyer Says Rough Few Years Ahead for Marcellus

    David Spigelmyer, who once headed up Chesapeake Energy’s efforts in the Marcellus Shale region, is and has been head of the Marcellus Shale Coalition for the past couple of years. Great guy. Smart guy. Dave published an op-ed in the Pittsburgh Post Gazette in today’s issue. It’s titled, “Shale hits a rough patch: But natural gas remains a boon to Pennsylvania.” The sobering news, according to Dave, is that the price northeast drillers (drillers everywhere) are getting for their gas will remain low in 2016 and 2017 “and perhaps longer.” Businesses are “in survival mode” and and the slowdown in drilling is being felt by “tens of thousands of men and women” who work for this marvelous industry. The statistics, according to Dave, are “numbing.” Sobering words. But we have to face the reality and not look away and pretend otherwise. But, according to Dave, there is hope and we will get through it. Here’s a portion of his no-rose-colored-glasses op-ed…
    Read More “MSC’s Dave Spigelmyer Says Rough Few Years Ahead for Marcellus”

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    CLNG Merges with NGSA, Gets New Director from Former ANGA

    The downturn in oil and gas prices doesn’t only affect drillers, and midstreamers, and landowners, and supply chain companies. It also affects trade associations. Last November we told you that America’s Natural Gas Alliance (ANGA) merged with/became part of the American Petroleum Institute (see Two Top O&G Trade Groups to Merge: ANGA & API). Another two trade groups announced a merger yesterday. The Center for LNG (CLNG) announced it is merging with the Natural Gas Supply Association (NGSA). CLNG will retain its identity and become a division of NGSA. In addition, CLNG has a new executive director–Charlie Riedl. Charlie joins CLNG from ANGA. Here’s the low down on two more trade groups combining…
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    Debate Rages: How Many Shale Drillers will go Bankrupt?

    Fadel Gheit, senior oil and gas analyst at Oppenheimer & Co., speculated on CNBC on Monday that half of all U.S. shale oil producers could go bankrupt before the price of oil reaches equilibrium. For Gheit, equilibrium price will be somewhere around $60-$70 per barrel. But, he says, it will take a few years to get there. His thesis is that in the meantime oil and gas companies are spending money out the wazoo and cannot sustain it and a good many of them (the smaller ones anyway) will go under. We compare his comments (below) with what Rusty Braziel recently said to Jim Cramer…
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    Shortages Begin: Tangible Result of No Pipelines in New England

    In December 2014 the Massachusetts-based utility Berkshire Gas Company announced the amount of natural gas they could purchase from the Tennessee Gas Pipeline (TGP) was at full capacity. There’s no additional gas supplies to buy–unless TGP builds their Northeast Energy Direct (NED) expansion project. So Berkshire was forced to tell new customers for natural gas in portions of Franklin County they won’t be able to tap into Berkshire’s line (see Guts: No New Pipeline in MA? Then No New Natgas for Utility Customers). In September, the Massachusetts Dept. of Public Utilities (DPU) approved long-term contracts for three utilities, including Berkshire Gas, to buy natural gas supplies from TGP’s NED pipeline when/if it gets built (see Mass. Approves Plan for Utilities to Buy Gas from New Pipeline). Anti-drilling nutters promptly sued to stop that plan (see Anti Group Sues to Stop Mass. Utilities from Buying Natural Gas). It’s now a year after Berkshire’s first announcement that some communities in Franklin County won’t get new natgas service. Berkshire has had to expand the prohibition area. They’re now turning down new businesses in neighboring Hampshire County, which is causing a stir. We’re not sure why antis don’t get it. No new gas, no new service. It’s pretty simple. Below is the story of a jilted Texas Roadhouse, who says they wouldn’t have purchased land and built had they known they couldn’t get natgas service. Translation: more businesses will stay away, or perhaps even leave, because they can’t get natgas due to the shortage…
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    API 2016 State of American Energy Report

    Earlier this week the American Petroleum Institute (API) released its annual report, the State of American Energy (full copy below). Several themes are prominent in the report: shale energy’s creation of jobs, the economic growth we’ve experienced due to shale energy, and the fact we are now more secure than we’ve been in generations with respect to energy. We’re far less dependent on foreign oil than we were just a few years ago. That’s great news!…
    Read More “API 2016 State of American Energy Report”