Economic Impact

Blue Racer Midstream | Economic Impact | Energy Services | Industrywide Issues | MarkWest Energy | Pipelines | Processing Plants

Blue Racer Exec Says NE Midstream Needs Another $30B+ Investment
January 31, 2014January 31, 2014

Blue Racer Midstream CEO Jack Lafield spoke at the Hart Energy Marcellus-Utica Midstream Conference and Exhibition in Pittsburgh yesterday, and he had some interesting things to say. As for the $10 billion in infrastructure already invested in the Marcellus/Utica, Lafield says that’s “only a fraction” of what’s needed for investment in the coming years. Lafield says at least $30 billion more needs to be spent “just to keep up with the demand” for infrastructure. Yikes! He also said in his 42 years in the industry, “this is about as good as it gets.”

Also speaking yesterday was MarkWest Vice President of Corporate Development, Scott Garner, who said that MarkWest is spending $2 billion this year on the Marcellus/Utica. As MDN found with our list of 111 midstream/infrastructure projects published in our Marcellus and Utica Shale Databook Volume 2, we estimated there’s at least $40 billion in projects planned or already in process over the next five years or so. Here’s more pickings from yesterday’s conference:
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Economic Impact | Energy Services | Industrywide Issues | Pipelines | Transco | Williams

Williams CEO: Transco Pipeline will Double Capacity by 2017
January 30, 2014January 30, 2014

Williams President & CEO, Alan Armstrong, addressed the Hart Energy’s annual Marcellus-Utica Midstream Conference & Exhibition at the David L. Lawrence Convention Center in downtown Pittsburgh yesterday. He said several interesting things, but the one that caught our attention was this: Williams is going to spend $5 billion expand their Transco methane pipeline. Transco runs from the Gulf Coast to New York. Armstrong said they will be adding more mainline to the Transco–making it longer, by about 9%. Which doesn’t seem like much, but it will nearly double the capacity of the entire pipeline. That’s a big hairy deal with lots of implications: More gas can get to market for consumers (bringing down prices for consumers), more gas can be shipped from drillers (more revenue for drillers), and more Marcellus gas will make it’s way into northeastern markets (great for drillers and landowners).

A summary of Armstrong’s speech:
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Economic Impact | Electrical Generation | Industrywide Issues | Ohio | Statewide OH

New SW Ohio Electric Generating Plant to be Powered by Natgas
January 30, 2014January 30, 2014

Middletown, OH, located on the border of Butler and Warren counties in southwestern Ohio, is about to get a new $500 million natural gas-fired electric generating plant. That is, they will if NTE Energy’s plan is approved. The new plant will generate enough electricity to supply 400,000 homes. Although the story we found about the plant doesn’t say where the gas will come from, you can bet your bottom dollar it will be fueled by Utica and Marcellus Shale gas…
Read More “New SW Ohio Electric Generating Plant to be Powered by Natgas”
Economic Impact | Energy Services | Ethane | Industrywide Issues | Odebrecht | Processing Plants | West Virginia | Wood County

Houston Investment Firm a True Believer in WV Cracker Plant
January 28, 2014January 28, 2014

A huge vote of confidence by an investment firm that the ethane cracker plant recently announced by Gov. Earl Ray Tomblin and planned for Parkersburg, WV will actually be built (see WV Announces Brazilian Company to Build Ethane Cracker Complex). Siltstone Capital, an investment and advisory firm with corporate offices in New York and Houston, bought the old Blue Cross and Blue Shield building in downtown Parkersburg–vacant since 2009–to set up offices for the company and to lease out space they don’t use themselves.

Siltstone invests in companies in the energy sector: exploration and production, oil services, and midstream. If they weren’t totally convinced that the Odebrecht cracker plant would be built, you can be sure Siltstone would not have spent $475,000 on a vacant building in Parkersburg, WV (population 31,492)…
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Economic Impact | Industrywide Issues | Jobs | Muskingum County | Ohio | Supply Chain | Utica Shale

OH Company Doubles Jobs/Revenue by Targeting Utica Shale Drillers
January 28, 2014January 28, 2014

Dan Pottmeyer, president of Producers Service Corp located in Zanesville, OH, says his company is the only fracking company that’s “home-grown in Ohio.” (That’ll be good news for OH Gov. John “foreigner hunter” Kasich. He likes ’em home-grown.) Pottmeyer’s company used to send oilfield services crews into Ohio’s conventional oil and gas fields for low-volume fracking work. However, after purchasing new equipment and more than doubling the work force, Pottmeyer now sends his crews into the field to work on Utica Shale wells–competing with the likes of oilfield services titans like Halliburton and Baker Hughes. Although he doesn’t disclose figures for the privately-held company, Pottmeyer says revenue has more than doubled in the past couple of years.

The Producers Service Corp story is a good story–an important story–of how local businesses can figure out how to plug in to the Marcellus and Utica Shale supply chain. Which is why we love to bring you stories like this one…
Read More “OH Company Doubles Jobs/Revenue by Targeting Utica Shale Drillers”
Economic Impact | Hydraulic Fracturing | Industrywide Issues | Jobs | Pennsylvania | Regulation | Statewide PA

PA Dem Consultant Lectures Party to Avoid Marcellus Moratorium
January 27, 2014January 27, 2014

Every now and again the truth pokes through–even in publications like the Philadelphia Inquirer. We read with interest an op-ed in today’s Philly Inquirer that tells the truth about how the Marcellus Shale is responsible for creating 290,000 jobs in Pennsylvania over the past few years–a state with an unemployment rate stuck above 7%. Some 28,000 of those jobs are “core” industry jobs that pay on average $83,000 per year or more. The op-ed says the Marcellus has given Pennsylvania families a reason to be optimistic about their financial future.

The fascinating thing to MDN is that the op-ed is written by Democrat consultant Mike Butler, current executive director of the Consumer Energy Alliance (Mid-Atlantic section). Mike is a former political consultant for Democrat Bob Casey for U.S. Senate (who sadly won), Dan Onorato for PA governor (who happily lost to Tom Corbett), and on the staff of former Democrat Congressman Jason Altmire. Huh. A Democrat singing the praises of the Marcellus shale, and at the close of his comments he warns the leaders of his party that the statewide moratorium they say they will enact if they regain political power in the state should be “avoided.” We’d use stronger words, but we’re happy to see at least one Democrat in the entire state hasn’t lost all of his marbles…
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Anti-Drilling/Fossil Fuel | Economic Impact | Hydraulic Fracturing | Industrywide Issues

NJ Natgas Customers Get 24% Reduction on Their Bill
January 27, 2014January 27, 2014

An irony of ironies…The anti-drilling lobby in New Jersey is very strong. Even though there’s no recoverable Marcellus Shale gas in NJ, so-called environmentalists continually agitate for a statewide ban on fracking. A number of them also cross the border to make trouble in PA too, showing up for protest rallies. Even though they hate natural gas that comes from fracked Marcellus Shale–the very same protesters burn it to heat their homes and cook their meals. Some of them even use it to power natural gas vehicles.

So it strikes us as a tad ironic that those same anti-drillers will see yet another huge rebate on their next gas bill from Public Service Electric & Gas (PSE&G), NJ’s largest gas and electric utility. Why? Because PSE&G has been wisely buying cheap Marcellus Shale gas produced in PA, and by law they have to pass along the savings to their customers. So in February their bills will be chopped by 24%, thanks to the same Marcellus gas groups like the Sierra Club are protesting…
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Economic Impact | Energy Services | Fayette County | Industrywide Issues | Jobs | Pennsylvania | Williams

Williams Expands in PA Again, Adds Local HQ in Fayette County
January 23, 2014January 23, 2014

Although headquartered in Tulsa, Oklahoma, Williams–one of the largest (perhaps the largest) midstream company in the Marcellus and Utica Shale–continues to expand its footprint in the northeast. The latest area where Williams is expanding is southwest PA–Fayette County to be precise. Williams recently opened a new local headquarters for their Williams Energy division in Fayette. The new location currently employs 75 people (so far).

Here’s the story of Williams’ ongoing expansion in SW PA…
Read More “Williams Expands in PA Again, Adds Local HQ in Fayette County”
Economic Impact | Hydraulic Fracturing | Industrywide Issues | Pipelines | Processing Plants | Research

Deloitte’s View: 2014 Spending Shifts from Upstream to Midstream
January 21, 2014January 21, 2014

From time to time it’s helpful to zoom out to the “40,000-foot view” of the oil and gas industry, because understanding the bigger picture helps us understand the smaller picture that MDN concentrates on–the Marcellus and Utica Shale. One of the better analysts of the bigger picture (in our humble opinion) is consulting powerhouse Deloitte. John England, Deloitte’s U.S. Oil & Gas leader, recently posted a 40,000-foot view of what’s happening in the oil and gas sector in the U.S.–and where he believes it’s headed in 2014.

England, quoting the Oil & Gas Journal, says E&P (exploration and production) spending in the U.S. was $354.8 billion in 2013. However, spending on the midstream–the pipelines and processing plants that get all of that production to market–was only $46.4 billion in 2013 (although that’s up 360% from the $12.8 billion spent on midstream in 2012). England says as we head into 2014, look for investments to continue shifting from the upstream sector (E&P) to the midstream sector–to infrastructure like pipelines and processing plants, refinery operations, and petrochemical facilities. MDN concurs. Just reference our massive list of 111 midstream/infrastructure projects underway or planned in the Marcellus/Utica (see MDN’s 2013 Databook Vol 2 Finds Staggering $40B in NE Midstream Projects). Here’s England’s take on where we’ve been, and where we’re headed in 2014…
Read More “Deloitte’s View: 2014 Spending Shifts from Upstream to Midstream”
Alternative Energy | BP | Crude Oil | Economic Impact | Energy Companies | Hydraulic Fracturing | Industrywide Issues | Research

BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?
January 16, 2014January 16, 2014

Yesterday BP, a huge driller with a sizable acreage position in the Utica Shale (84,000 leased acres), issued its annual BP Energy Outlook 2035 (full copy embedded below). The 96-page report sets out BP’s view of the most likely developments in global energy markets to 2035, based on up-to-date analyses. BP experts expect global energy demand to rise 41% from now until 2035 with 95% of that growth coming from “emerging economies.” According to BP, gas as a source of energy is growing fastest among the fossil fuels and by 2035 gas is expected to be at parity with coal–each providing about 27% of power needs in 2035. BP says shale gas will make up 68% of U.S. gas production by 2035.

Of course, all of this speculation is fun to read, but frankly is just so much folly. MDN editor Jim Willis heard Charif Souki, CEO of Cheniere Energy address the predictions game at the Platts Global Energy Forum in New York City last December (see Energy Industry Leaders Gather at Platts Forum in NYC). At that forum, Souki said any kind of prediction beyond 2-3 years in the rapidly changing energy industry is meaningless. He said if you go back 20 years and look at those predictions about today, none of them predicted shale and how the industry would change so dramatically. We concur with Souki–making these kinds of predictions is a fool’s errand. Still, it’s fun to read and muse about what might be…
Read More “BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?”
Economic Impact | Hydraulic Fracturing | Industrywide Issues | Ohio | Research | Statewide OH | Utica Shale

Quarterly OH Utica Shale Report from CSU: Huge Economic Impact
January 16, 2014January 16, 2014

Each quarter, researchers at Cleveland State University publish the Ohio Utica Shale Gas Monitor, a report that looks at the economic impacts of Utica and Marcellus Shale drilling in Ohio. The latest report was issued a few weeks ago and MDN has just now been able to locate a copy to share with you (full copy of the 39-page report embedded below). What does the report tell us? The number of counties with “strong” shale activity has gone to eight from 15, and the number of counties with “moderate” shale drilling activity has gone to five from 30. That’s a head-turner! The “strong” counties, in addition to producing methane (or dry gas), are also producing “commercial amounts” of natural gas liquids (wet gas).

Here’s a good overview of the report as provided by NortheastPA.com:
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Belmont County | Blue Racer Midstream | Economic Impact | Energy Services | Industrywide Issues | Jobs | Marshall County | Ohio | Ohio County | Pipelines | Processing Plants | West Virginia | Williams

Utica/Marcellus Construction Spending Rockets in Wheeling Area
January 14, 2014January 14, 2014

According to McGraw Hill Construction, the Wheeling, WV Metropolitan Statistical Area, which includes Ohio and Marshall counties in WV and Belmont County in Ohio, saw construction explode from $60.3 million in 2012 to $1.57 billion in 2013–a 29-fold increase. The vast majority of that explosion in construction came from–you guessed it–the Marcellus and Utica Shale. Midstream companies Williams and Blue Racer spent the majority of that on new processing plants and pipelines in the area.

This is incredibly good news for that area of the Ohio Valley. The even better news? Ironworkers Local No. 549 predicts this kind of spending by the drilling industry will go on for at least another 5-10 years. Wow!…
Read More “Utica/Marcellus Construction Spending Rockets in Wheeling Area”
Economic Impact | Guest Post | Health Impacts | Hydraulic Fracturing | Industrywide Issues | Jobs | Pennsylvania | Regulation | Statewide PA

Guest Post: Pennsylvania Drilling Moratorium – Good or Bad?
January 9, 2014January 9, 2014

Before Pennsylvanians head to the polls in November to elect a new governor and new legislators, they may want to consider the consequences of installing Democrats to re-assume power in the state. Specifically, Democrats have vowed to slap an ongoing moratorium–essentially a ban–on Marcellus Shale drilling should they regain control. MDN has been one of the few places in the media to even cover this story, and we’ve called it just what it is: economic insanity (see PA Democrat Party Votes to End Marcellus Shale Drilling Statewide).

MDN friend and contributor Chris Acker, a Pennsylvania property owner and geological engineer with an MBA, does a deep dive into the issue to explore what would happen should PA slap a moratorium on new shale drilling. Hint: It’s like experiencing someone’s worst nightmare…
Read More “Guest Post: Pennsylvania Drilling Moratorium – Good or Bad?”
Economic Impact | Hydraulic Fracturing | Industrywide Issues | Jobs | NGLs | Pipelines | Processing Plants | Research

Must-Read IHS Report: Midstream/Downstream Spending Hits $90B/Yr
January 8, 2014January 8, 2014

Information Handling Services, or IHS, is the publisher of choice for the American Petroleum Institute (API). A new API/IHS study was published in December, but apparently just released to the public yesterday by the API. The study is titled “Oil & Natural Gas Transportation & Storage Infrastructure: Status, Trends, & Economic Benefits” (full copy embedded below).

We previously told you the API/IHS estimates each year drillers in the U.S. spend on the order of $150 billion to drill new oil and gas wells (see US Spending $150B+ to Drill New Oil & Gas Wells Each Year). MDN editor Jim Willis heard at the recent Platts Global Energy Outlook Forum that midstream-specific spending is only $15 billion per year (see Energy Industry Leaders Gather at Platts Forum in NYC). This new IHS report provides further clarification on spending in the midstream and downstream. If you lump new yearly spending together for all midstream (pipelines & processing plants) and downstream (refineries and distribution), IHS says the number was actually $53 billion in 2010, and had rocketed to nearly $90 billion in 2013. IHS researchers believe spending will remain around $90 billion in 2014 and something close that, per year, until 2020. Truly astonishing numbers. And that’s not the only revelation contained in this “must read” report. Like, there are 1 million new jobs on the way because of all this spending…
Read More “Must-Read IHS Report: Midstream/Downstream Spending Hits $90B/Yr”
About MDN | Anti-Drilling/Fossil Fuel | Commodity Price | Crude Oil | Economic Impact | Ethane | Health Impacts | Hydraulic Fracturing | Industrywide Issues | Litigation | MDN Resources | NGLs | Pipelines | Regulation

MDN’s Top 10 Most Important Stories of 2013 – Our View
December 31, 2013December 31, 2013

Yes it’s trite and certainly overdone, but hey, it’s the last day of 2013 and a slow news day. So MDN editor Jim Willis thought he would put together a list of what he considered to be the top 10 Marcellus and Utica Shale stories from 2013. It’s a look into what we believe, based on your input and feedback, to be the most relevant and important stories from this year. Enjoy!…
Read More “MDN’s Top 10 Most Important Stories of 2013 – Our View”
Economic Impact | Industrywide Issues

US Spending $150B+ to Drill New Oil & Gas Wells Each Year
December 27, 2013December 27, 2013

The American Petroleum Institute has a pretty good handle on just how much money is spent each year on drilling new oil and gas wells. According to a recently released report for last year (takes a long time to compile these numbers, apparently), there were 46,736 oil and natural gas wells drilled in 2012. We don’t know the breakdown of conventional (vertical only) vs. unconventional (shale) wells drilled, but we suspect the vast majority drilled were conventional, even though shale is all the rage these days. It’s far cheaper to drill a conventional well than an unconventional well.

Speaking of cost, it took an estimated $153.7 billion (that’s with a “b”) to drill those 46.7K wells. Yikes! Shale drilling, according to the API, represented about one-third of those costs (again, that doesn’t mean it was 1/3 of the total wells drilled because drilling economics for conventional/unconventional are vastly different). We have the API press release below, which we found interesting. But here’s what you won’t read in that press release, something we heard at the recent Platts Global Energy Outlook Forum a few weeks ago…
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