Economic Impact

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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…
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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…
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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!…
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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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Coterra Energy (Cabot O&G) | Economic Impact | Energy Companies | Industrywide Issues | Jobs | Pennsylvania | Supply Chain | Susquehanna County

Scranton TV Station: NEPA Community Benefits from Cabot (Video)
December 19, 2013December 19, 2013

An interesting TV segment was recently filmed about the role of Cabot Oil & Gas in providing local jobs and a boost to the local economy where they drill in rural Susquehanna County, PA. The video, filmed by Scranton TV station WNEP Channel 16, highlights the partnership Cabot has developed with several vendors (supply chain) and points out Cabot’s long-term commitment to the community–a commitment that will go on for decades to come.

If you want “the other side of the story,” the side that shows what a good corporate citizen looks like and how gas drilling enormously benefits an entire community, take the time to watch this enlightening 6-minute video:
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Economic Impact | Ethane | Industrywide Issues | Jobs | Ohio | Processing Plants | Statewide OH | Statewide WV | West Virginia | Wood County

More Details Leak About Proposed WV Ethane Cracker Plant
December 9, 2013December 9, 2013

A few weeks ago WV and Brazilian-based Odebrecht announced plans to build an ethane cracker plant near Parkersburg, WV (see WV Announces Brazilian Company to Build Ethane Cracker Complex). Wayne Dunn, the president of the commission that governs Wood County, WV where the cracker would be built, recently said some very interesting things about the cracker. One comment: he’s known about the Odebrecht cracker for more two years! Congratulations to a politician that can keep a secret that long.

Dunn also said he pegs the chances that the Odebrecht cracker will be built at somewhere between 60-80%. He says it’s far from a done deal, but the odds are better that it will be built than not. Here’s a few more interesting “insider” insights into the proposed cracker plant coming to Parkersburg, WV:
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Economic Impact | Electrical Generation | Energy Services | Industrywide Issues | Jobs | Lancaster County | Pennsylvania | Pipelines | Williams

New Electric Power Plant in Lancaster Powered by Marcellus Gas
December 5, 2013December 5, 2013

Even though there’s no Marcellus Shale under Lancaster County, PA, the county is about to benefit from the Marcellus Shale. A new electrical generating power plant is planned for Lancaster County that will be powered by cheap Marcellus Shale gas from Pennsylvania–meaning lower electricity prices for the 390,000 homes it will power. It also means a new 9-mile natural gas pipeline will be built, and a 7-mile water pipeline.

Lots of jobs in building the plant and the pipelines, some landowners will benefit from having the pipeline cross their property, and everyone in the region gets lower cost electricity. It’s a win/win/win situation–thanks to the Marcellus…
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Economic Impact | Industrywide Issues | Pennsylvania | Statewide PA

Most PA Residents Pay Lowest NatGas Rates in 10 Years
December 4, 2013December 4, 2013

Limbo! How low can you go? Two-thirds of Pennsylvanians who heat their homes with natural gas will, this heating season, pay the lowest prices they’ve paid in the past 10 years, according the PA Public Utility Commission (PUC). Why? The Marcellus Shale, of course…
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Economic Impact | Industrywide Issues | Ohio | Pennsylvania | Statewide OH | Statewide PA | Statewide WV | West Virginia

List of U.S. Shale Plays Ranked by Profitability (IRR)
December 3, 2013December 2, 2013

Thanks to our ever-helpful second set of eyes, Chris Acker, MDN was alerted to a Seeking Alpha article with a table showing the Internal Rate of Return (IRR) for commercially developed U.S. shale plays. It is a way of ranking shale plays (specific regions within plays) that shows the profitability of the plays. The higher the IRR percentage, the better/more profitable that play is. A dollar of investment goes further with a higher IRR.

And what did we spot in scanning the chart? The top spot–the most profitable shale play in America–is the “Marcellus Super Rich” area located in southwest PA and the northern panhandle of WV. The second most profitable play, virtually tied with the Marcellus? The “Utica Liquids Rich” region in eastern OH. It’s a fascinating table. Have a look…
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Carroll County | Economic Impact | Harrison County | Industrywide Issues | Ohio | Statewide OH | Utica Shale

Meet Ohio’s New Utica Millionaires – Hundreds of Them
December 2, 2013December 2, 2013

As part of a story about the Morgan County (OH) Landowner Group, or MCLG (see our companion story today), near the end of the story we get this short mention which, although an “off-hand” comment, comes as a startling thunderclap to MDN about the sheer number of millionaires created by the Utica Shale (i.e. “shaleonaires”):
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Economic Impact | Energy Services | Industrywide Issues | NGLs | Pipelines | Processing Plants | Williams

Williams Spending $20B (!) on Marcellus/Utica Infrastructure Next 5 Years
December 2, 2013December 2, 2013

MDN released Volume 2 of the 2013 Marcellus and Utica Shale Databook in October. Volume 2 contains one of MDN’s proudest achievements: a comprehensive list of midstream/infrastructure projects either on the boards or already under way in the Marcellus and Utica Shale region. Cumulatively the projects represent a mind-blowing $40 billion investment (see MDN’s 2013 Databook Vol 2 Finds Staggering $40B in NE Midstream Projects).

Although when we released Databook Vol. 2 we thought trumpeting our findings of $40 billion in investment may sound exaggerated and overblown to some, little did we know we may have underestimated the number! An article appearing in Tulsa World says a single company–Williams–has committed to spending $20 billion on Marcellus and Utica infrastructure (pipelines and processing plants) over the next five years. One company! Such numbers makes our jaw hit the floor…
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Economic Impact | Electrical Generation | Industrywide Issues | Pennsylvania | Wyoming County (PA)

P&G’s Only Energy Self-Sufficient Plant is Powered by Marcellus
November 27, 2013November 27, 2013

Consumer goods behemoth Procter & Gamble (P&G) has 150 manufacturing plants worldwide that make things like Pampers diapers, Charmin toilet paper and Bounty paper towels. Only one of those 150 P&G manufacturing plants is 100% energy self-sufficient–providing all of its own massive energy needs without the need to tap into the local utility grid. Can you guess where it’s located? The 100% energy self-sufficient P&G plant is in Mehoopany (Wyoming County), PA, near Scranton/Wilkes-Barre. The P&G plant in Mehoopany is powered exclusively by Marcellus Shale gas drilled right on P&G’s own property! In fact, P&G is producing so much electricity by using Marcellus gas that they sell electricity back to the local utility grid–enough electricity to power 20,000 homes! What a tremendously proud, feel-good moment this is.

Northeast PA is showing the world how shale gas is making the U.S. energy independent. Bye bye tinpot dictators in the Middle East who hate our guts! Bye bye messy wars to keep oil flowing. Hello home-grown energy, home-grown jobs and home-grown economic prosperity. Here’s the P&G feel-good story that will keep you smiling while you eat turkey tomorrow…
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Commodity Price | Economic Impact | Hydraulic Fracturing | Industrywide Issues | New York | Statewide NY

Big News: Bloomberg Writes Positive Marcellus Shale Article!
November 27, 2013November 27, 2013

Whenever we start reading a Bloomberg article about the Marcellus Shale, shale gas drilling in general, or fracking, we just know how skewed to the anti-drilling side of the ledger the story will be. So imagine our surprise when we read an article that actually reports (gasp!) the truth about the Marcellus Shale. Even though Bloomberg usually tells us the low price of natural gas can’t last, the whole shale gas thing is a house of cards waiting to collapse, drillers are trying to hoodwink investors, blah blah blah–this time even Bloomberg can’t ignore the fact that natural gas being piped into New York City is selling below the price of the benchmark Henry Hub in Louisiana–and likely will for years to come. Thanks to the Marcellus.

The Bloomberg article does a good job of giving the big picture with respect to gas prices and how drilling has become more efficient, how infrastructure (pipelines) are helping to get all that gas to market (abundance of supply equals lower prices), and predicting what’s coming next. At the end of the article is an obligatory few sentences from anti-drillers about how shale drilling will poison all of our water and make farms uninhabitable. Well, it is Bloomberg after all. But on balance, this is a good article and worth your time to read. The article begins this way…
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Economic Impact | Industrywide Issues | Lycoming County | Pennsylvania

Is the Marcellus Already Going Bust in Lycoming County, PA?
November 25, 2013November 25, 2013

Has the Marcellus Shale drilling industry already going bust? If you read the headlines of say, oh, the Philadelphia Inquirer, that may be the conclusion you reach. But if you read beyond the headlines you’ll find a different story.

The number of drilling rigs in the Marcellus is down a bit from what it was a year or two ago, that’s for sure. With less drilling comes less of a lot of other things needed for drilling (hotel visits, construction, security, catering, etc.). However, it may be more accurate to view the Marcellus drilling industry as more like taking a breather. Regrouping. Assessing. One thing is for sure, although some parts of the Marcellus drilling industry may have dipped (not gone bust, but slowed a bit), other parts of it are just picking up steam. A better metaphor is “ebb and flow”…
Read More “Is the Marcellus Already Going Bust in Lycoming County, PA?”
Economic Impact | Hydraulic Fracturing | Industrywide Issues | Ohio | Pennsylvania | Pipelines | Processing Plants | Research | Statewide OH | Statewide PA | Statewide WV | West Virginia

Deloitte & EIA: 90,000 Marcellus Wells Drilled in Next 20 Years
November 25, 2013November 25, 2013

A new report published by consulting powerhouse Deloitte references (and affirms) U.S. Energy Information Administration’s predictions that it will take at least $5 trillion of investment in the oil and gas sector between now and 2035 to main current levels of oil and natural gas production and meet future demand as it rises. The report is titled “The challenge of renaissance: Managing an unprecedented wave of oil and gas investment.” Unfortunately we couldn’t locate a copy–but reportedly it’s full of interesting facts–like the $5 trillion number.

Another eye-popping number from the report: Current estimates are that 90,000 Marcellus Shale wells will be drilled over the next 20 years. That kind of activity will spur an unfathomable economic revival in the northeast like we haven’t seen in since, well, forever! The study says while “trillions” will be spent on upstream (drilling), “hundreds of billions” will need to be spent on midstream (pipelines & processing plants) in order to keep up with the production. More from the Deloitte study…
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Economic Impact | Hydraulic Fracturing | Industrywide Issues | New York | Ohio | Pennsylvania | Research | Statewide NY | Statewide OH | Statewide PA | Statewide WV | West Virginia

Marcellus/Utica States Slip in Global Petroleum Survey
November 21, 2013November 21, 2013

Each year, the Canadian-based Fraser Institute surveys petroleum industry executives and managers (864 of them for 2013) asking them their opinions on the barriers to investing in exploration and production in various geographies across the globe. That is, what makes them more likely or less likely to spend money drilling in a particular location? It’s vitally important to understand what drives investors because without money, drilling doesn’t happen.

The Global Petroleum Survey, as it’s called, tallies the survey responses and ranks each geography from most desirable place to invest, to least desirable. MDN reported the rankings last year (see Energy Execs Rank Drilling Locations Including WV, OH, PA, NY). A copy of this year’s full report/rankings is embedded below. How did Pennsylvania, Ohio, West Virginia and (yes) New York fare this year, compared to last?…
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