Exporting

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    The Link Between Ukraine and Marcellus Shale Gas

    Is there a link between Russia’s nakes aggression and invasion of Ukraine, and American shale gas, like that found in the Marcellus and Utica? You bet there is! When Russian bully Vlad Putin wants to throw his weight around, he turns off the natural gas pipeline to places like Poland and Ukraine. Keeps the peasants in line, especially during long, cold winters like this one. Just the threat of turning it off has a profound effect.

    Four eastern European nations–Poland, Hungary, Slovakia and the Czech Republic sent an official letter on Friday to U.S. House of Representatives Speaker John Boehner begging him to step up U.S. efforts at exporting natural gas to Europe–so they can tell Vlad where to stick his gas. American exports would make for a much more secure Europe and would serve to marginalize Putin and his bullies. If we could just get the Obama administration to start crawling toward more export facility approvals (instead of being at a virtual standstill), it would certainly help. Exporting to Europe would help sop up some of the oversupply we have in the Marcellus Shale…
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    Maryland Court Rules in Favor of Cove Point LNG Export Terminal

    The litigating Sierra Club has lost yet another lawsuit to block Dominion from revamping an LNG import terminal in Cove Point, Maryland to become an export terminal instead–exporting Marcellus Shale gas to India and Japan. Last Friday Maryland’s second highest court, the Court of Special Appeals, gave Dominion the green light to continue with their project to covert the Cove Point facility into an export terminal. Will the Sierra Club appeal (yet again)? With the deep pockets of the eco-left in this country, it’s a pretty safe bet they will appeal…

    Here’s the story of the court returning a pro-Dominion verdict:
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    The Radicals Behind Efforts to Stop Cove Point, MD LNG Plant

    The group 350.org, a rabidly anti-drilling group that has adopted the same tactics used by the Ku Klux Klan complete with face masks and burning torches (see Wackadoodle 350.org protesters disappear their KKK moment), is behind the movement to stop the XL Keystone oil pipeline from Canada to the Gulf Coast. They are also behind an effort to stop the LNG (liquefied natural gas) export terminal in Cove Point, MD. The Chesapeake Climate Action Network has enlisted the help of 350.org in their effort to stop Cove Point. We wonder, are torches and bed sheets coming to Maryland now? Shame on the Climate Action Network for hooking up with these radicals–but then, perhaps they’re just as radical?

    Here’s an update on the ongoing effort to stop what, frankly, can’t be stopped: the permitting of a new export facility in Cove Point that will liquefy and send some of our cheap, abundant Marcellus Shale gas to India and Japan where they need it badly…
    Read More “The Radicals Behind Efforts to Stop Cove Point, MD LNG Plant”

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    CONSOL Feeling Heat over Ethane Exports to Europe, CEO Defends

    it's okCONSOL Energy’s CEO Brett Harvey must be getting some heat over the company’s recent announcement that they have signed an agreement to export ethane from the Marcellus to Europe (see CONSOL to Begin Ethane Shipments Next Year–to Europe?!). Why would we say CONSOL is getting blowback? Because Harvey penned an op-ed that appears in The Intelligencer/Wheeling News-Register giving a spirited defense of their decision. The gist of Harvey’s points, if we might summarize, is this: CONSOL has deep roots and is committed to WV; there’s plenty of ethane to go around, including for exports (and exports bring money into WV); CONSOL is also going to sell ethane to the Odebrecht ethane cracker when/if it gets built; in the meantime, selling ethane to Europe means CONSOL will have more money to invest in WV.

    Here’s Harvey’s “it’s OK” op-ed:
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    The Complex Issue of Ethane – Pipelines, Cracker Plants & Exports

    Ethane–a natural gas liquid (NGL)–is bountiful in parts of the Marcellus and Utica Shale. So bountiful, it’s causing problems. Until very recently, ethane was considered a waste product. You either had to burn it (increasingly hard to do because of regulations), or blend it with methane. It has been a cost center when in fact ethane is normally a profit center–something that makes drillers money. But you can only make money on it if you can get it to market.

    Enter several ethane-specific, and coming soon, NGL pipelines that can carry ethane (and other NGLs) to the Gulf Coast, Canada or Philadelphia for processing and sale. The problem is, if you don’t have a long-term contract on one of those pipelines, you’re hosed. Your competitors are making money on ethane while you’re still spending money on it. That, in a nutshell, is why two regional ethane cracker plants are so desperately needed (Shell’s cracker plant in Beaver County, PA and Odebrecht’s cracker in Parkersburg, WV). The Pittsburgh Tribune-Review took an in-depth look at “the ethane issue” last Friday. It’s a good article providing us with insights into the complex issue of what drillers can/should/are doing with ethane:
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    CONSOL to Begin Ethane Shipments Next Year–to Europe?!

    CONSOL Energy is a big, important driller in the Marcellus and Utica Shale. Most of their operations are in “wet gas” areas–those locations that produce a lot of natural gas liquids (NGLs), like ethane, along with “dry gas” or methane. Although CONSOL has a lot of acreage in southwestern PA and in WV and eastern OH, the ethane they produce will not be going to a proposed new ethane cracker plant being built by Odebrecht in Parkersburg, WV. Instead, CONSOL is going to send their ethane by pipeline to an export facility in Philadelphia, and from there, on to Europe for processing and use in European petrochemical factories.

    Why in the world ship ethane all the way to Europe for processing instead of selling it in your own back yard? Timing. CONSOL doesn’t want to wait the 4-5 years for an ethane cracker to be built (if it’s built at all). They’ve adopted a “bird in hand” strategy. They’d rather start shipping it next year, when Sunoco Logstics’ Mariner East pipeline is up and running, rather than wait. And so CONSOL, according to their announcement below, has locked in a deal with Ineos Europe AG. But don’t despair, CONSOL also previously signed an agreement with Shell to provide its cracker plant in Beaver County, PA with ethane–when and if that plant gets built…
    Read More “CONSOL to Begin Ethane Shipments Next Year–to Europe?!”

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    Which Way Do You Flow? The Price of Gas, the Marcellus & Canada

    What’s the long-term prognosis for the commodity price of natural gas? Depends on who you ask–but overall, “the market” seems to be saying even amidst one of the coldest winters on record in decades, the longer term trend will be low to moderate prices for methane/natural gas. Industry publication Oil and Gas Investments Bulletin issued one of their analysis stories on the press release wire (a clever marketing move that we appreciate). The story delves into the issue of gas prices and its relationship to Canadian exports/imports. One of the major components of the story (full copy below) is an analysis by investment firm Raymond James.

    Guess which shale play Raymond James spends a good deal of time examining? The Marcellus, of course–which is why we found this particular story about gas prices intriguing. Another reason the story is intriguing is because it reveals that Canada, which has long been the #1 source of natural gas imported into the U.S., has seen their gas flows into the U.S. drop by 50% in the past six years. And now, Marcellus gas is starting to flow the direction, into Canada…
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    Are Exports to Blame for High Propane Prices?

    what's the dealWhat’s the deal with propane prices? MDN previously pointed out lack of storage in the northeast because of NY Gov. Andrew Cuomo’s dallying on a decision to allow a new storage facility near Seneca Lake has contributed to rising propane prices (see Northeast Propane Shortage – Andrew Cuomo Partially to Blame). Although Gov. Can’t-Make-a-Decision is partially to blame, so too is the brutally cold (and long) winter we’re experiencing–a winter that casts serious doubt on the notion of man-made global warming.

    But there is a possible third reason why propane prices have gone up: exports. U.S. Energy Information Administration (EIA) data shows both a record volume of propane being produced, and a record volume being exported out of the country…
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    RBN Energy’s 2014 Predictions & the Marcellus Connection

    RBN Energy, headed by energy industry luminary Rusty Braziel (formerly an executive with Bentek and veteran of several large oil and gas companies), recently proffered its Top Ten Energy Prognostications for 2014. RBN is based in Houston, but a number of this year’s predictions from RBN are either directly or indirectly related to the Marcellus and Utica Shale, which tells you the stunning impact our northeast energy market is having on the world energy market.

    Below is the abbreviated list of RBN’s “top 10” predictions for 2014–the Chinese Year of the Horse. Bear in mind what Rusty says, even as a prognostication, most (including MDN) believe as the gospel truth…
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    Continued Resistance to NH Propane Terminal Expansion

    Sea-3, otherwise known as Trammo, continues to encounter local opposition to its plans to expand a propane terminal in Newington, NH. Trammo (until last year the company was called Transammonia) is the 24th largest private company on the Forbes list. Trammo has operated the Sea-3 propane terminal in Newington since 1975, handling up to 200 million gallons of liquefied propane annually. Current capacity at the terminal is 2 million gallons per day traveling in and out by truck and rail car. The company has asked the local town for permission to expand the rail yard at the terminal to handle more propane.

    The controversy comes in that Trammo originally said they want to expand the terminal in order to export propane. More recently they’ve changed their tune and now say the expansion may include some exports, but the focus will be on regional distribution in New England. The reason it’s an MDN story? It’s Marcellus & Utica Shale propane that would flow into the facility…
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    Cabot Signs Deal to Export Gas via Cove Point, MD

    The good news continues to roll out of Cabot Oil & Gas. In a corporate updated issued yesterday, the company said they’ve signed a deal with Pacific Summit Energy (a subsidiary of Japanese company Sumitomo) to export up to 350,000 million Btus of natural gas per day via Dominion’s planned Cove Point, MD LNG export facility. The Cove Point facility is currently supposed to be in operation in 2017. The deal runs for 20 years. Previously, MDN told you that Japan and India have already spoken for 100% of LNG exports from Cove Point (see Dominion’s Cove Point LNG Facility Achieves Important Milestones).

    In what seems to be unrelated but actually is related, Cabot also said they’ve achieved another milestone–they now produce 1.5 billion cubic feet of natural gas per day out of their wells in Susquehanna County, PA. That’s just one year after hitting 1 Bcf/d! So in one year production has skyrocketed another 50%. Truly astonishing. How much of today’s current production is Cabot committing to send overseas?…
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    Energy Industry Leaders Gather at Platts Forum in NYC

    One week ago, MDN editor Jim Willis attended the Platts Global Energy Outlook Forum in New York City. The Forum, an annual event that attracts the titans of the worldwide energy industry, was held at the swanky Waldorf Astoria Hotel. Although Jim has been traveling to NYC for years and prides himself on his ability to navigate Manhattan on the subway, every now and again he botches it–like this time. So he ended up walking an extra 6-7 city blocks after getting off at the wrong stop (doh!). But that’s OK. It was a brisk day and the walk did him good.

    Rather than get on the ungodly 3:10 am bus from Binghamton to NYC, Jim elected to ride the 6:10 am bus, which was late arriving at the Port Authority due to traffic at the Lincoln Tunnel. So he missed the first session and joined the second session shortly after it had begun. But wow, what a session it was! Below Jim shares his notes from the session “Switching, Ditching and Bridging Fuels,” his notes and impressions from the lunch keynote address by DOE Sec. Ernest Moniz, and his notes from the afternoon session titled, “Midstream Gathers Momentum”. Jim got to hear some of the biggest names in energy. It was all a bit heady for a “small time” natural gas blogger with an attitude…
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    EIA Early Release of 2014 Report Shows Plenty of Gas for Exports

    Yesterday the U.S. Energy Information Administration (EIA)–the one government agency MDN actually likes and believes to be effective–released preliminary data and an abridged version of their Annual Energy Outlook (AEO) for 2014 (full copy of the “early release” version embedded below). The full version will be along in Spring 2014.

    So what does the early release version show? U.S. production of crude oil and natural gas will continue to go through the roof–thanks to natural gas. Crude oil production will continue to grow until 2020 or there about, before leveling off. Natural gas? Production increases until at least 2040. In addition, EIA says the increased production in natgas means exports–by both pipeline and LNG carriers–won’t negatively affect domestic prices. That is, EIA report provides justification for further approvals to export American natural gas…
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    ACCF to DOE Sec. Moniz: Please Hurry Up LNG Export Approvals

    On Monday, the American Council for Capital Formation (ACCF) sent a letter to Dept. of Energy Secretary Ernest Moniz to encourage him to continue approving new liquefied natural gas (LNG) export terminals, and to “goose him along” and get him to speed up the process (full copy of the letter embedded below). To be fair, DOE has now approved five such facilities which will allow the export of LNG to countries without a free trade agreement with the U.S. However, there are another 21 applications waiting to be reviewed–and it took 65 days between the last two approvals (way too long).

    ACCF respectfully requests Moniz to hurry it up in their letter, and provides him with compelling arguments for why more LNG exports should go forward…
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    Range Resources’ Top 10 Wet Gas Wells, New Company Presentation

    Top 10Yesterday Range Resources released their financial and operations update for third quarter 2013 (see our companion story from today). Nestled in that update is reference to a new company presentation released yesterday as well, available on the Range website. MDN downloaded it (full copy embedded below) and wow! What a presentation it is. This sucker is loaded with useful charts, maps, bullet points and more. Range has done the industry (and their investors) a great service with this presentation.

    Below we will highlight some of our favorite “don’t miss it” slides from the presentation, so you know which ones to zero in on right away. However, the one slide many will want to view first is the list of Range’s Top 10 Liquids Rich (“wet gas”) wells. That slide lists the wells and their locations (hint: they’re all found in a single PA county), initial production levels, production mix (how much oil, NGLs, gas), lateral length, and number of frac stages. With lots of maps and lots of charts, here are some of our favorites, including the Top 10 Wells slide:
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    GE Report: Natural Gas Taking the Limelight in World Energy

    Last week GE released a new report titled “The Age of Gas and the Power of Networks” (full copy embedded below). In the report, the brains at GE say that natural gas will soon rival coal use throughout the world, and is even starting to take some of oil’s market share away. By 2025 the report says 20% of the world’s natural gas supply will come from unconventional (i.e. shale) gas. Most that will come from the U.S. and Canada, and the majority of that will come from two shale plays: the Marcellus and the Eagle Ford. It shows the incredible importance of the Marcellus to the world’s energy supplies in the coming decades.

    Other interesting factoids found in the report: 89% of natural gas is transported via pipelines, the rest by rail or truck or ship. LNG exports will play an increasingly important role as America continues to generate more natural gas that we can use here at home. And not surprisingly, the power sector (electric generation) will be the key future driver of demand for more natural gas, especially with tighter EPA regulations on coal generating plants…
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