Industrywide Issues

Industrywide Issues | Research

Turning Point: EIA Drilling Report Shows Slow Down in Production
March 11, 2015March 11, 2015

It is true that what goes up must come down? As a general rule, yes. That age-old wisdom is manifesting itself in both oil and natural gas production from shale plays. Two days ago our favorite report from our favorite government agency–the Drilling Productivity Report (DPR) from the U.S. Energy Information Administration (EIA)–was issued. It shows something we haven’t seen before: negative numbers in some of the production columns for some of the shale plays–in both oil and natural gas. No, the Marcellus and Utica are not in the negative (they will both produce more oil and gas in April than they did in March). However, the rate of increase in production for the Marcellus and Utica, indeed all of the shale plays, is much less than it has been previously. Scaling back on new drilling will, sooner or later, affect production. We’re now seeing it in the numbers…
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Industrywide Issues | Ohio | Statewide OH | Taxation

OH Gov Kasich the Bully: Accept My 6.5% Tax or Risk a 10%+ Tax
March 11, 2015March 11, 2015

Wow. We’re kind of speechless. Ohio Gov. John Kasich (RINO) sure is a sore loser. And a vicious one too. Get this: Kasich is now saying if the oil and gas industry doesn’t lay down and take the high severance tax he’s proposing, some “citizen group or aspiring politician” will probably (wink wink nod nod) push for a ballot measure in the state to create such a tax. And if that happens, his measly 6.5% severance tax will look darned good compared to the 10% or more those wild citizen groups will no doubt push for (see OH Gov. Kasich Increases Proposed Severance Tax Rate by 236%). That is, Kasich just threatened the oil and gas industry with a 10%+ severance tax if they don’t accept his tax in this year’s budget. Talk about a bully! We’re used to this from Democrats, but not from so-called Republicans…
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Chesapeake Energy | Columbiana County | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio

Columbiana Landowners Win Right to Renegotiate Some Lease Terms
March 11, 2015March 11, 2015

In 2008, before the word “Utica Shale” was on people’s lips and in their consciousness, landmen from Patriot Energy Partners “smiled and dialed” calling up landowners in Columbiana County, offering them a whopping $10 (yes 10 bucks) an acre to sign gas and oil exploration leases. Patriot mailed them the contracts, the landowners signed and sent them back, and then got pennies on the dollar for what those leases were actually worth. Patriot then flipped the leases, selling the deep exploration rights to Chesapeake Energy–for $1,100 an acre. Patriot claimed the practice (of hoodwinking landowners and flipping leases) is legal. The landowners wised up and in 2011, 25 landowner families sued to have their leases dissolved. Four years later the case, after going to arbitration, is resolved…
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Energy Companies | Industrywide Issues | Pennsylvania | Range Resources Corp | Regulation | Washington County | Wastewater

Range Re-Opens 2 of 3 Water Impoundments in Washington County, PA
March 11, 2015March 11, 2015

Last September Range Resources was fined $4.15 million for a series of violations at eight water impoundments they operate in southwestern PA (see PA DEP Fines Range Resources $4.15M for Wastewater Impoundments). As part of the deal worked out with the PA Dept. of Environmental Protection (DEP) under then-Sec. Chris Abruzzo, Range agreed to shut down five of the eight impoundments. Actually, all eight of the impoundments ceased operation either during or prior to last September. Two of the remaining three impoundments–the “Carter” and “Carol Baker” impoundments–are now back up and running. The Carter impoundment is handling only fresh water these days, while the Carol Baker impoundment has been upgraded and once again handles wastewater. The remaining “Jon Day” impoundment is being upgraded to begin handling wastewater again, when the weather breaks…
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Energy Companies | EQT Corp | Industrywide Issues | Pipelines | Regulation | West Virginia | Wetzel County

WV Landowners Say They’re Bullied by Mountain Valley Pipeline
March 11, 2015March 11, 2015

Last June EQT and NextEra US Gas Assets formed a joint venture to build a 330-mile pipeline from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA to deliver abundant, cheap Marcellus and Utica Shale gas to markets throughout the southeast (see EQT Announces New Marcellus/Utica Pipeline to Southeastern US). The new pipeline was dubbed the Mountain Valley Pipeline (MVP) project. Since that time, MVP has filed paperwork with the Federal Energy Regulatory Commission (FERC), which has jurisdiction on whether or not to build it because the pipeline crosses state lines (see EQT’s WV to VA Pipeline Open Season a Success, FERC Filing in Oct). In February, rumors began to bubble that the pipeline is changing its route (see WV to VA Mountain Valley Pipeline Changing Routes?). There has been some resistance, as there always is, on the part of some landowners who refuse to let surveyors on their property. So MVP sent letters to landowners threatening to sue them if they don’t allow the surveyors access. How can they sue? Using the power of eminent domain–but FERC hasn’t yet approved the project which would trigger the right to use eminent domain…
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Energy Companies | Energy Services | EQT Corp | Equitrans/EQT Midstream | Industrywide Issues | Pipelines | Statewide WV | West Virginia

EQT Sells WV Pipeline Gathering System to Itself for $1B
March 11, 2015March 11, 2015

We’re always somewhat amused by these stories. Sometimes a company will spin off a division into its own company–a subsidiary–and later transfer or “sell” certain assets to the subsidiary. On paper the subsidiary is its own company with its own set of investors, its own board, and its own management. But the primary investor with controlling interest remains the mother company. For all practical purposes, the subsidiary IS the same company as the mother company. Midstream companies tend to do this with some regularity. Back in 2012 we noted that Kinder Morgan did it (see Kinder Morgan Sells Tennessee Pipeline to Itself). This week it’s EQT–selling its Northern West Virginia Marcellus Gathering System, along with a “preferred interest” in another EQT subsidiary, for $1.05 billion to the company’s pipeline subsidiary, EQT Midstream Partners…
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Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Regency Energy Partners

ETP Buyout of Regency Energy Has a Date: April 28
March 11, 2015March 11, 2015

In January MDN brought you the big news that Energy Transfer Partners (ETP) is buying/merging with Regency Energy Partners (see Energy Transfer Partners Buys Regency Energy for $25B). Both companies have meaningful operations in the Marcellus/Utica region. These mergers & acquisitions, as you know, take time. Both companies have been busy and Regency reported earlier this week they have a date to make it all final: April 28. On that date, Regency will hold a special meeting at their company headquarters in Dallas, TX to vote on the deal…
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Anti-Drilling/Fossil Fuel | Industrywide Issues | Ohio | Pipelines | Regulation | Statewide OH

NE Wackos on a Rampage: Demand FERC Stop Approving Pipelines
March 11, 2015March 11, 2015

Here’s what passes for thinking in anti-drilling land: Fossil fuels, when burned, release carbon into the atmosphere. Carbon is bad (at least it is for anti-drillers), although you and all other animals breathe carbon out with every breath and plants breathe it in–it’s a requirement for all of life to exist. Still, play along, k? Because natural gas is a fossil fuel, it’s evil. By burning it you pollute Mother Earth and will cause Her to bake with mythical global warming (although we almost froze to death this winter in the northeast). So fracking is the ultimate rape of Mother Earth, as stated by none other than that towering intellect Yoko Ono when singing the song “Don’t Frack My Mother” (see Yoko Ono and Son Sean Lennon Go on Anti-Fracking Tirade). Fracked shale wells require pipelines. If you can stop pipelines, you can stop fracking. Who approves the big pipelines? The Federal Energy Regulatory Commission (FERC). So who’s the latest target of anti-drilling wackos? You got it–FERC…
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Anti-Drilling/Fossil Fuel | Industrywide Issues | Research

UCS “Report” Says Using Natural Gas for Electric Generation Big Gamble
March 11, 2015March 11, 2015

The Union of So-Called Concerned Scientists (UCS) recently issued a new report that says switching to natural gas use, especially for electric generation, is one big gamble and we’re being lured down the primrose path to destruction. According to the “scientists” at UCS, it’s far better to turn the thermostat down to 50 degrees in the winter (called “energy efficiency”) and ride to work via horse and buggy (called “switching to renewables”) than risk using that foul, evil, nasty fossil fuel natgas (natgas, natgas, natgas–echo for evil-sounding effect). One might put more stock in such a report if it were actually authored by scientists–people with degrees in the hard sciences. Instead, its primary author is someone with a political science degree…
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Industrywide Issues | Pennsylvania | Regulation | Statewide PA | Wastewater

New Draft Drilling Regulations in PA: Wastewater Impoundments Out
March 10, 2015March 10, 2015

The Pennsylvania Dept. of Environmental Protection (DEP) has been working on revisions to oil and gas regulations, something called Chapter 78, since 2011. In 2012 the new Act 13 drilling law required the DEP to update Chapter 78 to reflect the new reality of shale drilling. Over the past three years, the DEP held nine public hearings and received some 24,000 public comments on the proposed changes (see PA DEP Extends Roadshow for Public Comment on New Drilling Rules). The new rules were supposed to be over and done with long before now, but got derailed by last year’s election cycle. New governor, new secretary of the DEP, and guess what? The proposed rules have changed yet again. There’s a new due date too: the final rules won’t be ready until early 2016. Yesterday the DEP released yet another revision to the rules (we’ve lost track how many times the rules have been revised and changed). Drillers under Democrat Gov. Tom Wolf and his PennFutureDEP Sec. John Quigley want to increase the red tape drillers must navigate. Among the changes in this latest draft (full copy below) are…
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Energy Services | Energy Transfer Partners | Industrywide Issues | Litigation | Ohio | Pipelines | Regulation | Statewide OH

OH Law Firm Asks FERC to Stop ET Rover Pipeline Eminent Domain
March 10, 2015March 10, 2015

Columbus, OH law firm has filed a motion with the Federal Energy Regulatory Commission (FERC) challenging Energy Transfer Partners’ ET Rover application before FERC. The issue at the heart of the motion is to prevent ET Rover from invoking eminent domain and steamrollering over landowners, building the pipeline without an agreement in place with each individual landowner first. When pipeline companies have the power of eminent domain, they hold all the cards. They can say, “Here’s the offer–take it or leave it–and if you leave it, we’ll build the pipeline through your land anyway at the price we want.” We’ve never been fans of eminent domain for pipelines. Far better for pipeline companies to work it out with landowners and pay them–or reroute it through someone else’s property who will play ball. We acknowledge it’s a thorny issue and not completely black and white. ET Rover is an 830-mile, $4.4 billion pipeline that will flow Marcellus and Utica Shale gas from PA, WV and eastern OH through OH into Michigan and eventually into Canada (see ET Rover Pipeline’s 800-Mile Journey Begins with FERC Filing). The bulk of the pipeline will run diagonally from southeast to northwest across Ohio. Just yesterday we told you about ET Rover’s program to help landowners (see ET Rover Pipeline Hires Land Stewards to Protect the Land in OH). The motion filed with FERC, from what we can tell in reading the press release and the motion itself (embedded below) is not an attempt to stop ET Rover–it’s an attempt to give landowners more negotiating power and leave them firmly in control of whether, and how much, they will accept to allow the pipeline through their property…
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Industrywide Issues | New York | Regulation | Statewide NY

NYS DEC Releases 2013 Annual Report: Not One Marcellus Mention
March 10, 2015March 10, 2015

By Andy Leahy

Sometime last week, the New York Department of Environmental Conservation’s Mineral Resources Division quietly posted its 2013 annual report–finally getting around to covering that year’s activity in the extractive (and regulatory) industries, concerning oil, gas, and other minerals. The report covers a year that ended some 14 months previously, which is a typical breakneck schedule in the Empire State for finishing up these kinds of things. No surprises on the highlights. Natural gas production was down 11%. Oil production was down 5%. Completed wells were down 3%. Drilling permits issued were down 5%. How about the number of occurrences of such phrases or words as “Marcellus shale,” “Utica shale,” “hydraulic,” “frack,” or possibly even “SGEIS”?…
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Commodity Price | Economic Impact | Industrywide Issues

With Cheap/Abundant Marcellus Gas, Why Aren’t Utility Bills Lower?
March 10, 2015March 10, 2015

The price of natural gas is low–and seems to be staying low–for an extended period. In the dead of a brutal winter (for the northeast anyway) the price of natgas has stayed below $3 per thousand cubic feet (Mcf). This morning it was $2.68 Mcf. So what aren’t consumers–those who heat with natural gas–seeing lower prices on their monthly utility bills? None other than the U.S. Energy Information Administration (EIA) tackled that very question yesterday in their Today in Energy publication. We have their article below. In a word, the reason consumers don’t see lower prices is…”regulation”…
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Anti-Drilling/Fossil Fuel | Electrical Generation | Industrywide Issues | Lackawanna County | Pennsylvania

Gas-Powered Electric Plant to be Built “on Thousands of People”
March 10, 2015May 4, 2015

Since 2013 we’ve been tracking the story that Invenergy, a company that builds and operates clean energy electric generating plants like those powered by natural gas, plans to build such a plant near Scranton, PA (see Marcellus Gas to Power Combined-Cycle Electricity Plant in NE PA). In October 2014, Invenergy purchased the 80-acre parcel in Jessup where they plan to build the plant (see Invenergy Buys Land in NEPA for Natgas Electric Generating Plant). In January of this year, the first in what will be a string of public hearings was held in Jessup (see Public Hearing on NEPA Proposed Marcellus-Powered Electric Plant). There was understandable concern from some area residents about air quality and other issues. Now that the plant is getting much closer to reality, it’s time for the anti-drillers to come out–and right on cue, they have. One of them is quoted as saying the plant will “be built on thousands of people. Literally thousands of people.” Wait. Did we miss something? Is this plant being built on top of cemetery? Is Invenergy planning on killing thousands and throwing the bodies in a trench so they can construct a plant on top of them?…
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Economic Impact | Industrywide Issues | M&A

World’s Best Investment Bank in the Oil & Gas Sector for 2015
March 10, 2015March 10, 2015

It takes a lot of money to fund an oil & gas company–whether they are drillers, pipeline companies or the myriad of associated supply chain companies. It takes millions–billions! Who has that kind of money? Investors, typically investment banks. And who is the best investment bank in the whole wide world? Obviously it’s the one that will give you money! However, Global Finance magazine conducts an annual survey and based on various criteria, they have just awarded CIBC (Canadian Imperial Bank of Commerce), Canada’s fifth largest bank, with the honor of World’s Best Investment Bank in the Oil & Gas Sector for 2015…
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Cunningham Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Tyler County | West Virginia

WV “Landowner” Wins $4.8M in Lawsuit for Failure to Drill
March 9, 2015March 9, 2015

By Andy Leahy

On March 3, a federal judge awarded a Tyler County, WV mineral owner $4.8 million in present and future royalties (plus interest) as damages in a dispute involving the operator’s failure to follow through on some unusually generous lease terms. The operator, Cunningham Energy LLC of Charleston, WV, had promised to horizontally drill eight wells to and through the Marcellus Shale formation within three years, but was unable to do so–largely because the leaseholds were far too small to develop as stand-alone units, and the surrounding lands turned out to be already under lease to other drillers…
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