Some Mariner East 2 Construction Resumes During Lockdown
The confusion over whether or not the Mariner East 2 (ME2) pipeline project has (a) shut down all construction, except certain tidying up aspects at certain locations, or (b) has permission by the state to keep on building, is still not 100% settled. On Monday we told you that ME2 construction was in the process of ceasing under orders issued by Gov. Wolf (see Mariner East 2 Pipeline Construction Shuts Down re COVID-19). However, the PA Dept. of Community and Economic Development granted a waiver to ME2 for certain activities.
3/27/20 UPDATE: As we suspected and have now confirmed with an unnamed (but highly reliable) source, the ME2 sites issued waivers to continue construction on Wednesday, March 25th were areas deemed necessary to continue work in order to protect the environment or the public. While there are numerous “sites” where activity has resumed, it represents less than 20% of total project sites. For example, places where there were open cut ditches or partially complete HDDs (underground horizontal directional drilling), the company requested and was approved waivers to restart construction–after an extensive review by the Wolf Administration.
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The Energy Equipment and Infrastructure Alliance (EEIA), a non-profit representing people and businesses who work in the energy infrastructure supply chain, filed an “amicus curiae” (friend of the court) brief in support of PennEast Pipeline’s request to get the U.S. Supreme Court. PennEast has asked the Supremes to overturn a lower court decision that allows states like New Jersey to usurp federal authority by blocking PennEast, a FERC-approved pipeline.
If there’s a silver lining in this tragic COVID-19 coronavirus crisis, this may be it: Radicals who want to deny everyone the right to use fossil fuels with their unending campaigns of protests and legal actions are pretty much stopped in their tracks. They can no longer make mischief to block pipelines and shale drilling and the use of natural gas by ordinary citizens (via municipal bans). The virus has stopped most court cases, public hearings, and even the right to assemble and protest. Antis are apoplectic and scared that pipeline and drilling projects will get approved and move forward because antis can’t bully public officials and courts into bending to their twisted anti-fossil fuel views.
OPEC, the Organization of the Petroleum Exporting Countries, is a pact of colluding oil-producing companies that act to artificially lower or raise the price of oil around the world based on how much the colluders are willing to pump. OPEC is the antithesis of free trade. But it does serve a purpose that (unfortunately) all oil drillers, including U.S. drillers, depend on–keeping prices high enough to be profitable. OPEC added Russia in a loose confederation for the past three years or so, something referred to as OPEC+. But then Russia recently told Saudi Arabia, the main OPEC player, to kiss off and left the OPEC+ fold, preferring to pump as much oil as they can. Saudi Arabia responded by increasing its production too, to drive prices into the basement, causing Russia (and U.S. shale drillers) pain.
A week ago we brought you the story that predicted the price of oil would go from the $30/barrel range down to the $20/barrel range–something almost unthinkable. And then it happened within a few days! Now we’re reading of warnings from Barclays, one of the biggest banks in the world, that the price of oil may go as low as (GASP) $10/barrel. At that price, there’s maybe one producer in the world that can still make at least some money–Saudi Arabia. Everyone else would be upside down and heading for bankruptcy court.
The double shock of less demand for oil because the COVID-19 coronavirus crisis has shut pretty much everything down (worldwide) AND the Saudis and Russians pumping oil to the outer limits, continues to cause the price of oil to remain at historically low prices. The Russians are trying to bankrupt American shale oil drillers by driving prices into the basement. The Saudis are trying to bankrupt Russia for leaving the OPEC+ fold (and the Saudis certainly don’t mind if American shale oil drillers are put out of business in the process). The low price resulting from the double shock is affecting not only big American shale oil drillers but also mom and pop conventional oil drillers too. Particularly small conventional drillers in western Pennsylvania.
Sen. Chuck Schumer and Speaker Nancy Pelosi are the lowest of the lowest. They are blocking COVID-19 aid to suffering American people and businesses, holding the aid package hostage, in a bid to play to their radicalized political base. They are holding up an aid deal in order to, among other things, fund Big Green projects. Green lard. Graft. Corporate welfare that decimates fossil fuels and favors so-called renewables. “Democrats won’t let us fund hospitals or save small businesses unless they get to dust off the Green New Deal,” said Senate Majority Leader Mitch McConnell in a floor speech yesterday. This is tragic. This is despicable. This is UNFORGIVABLE.
The American Petroleum Institute (API) wrote a letter to both President Trump and the federal Environmental Protection Agency last Friday asking for “non-essential compliance obligations” to be temporarily waived. Such obligations include “record-keeping, training and other non-safety requirements.” The oil and gas industry wants to be able to better and more quickly distribute fuel during the COVID-19 coronavirus crisis–using fewer people to do so. Government red tape is enormous. API is simply asking the government to cut some of that red tape on a temporary (not permanent) basis to get the job done during this crisis.
Last Friday MDN laid out three potential options for how the U.S. government can deal with the Saudis and Russians flooding world markets with oil, driving the price into the basement in a bid to bankrupt American shale oil drillers, a practice called dumping (see 
Before Lord Obama and the EPA Obamadroids left office, they inflicted a great deal of damage to this country via onerous and outrageous new regulations. When President Trump took office, he immediately began to roll back and rightsize regulations at the EPA (and elsewhere), scaling back overregulation to common-sense regulation. We’re talking about regs like the horrible so-called Clean Power Plan. The Obamadroids and Big Green lobby (one and the same, with gobs of money) have litigated Trump’s efforts to restore sanity to EPA regulations every square centimeter of the way.
As we told you last Friday, there was some confusion over whether or not construction of the Mariner East 2 (ME2) pipeline, which is nearing completion, is included under Pennsylvania Gov. Tom Wolf’s “stop work” order to prevent PA residents and workers from further spreading the COVID-19 coronavirus (see 
Advanced Power Services is building a 1,100-megawatt natural gas-fired electric generation facility in Wellsville, Columbiana County. Dominion Energy is building 5 miles of new pipeline, called the West Loop Project, from western PA into Ohio to feed the Wellsville plant (see 
We spotted an interesting article appearing in the American Oil & Gas Reporter about results from using tiny ceramic beads as a proppant in oil and gas wells in several shale plays. Typically sand is used as a proppant to “prop open” tiny fractures to allow oil and gas to escape from shale rock. Sometimes ceramic beads are used. The article is based on a paper delivered at the Society of Petroleum Engineers’ Hydraulic Fracturing Technical Conference & Exhibition, held Feb. 4-6 in The Woodlands, Texas. Of particular interest to us are the findings for the Utica and Marcellus. The “micropropped” Utica wells showed a marked increase in oil production, while no such increase in production happened in micropropped Marcellus wells.
It certainly doesn’t feel as though we’ve hit the bottom yet when it comes to the effect of the coronavirus and Saudi-Russia oil price war on American shale companies. We still have a way (down) to go, unfortunately. But all is not lost. There is hope on the horizon. That’s the message we take from comments by an Enverus analyst. According to RBN Energy, we’ve seen this movie before. Maybe this movie has a different storyline, but the plot is the same. Can we predict how it will play out this time based on previous downturns? RBN offers up the five stages a shale play goes through.
What happens when an oil driller has a well or two or dozen where they get great oil production, but there are no pipelines connected to cart away the associated natural gas that comes out of the borehole along with the oil? There are only a couple of options–venting (releasing methane into the air) and flaring (burning the methane, turning it into carbon dioxide). There are a number of innovative companies that have a new solution: Go ahead and burn the methane, but burn it to produce electricity, and use the electricity (at the well site) to power computers. The computers are connected to a network of other computers and form a sort of supercomputer. Crusoe Energy Systems is one of those innovative companies, now using their distributed computing systems at oil wells to work on computations aimed at finding a vaccine for the COVID-19 coronavirus.
Should the U.S. government step in to help the American oil and gas industry, given the current double crisis of both lower demand (COVID-19) and oversupply (the Saudi-Russia oil price war)? We’ve written about rumblings that since the Saudis and Russians are dumping oil (selling it far below the price to make it) on the world market, in an attempt to bankrupt American shale drillers, that the government should consider either imposing tariffs on imported oil, or possibly embargo imported oil. Free traders are aghast at such a notion. Fair traders (like yours truly) are less aghast, although as a general rule we don’t favor government intervention in the marketplace. Below are two differing views on whether or not Uncle Sam should do something to help O&G. Interestingly, the American Petroleum Institute says “no way” to government intervention.