Industrywide Issues

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    Rolling Blackouts/Brownouts Coming to Upstate NY? Maybe

    In May, MDN brought you a story of how New England was “this close” to rolling blackouts due to an extreme shortage of electricity during a cold snap (see When Neighbors Go Bad: NY Forcing New England into Blackouts). New York is blocking natural gas pipelines that are critically needed to flow gas to New England gas-fired electric plants. New England has a bunch of old 1960s oil-burning plants. It was reactivating those old plants and burning 2 million barrels of oil over a two-week period (belching out all sorts of pollution), that kept the lights on in New England this past winter. But what’s this? New York itself is now in a pickle. National Grid, a local electric utility operating in much of Upstate, is warning customers to “reduce unnecessary electricity usage for the remainder of the week.” Why? The company says that although, “Electricity supply to the area is adequate…heavy demand and high temperatures could potentially challenge regional networks.” Translation: Use less electricity or you may face a rolling blackout/brownout. They don’t use those words, but we do. It sure looks to us like NY (via Andrew Cuomo) is beginning to reap what it’s sown. Stop new pipelines, block new gas-fired electric plant projects, and this is what you get when the temps turn really hot, or really cold…
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    Shale Support Buys 2 Frac Sand Mines in La. to Help Service M-U

    Last September MDN told you that Shale Support Holdings, “a leading provider of frac sand and logistical solutions to the oil and gas proppant market” (headquartered in Texas, with an operations center in Mississippi), was stepping up its presence in the Marcellus/Utica region with a partnership with Tidewater Logistics (see Shale Support Holdings Expands M-U Frac Sand Business via Partnership). The partnership increases Shale Support’s operations in Ohio, Pennsylvania and West Virginia. Because Shale Support can ship sand direct from Mississippi, which is much closer than most other alternatives, the price for frac sand is cheaper for customers. Shale Support announced another important deal in May, to become the exclusive supplier for a major regional frac sand facility in Wysox (Bradford County), PA (see Shale Support Exclusive Frac Sand Supplier for NEPA Facility). Two weeks ago, in June, Shale Support made yet another announcement–they’ve just closed on a deal to buy two natural sand mines in Louisiana. The mines add another 2 million tons per year of frac sand (now totaling 5 million tons) that Shale Support will provide to plays like the Haynesville, Austin Chalk, Eagle Ford and (yes), to the Marcellus/Utica…
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    EPA Advances Effort to Overturn Obama Waters of the U.S. Rule

    In May 2015, the Obama rogue Environmental Protection Agency (EPA) along with the Obama U.S. Army Corps of Engineers (USACE) released a finalized rule clarifying what “Waters of the United States” (WOTUS) means vis a vis what can be regulated under the federal Clean Water Act (see EPA Power Grab: Redefines Waters of the U.S. to Include Everything). Essentially the rule change redefined everything down to mud puddles (no, we’re not exaggerating) as being subject to the Clean Water Act. It was yet another attempt to bring oil and gas regulation under the purview of the federal government, a violation of the U.S. Constitution. We won’t recount the history of lawsuits and counter lawsuits that have ensued. We’ll only tell you that in January the U.S. Supreme Court entered the fray by determining which courts can hear lawsuits regarding WOTUS (see U.S. Supreme Court Changes Jurisdiction for WOTUS Challenges). At the end of January, EPA Administrator Scott Pruitt issued an order to suspend/delay the Obama version of WOTUS until a new version is ready, in two years (see EPA Director Scott Pruitt Suspends Obama WOTUS Rule). Pruitt’s action has (so far) held, much to the consternation of radical environmentalists. Pruitt has just architected another masterstroke, issuing a “Supplemental Notice of Proposed Rulemaking” for WOTUS. The notice does two things: It states unequivocally that the EPA and Army Corps want to completely overturn the 2015 Obama WOTUS rule; and it inoculates the process of overturning WOTUS so that future lawsuits can’t bring it back from the dead…
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    PennFuture Tries to Bully Pittsburgh Airport re Gas Royalties

    As is so often the case, radical Big Green groups, like PennFuture, attempt to intimidate (i.e. bully) by using threats of legal action, those who dare to use and (gasp) enjoy the monetary benefits of shale drilling. In early 2013 the Pittsburgh International Airport and Allegheny County, PA signed a deal with CONSOL Energy (now CNX Resources) to lease 9,000 acres surrounding the airport for natural gas drilling (see $50M Check in the Mail: Pittsburgh Airport Lease a Done Deal). The airport received a $50 million signing bonus and the promise of 18% royalties on anything produced and sold. The first wells began to flow natural gas for the first time exactly two years ago, in July 2016 (see CONSOL’s First Pittsburgh Airport Wells Begin to Flow NatGas). So far, for 2016 and 2017, the airport has received a grand total of just over $16 million in royalty payments and another $857,000 from other fees. Yikes! The airport uses the revenue “to reduce airline rates and charges and for capital expenditures…at the Airport.” So along comes the Big Green bullies from PennFuture, threatening to sue the airport if it doesn’t use the money for what PennFuture wants it used for. Yeah, the money does not belong to PennFuture, but that doesn’t stop this rogue “nonprofit” from throwing its weight around and making demands. PennFuture is telling the airport the money MUST be used to “further the interests of citizens under the environmental rights amendment.” Whatever that means. PennFuture told the airport, in a nasty letter, that the airport is in violation of Article I, Section 27 of the Pennsylvania Constitution. Our advice to the airport: Tell PennFuture to take a hike in the vast PA outdoors…
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    Exploded Leach XPress Pipe Won’t be Online Until Mid-July

    Leach XPress Pipeline explosion/fire on June 7

    TransCanada’s Leach XPress project–some 160 miles of new natural gas pipeline and compression facilities in southeastern Ohio and West Virginia’s northern panhandle which flows 1.5 billion cubic feet (Bcf) of gas all the way to Leach, Kentucky (hence the name)–went online January 1st. A section of the pipeline exploded and burst into flames on June 7 (see Leach Xpress Pipeline Explodes in Marshall County, WV). Still no word on what caused the explosion, although the investigation seems to be centered on a welded seam. TransCanada (and their Columbia Gas Transmission subsidiary) is working hard to get the pipeline back online. The company told shippers in mid-June they expected to have the full 1.5 Bcf/d pipeline back online “early in July” (see TransCanada Says Exploded Leach XPress Pipe Back Online in July). That’s not going to happen since it’s now early July. Last Friday, Columbia pushed back the date to “mid-July,” due to challenges in getting everything remediated and fixed because of heavy rain in the area. Meanwhile, the drillers using Leach continue to find other ways to get their gas to market…
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    PA DEP Grants Williams NE Supply Enhancement Pipe Key Permit

    NESE map – click for larger version

    The Northeast Supply Enhancement (NESE) is a Williams Transco Pipeline project meant to increase pipeline capacity and flows heading into northeastern markets (see Time to Support Transco’s Northeast Supply Enhancement Project). Transco wants to provide more Marcellus natural gas to utility giant National Grid beginning with the 2019-2020 heating season. National Grid operates in New York City, Long Island, Rhode Island and Massachusetts. There are a number of components to the project, but the key component, the heart of the project, is a new 23-mile pipeline from the shore of New Jersey into (on the bottom of) the Raritan Bay–running parallel to the existing Transco pipeline–before connecting to the Transco offshore. After an initial rejection by the New York Dept. of Environmental Conservation (DEC), Williams refiled an application for the project in May with the DEC (see Williams Refiles Application with NY DEC for Transco NESE Project). Meanwhile, there are portions of the project in Pennsylvania that have already been approved by the PA’s Dept. of Environmental Protection. In a notice published in the June 16 Pennsylvania Bulletin, the DEP issued the project a Section 401 Water Quality Certification for work being done in Lancaster and Chester counties. According to the PA Environment Digest Blog: “The Project facilities consist of approximately 10.17 miles of new 42-inch diameter natural gas pipeline in Drumore, East Drumore, and Eden Townships, Lancaster County and the addition of one 21,902 horsepower motor-driven compressor at the existing Compressor Station 200 in East Whiteland Twp., Chester County.” Too bad the dysfunctional NY DEC couldn’t be more like the mostly-functional PA DEP…
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    New Kid on the Block Gives THE Dela. Riverkeeper Some Competition

    Sandra Meola

    Looks like THE Delaware Riverkeeper, Maya van Rossum, now has some competition. We’ve written about the radical Riverkeeper for years–an anti-fossil fuel organization hellbent to stop the use of fossil fuels by opposing fracking and pipelines anywhere and everywhere throughout the Marcellus/Utica region. Fruitcakes. Funded by the William Penn Foundation and Heinz Endowments, among other politically-active-yet-tax-exempt Big Green funders. But what’s this? There’s a relatively new organization (formed in 2012) called the Coalition for the Delaware River Watershed (CDRW). Beginning this month, Sandra Meola becomes director of the organization. By all accounts the CDRW is just as far-left as Riverkeeper, although CDRW seems to be more about raising money for particular projects rather than suing fossil fuel companies. According to the CDRW website, “The Coalition is made up of numerous organizations working throughout the four-state Delaware River Watershed to protect and restore one of America’s great river basins. Members range in size and reach from local groups on the front lines of Watershed protection, to organizations that work on regional, state, and national levels.” In looking through the Members page (the list of organizations that belong to the CDRW), we spot the usual suspects. PennFuture, Trout Unlimited, Pennsylvania Environmental Council–radical green groups all, vehemently opposed to shale energy. Noticeably absent from the CDRW Members list is THE Delaware Riverkeeper. We wonder, why is that?…
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    Canadian Goldboro LNG Inches Toward Final Investment Decision

    The Goldboro LNG export facility in Nova Scotia continues its march (shuffle?) toward construction. As we reported in February, Pieridae Energy (the builder) has enlisted the help of Morgan Stanley and Société Générale to help raise $10 billion to build it (see Pieridae Energy Hires Morgan Stanley, SG to Help Fund Goldboro LNG). Last May, MDN told you that Pieridae Energy had signed a labor agreement to build the Goldboro LNG export facility along the shore of Nova Scotia, Canada (see Update on Goldboro LNG – Labor Agreement Signed to Build). The U.S. Dept. of Energy approved the plant for exporting to non-free trade agreement counties in February 2016, an indication that Marcellus/Utica gas may flow to the plant (see Goldboro LNG Project Gets Final DOE Approval – Good for Marcellus). And in May, we told you the facility is lining up customers for its LNG in Europe (see Goldboro LNG in Nova Scotia Negotiating Deal to Sell LNG to Europe). It’s now time for Pieridae to decide. If they don’t begin construction on the project in the next nine months, they risk losing Nova Scotia environmental approval…
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    BP’s 67th Statistical Review – Fossil Fuels Still Going Strong

    Oil and gas giant BP recently released its annual Statistical Review of World Energy–the 67th edition! (Full copy below.) A number of big energy companies, like Exxon Mobil, as well as government agencies, publish similar reports that characterize current and future world energy trends. However, one analyst we read says BP’s report is the best: “I have relied upon the BP World Energy report for years. It is not a report to be viewed with a partisan eye, but as merely one of the best, if not the best, energy trend device available anywhere. In comparison to government agencies like the U.S. Energy Information Administration (EIA) the global International Energy Association (IEA) or OPEC’s own World Oil Outlook, the BP report has proven itself to be far more valuable in finding investable trends. I would never recommend any oil sector without having the statistical evidence of the BP World Energy Report behind me.” This year’s report finds that oil and natural gas consumption increased significantly in 2017. It also finds the U.S. best-positioned to meet that increasing demand, thanks to the shale miracle. Below we have some of the key highlights from the report, followed by a full copy…
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    FERC Plays Hardball with Rover – Refuses to Certify 4 Laterals

    Rover Pipeline has violated one of the sacrosanct rules of life (and of pipeline construction): “Say what you’ll do, then do what you say.” Rover told the Federal Energy Regulatory Commission it would restore areas previously dug up to lay the pipeline by certain dates (primarily June 30th). In return, based on those promises from Rover, FERC allowed the company to begin service on certain sections of the $3.7 billion, 711-mile natural gas pipeline that runs from PA, WV and eastern OH through OH into Michigan and on to Canada via the Vector Pipeline. Rover has been pressuring FERC to allow two of the laterals–the Burgettstown and Majorsville laterals, that reach into western Pennsylvania–to begin service (see Rover Pressuring FERC to Approve Final 2 Laterals ASAP). We previously assumed (incorrectly) that the other six laterals were all online. That is not the case. Two more laterals are not yet online, in addition to the Burgettstown and Majorsville laterals. We’re not sure which ones. Laterals are offshoot pipelines that connect sources of gas to the main Rover pipeline–a critical component because you need the supply or you’ll have a partially empty mainline. In a letter dated last Thursday, FERC told Rover they haven’t lived up to their promises to restore areas they promised to restore by June 30th. The FERC letter (full copy below) says (1) Rover must provide a detailed list, chapter and verse, of why it has not lived up to its promises, and (2) informs Rover that until it does live up to its promises, they won’t be authorizing any more laterals to go online. FERC is playing hardball–far from the “industry rubber stamp” that antis attempt to portray FERC as…
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    Mountain Valley Pipe Voluntarily Shuts Down Construction in Va.

    MDN told you last week that Sierra Club lawyers are attempting to bamboozle a court into halting construction of the Mountain Valley Pipeline (MVP) in Virginia, as they were able to do in West Virginia (see Enviro Radicals Target MVP in Va. Following WV Court “Win”). Turns out the enviro-nuts don’t have to worry–at least for now. Mother Nature has done it for them, has halted all construction of MVP in the Old Dominion. Following heavy rains that have resulted in erosion and runoff from the pathway along which the pipeline will be laid, MVP has voluntarily decided to, for the time being, halt all construction in Virginia. When will construction resume? According to an MVP spokesman: “There is no specific timeline for the suspension, however, as soon as upgrades are completed and approved by DEQ, construction can resume.” Let’s hope it’s sooner rather than later…
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    60-Mile Pipeline from NW PA to NE OH Gets Favorable FERC Review

    Click for larger version

    Last October MDN brought you details about the proposed $86 million Risberg Line pipeline project (see New 60-Mile Pipeline Proposed from NW Pa. to NE Ohio). The project will use approximately 32 miles of existing pipeline in an established Right of Way originating in the Meadville, PA area. Approximately 16 miles of new pipeline will be installed in Pennsylvania and approximately 12 miles of new pipeline will be installed in Ohio–meaning 28 miles of brand new “greenfield” pipeline needs to get built. Both the U.S. Army Corps of Engineers and the Pennsylvania Fish and Boat Commission are “cooperating agencies” and part of the environmental assessment (EA) review process, along with the lead agency, the Federal Energy Regulatory Commission (FERC). Good news: FERC issued the EA on Friday (full copy below), and the project passes with flying colors. While this is not a final stamp of approval (which is due by Sept. 27th), when FERC issues a favorable EA, it’s almost certain they will approve the project…
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    Another ME2 Mud Spill at Snitz Creek, Another Hysterical Reaction

    Sunoco Logistics Partners was drilling horizontally underneath Snitz Creek in Lebanon County, PA for its Mariner East 2 Pipeline project when it experienced yet another “inadvertent return”–nontoxic drilling mud leaking out of a place where it shouldn’t. Sunoco spilled five gallons of nontoxic drilling mud. This is the third time it’s happened in June, and the sixth time it’s happened at the Snitz Creek location in total. Predictably, antis were hysterical. Hysterical, not as in funny, but hysterical as an insane, out-of-control overreaction. Theatrics. Drama. That kind of hysterical. The reaction from antis is organized by “green” groups–in particular by one person from a local green group calling itself Concerned Citizens of Lebanon County. Five gallons of nontoxic drilling mud (the same stuff used to make kitty litter and lipstick) is, quite literally, NOTHING. We’ve seen 5 gallon spills of very toxic gasoline at the local gas station that went unnoticed. Gasoline is far more “toxic” to the environment than what’s happening at Snitz Creek. Why do drilling mud spills keep happening at the Snitz Creek location? Obviously the ground in that area is porous. Every time Sunoco drills under the creek another few feet, drilling mud pops out and drilling activity gets shut down, yet again. This is a recurring situation. We don’t know what the solution is, but not building the pipeline (which is 99% done) is not one of the options. Hopefully Sunoco can find a solution quickly so we can put this ongoing, manufactured, and tiresome drama queen theatrics behind us…
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    Sad News: FERC’s Rob Powelson (from PA) Resigns Effective August

    FERC Commissioner Rob Powelson

    Robert Powelson, a Republican member of the Federal Energy Regulatory Commission (FERC) from the great state of Pennsylvania, appointed by President Trump, announced yesterday he is resigning effective in mid-August. He’s not even been in office a full year. This is devastatingly bad news in our book, for a couple of reasons. Coming from PA and previously serving on the state Public Utility Commission, Powelson has been a champion for natural gas and the pipelines that flow it–especially Marcellus/Utica projects. He’s been a superb FERC commissioner. So why is Powelson leaving? To become president and CEO of the National Association of Water Companies. No offense to that association (which we’d never heard of before), but this is a step down. The speculation whirling around is that Powelson is leaving FERC over differences of opinion with Team Trump and their ill-advised mission to prop up coal and nuclear energy, at the expense of natural gas. Apparently Powelson has had enough and wants out. It’s not only sad he’s leaving, it could be consequential in the near-term. Why? Because the Commission will be split 2-2 Republicans and Democrats, and the Dems have shown they’ve sold out to their radical elements, willing to vote against new pipeline projects in the name of man-made global warming, contrary to policy and stated regulation (see FERC Becomes Political as Seen in Rehearing Vote on NY Project). The politics in the Dem party is toxic and radical, and has now spread to FERC. Powelson’s departure at this time is not good news for our industry. We hope Trump can get a new FERC member appointed to replace Powelson asap–but don’t hold your breath. The swamp resists change at any cost…
    Read More “Sad News: FERC’s Rob Powelson (from PA) Resigns Effective August”

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    PA IFO Predicts 2018 Impact Tax Will Raise Record High $224 Million

    The PA Independent Fiscal Office (IFO) does a pretty good job of guesstimating how much impact fee revenue will get generated in the coming year, based on permit and producing wells activity this year. How good? Last year the IFO predicted that impact fee (equivalent of a severance tax) revenue would be $222 million for 2017 (see IFO Predicts PA Impact Fees for 2017 Will Soar, Near Record High). They weren’t too far off. The state Public Utility Commission, charged with collecting the fee, just disbursed impact fee revenue raised in 2017. The grand total was $210 million (see PA Impact Fee/Tax Hauls in $210M in 2017 – Third Highest Ever). There was $6 million “missing” from that number due to a dispute over what is, and what is not, considered a “stripper well.” If you were to include the $6 million (as the IFO does in their estimates), then 2017 revenue would have been $217 million–not far from IFO’s $222 million estimate. The IFO just released an impact fee update (full copy below) with an outlook for 2018. The IFO predicts next year’s impact fee will generate $224 million in revenue. If that estimate bears out, it would be the highest amount of revenue generated by the fee since its beginning in 2011…
    Read More “PA IFO Predicts 2018 Impact Tax Will Raise Record High $224 Million”

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    M-U Production May “Flounder” This Summer from Rover Pipe Delays

    Platts is reporting U.S. natural gas production hit a new, all-time high last week, mainly due to a surge in natgas production in the Texas Permian. Although Marcellus/Utica production “pulled back modestly” this past week, if you look at the entire month of June, we hit new all-time highs for production yet again. However, it wasn’t just the good news of new record production that caught our attention in the Platts update, but this statement: “Looking ahead, it’s possible that Northeast production growth could flounder this summer, thanks to continued in-service /delays on Rover Pipeline’s upstream supply laterals.” Rover is desperately trying to get FERC to grant permission to open the Majorsville and Burgettstown laterals, as we pointed out yesterday (see Rover Pressuring FERC to Approve Final 2 Laterals ASAP). So if those laterals were to go into service immediately, wouldn’t that mean production will spike up right away with no “floundering”? Not necessarily. Here’s why…
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