Industrywide Issues

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    PA DEP’s Short-Term Solution to Get More Help – Hire 92 Interns

    Everybody has a “fix” for the chronically slow Pennsylvania Dept. of Environmental Protection (DEP). The DEP has a policy of issuing erosion and sedimentation permits for shale drilling 14 days from the date of application. At last check, it was taking the agency over 250 days to issue those permits. The Marcellus industry has been pressuring the PA legislature for a fix. As we noted in a companion story today, the PA Senate’s “fix” is to study it (see PA Senate Passes Meaningless Resolution to “Study” DEP Slow Permits). The PA House is more proactive, with a series of 5 bills that would, among other things, enlist the help of independent third parties to take up the slack (see PA House Advances “Fix DEP & Other Agencies” Plan with 5 Bills). Even PA Gov. Tom Wolf got in the act, offering his own solution, which involves hiking fees and hiring more people (see PA Gov Wolf Floats Plan to Fix DEP Slow Drilling Permits: Hike Fees). Perhaps the DEP has found a way to fix itself. The DEP recently posted 92 openings for paid internships. Many of the openings are for “Engineering and Scientific Technical Interns” for which the intern will earn $13.23/hour. While some of the openings are in the coal program, or the water resources program, many of positions (we’d say most, judging by a random check) are in the oil and gas program. But wait, the DEP is on a tight budget, right? They don’t have an extra two nickels to rub together. That’s what we always hear. That’s why fees need to go up, right? Somehow the DEP has been able to find money for an intern program. If 92 interns work for a 3-month period earning $13.23 per hour (40 hour weeks), that’s more than $580,000. Maybe the DEP will pull the money from one of the slush funds Republicans wanted to empty as part of balancing the budget? At any rate, here’s the deets on becoming an intern for the PA DEP…
    Read More “PA DEP’s Short-Term Solution to Get More Help – Hire 92 Interns”

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    NY Reconsiders Building Tiny NatGas-Fired Elec Plant in Albany

    It doesn’t happen often, but we’re speechless. We’ve lived under the apparent illusion that as stupid and insane as liberal leftist environmentalism is, that deep down underneath there’s still at least a small sliver of pragmatic truth that lives. Example: Even though NY Gov. Andrew Cuomo has banned fracking, and blocks natural gas pipelines from getting built (bowing to pressure from the enviro left), at least Cuomo is on board with building a tiny natgas-fired electric generating plant in the heart of Albany, to power the bloated government complex that exists (see NY Gov Cuomo Building New Fracked Gas Elec Plant to Power Albany!). Sure, Cuomo’s fringe/nut/kook base doesn’t want the tiny electric plant built in Albany (see Antis Push Back on Albany, NY Tiny NatGas-Fired Electric Plant). But not even Cuomo would cave to that kind of insanity, right? Wrong. Because of pressure from the enviro left, the New York Power Authority (i.e. Cuomo) announced yesterday it will hold (don’t laugh), “listening sessions” to hear any and all crackpot alternatives that can be proposed using so-called renewable energy, instead of building the natgas-fired electric plant. Which means the entire project, IF IT EVER GETS BUILT, will now be delayed…
    Read More “NY Reconsiders Building Tiny NatGas-Fired Elec Plant in Albany”

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    New 190-Mile NatGas Pipeline Planned for Delmarva Peninsula

    Delmarva Pipeline map – click for larger version

    It’s not often we run across a new pipeline project in our region that we haven’t heard about. But this is one of those days. Last August through October (for 60 days) the Delmarva Pipeline company ran an open house for a 190-mile pipeline that will originate in Rising Sun, Maryland and extend down the Eastern Shore to Accomack, Virginia. We missed the original open season announcement. An open season, for those new to the oil and gas business, is when a pipeline company floats a plan for a pipeline and gets potential customers to agree, contractually, to use the pipeline for the first 10-15 years (or longer) after it’s built. Those signed-on-the-dotted-line contracts give the builder, in this case H4 Capital Partners, confidence to file a plan and proceed with construction. The purpose of the Delmarva Pipeline is to flow natural gas to two rural counties in the southern portion of the Delmarva Peninsula–Somerset County, MD and Accomack County, VA. (Delmarva, for those not along the East Coast, stands for Delaware, Maryland and Virginia–the peninsula where portions of all three states can be found.) H4 Capital Partners has reportedly spent the past four years planning the $1.3 billion pipeline project, and they are now, after a successful open season, ready to file plans with FERC to make it happen. The plan is to get the pipeline built and in-service by late 2020 or early 2021. The reason MDN is interested in this pipeline should be obvious. Although there’s no mention of where the gas will come from to feed this new pipeline, we have zero doubt the gas will come from the Marcellus Shale–making the Delmarva Pipeline an important new demand source for our bountiful supplies of clean burning Marcellus gas…
    Read More “New 190-Mile NatGas Pipeline Planned for Delmarva Peninsula”

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    PA DEP Plans to Raise Marcellus Well Permit Fee by 250%

    Pennsylvania Gov. Tom Wolf’s Dept. of Environmental Protection (DEP), the agency charged with overseeing oil and gas drilling in the state, has “blindsided” the shale industry with a proposal to hike the fee required when submitting an application to drill a new shale well. The current fee is $5,000. The proposed new fee is $12,500–or 2.5 times greater (i.e. 250% higher). The DEP Oil and Gas Technical Advisory Board (TAB) is scheduled to meet next week, on Feb. 14, to discuss the permit fee increase. The fee funds the oil and gas program within the DEP. Wells must be visited and inspected throughout their life–decades after they are initially drilled. The permit fee is a one-time, up-front fee. Over the past couple of years the number of new wells getting drilled has decreased (although in 2017 it went back up, see PA Shale Wells Drilled Soars 56% in 2017; Impact Fee Up $5,400/Well). Because there have been fewer wells drilled in recent years, there’s a lot less money in the DEP’s budget for well inspectors. Hence the plan to hike the fee. The industry does not object to a measured increase–but going up 250% is “excessive” and not called for, according to the Marcellus Shale Coalition. In addition to the permit fee hike, the TAB meeting will also hold a discussion on finalizing new GP-5 and GP-5A General Permits to control methane emissions from oil and gas operations. Buckle up, the next TAB meeting looks like it may get heated…
    Read More “PA DEP Plans to Raise Marcellus Well Permit Fee by 250%”

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    Sunoco Appeals DEP’s ME2 Pipe Suspension to Enviro Hearing Board

    PA State Sen. Andy Dinniman

    In early January, the Pennsylvania Dept. of Environmental Protection (DEP) issued an order shutting down all construction for the Sunoco Logistics Partners Mariner East 2 (ME2) pipeline project (see PA DEP Caves to Big Green Pressure, Stops All Work on ME2 Pipeline). The DEP claims Sunoco had violated the conditions of the permits that allow it to drill and trench for the project. In particular, the DEP is hot and bothered about drilling mud spills associated with underground horizontal directional drilling (HDD). The DEP said Suonco can restart work when/if certain conditions are met. So far the DEP has not allowed Sunoco to restart work. In the meantime, thousands of workers are in the unemployment line, and have been since Jan. 3rd. Sunoco has just appealed the DEP’s cease and desist order to the PA Environmental Hearing Board–a special court set up to hear appeals of DEP decisions. Sunoco lays out their case in a filing (below) for why the DEP is incorrect in issuing their stop work order…
    Read More “Sunoco Appeals DEP’s ME2 Pipe Suspension to Enviro Hearing Board”

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    Rover Again Asks FERC for OK to Restart Tuscarawas Drilling

    On Jan. 24, the Federal Energy Regulatory Commission (FERC) sent a letter to Rover Pipeline stopping drilling at the Tuscarawas River site, which had only restarted in December (see FERC Stops Rover Drilling Near River After 200K Gal Mud Disappears). In a strongly worded letter dated Sunday, Jan. 28, Rover told FERC they are “frustrated by the inaccurate central premise underlying the letter received from” FERC shutting down drilling at that location (see Rover “Frustrated” with FERC Order to Stop Drilling at Tuscarawas). Some 99% of all construction work is now complete for Rover Pipeline. There’s only a little more to do to finish things up, including installation of a second Rover Pipeline (next to the first) underneath the Tuscarawas River. Rover has “lost” 200,000 gallons of drilling mud down the hole in drilling for the second pipe. However, the “lost” mud has not come back to the surface. Mud disappearing–and staying down the hole–when drilling for pipelines is not uncommon. Yet FERC will not lift the stop work order. On Friday, FERC sent a letter to Rover saying Rover must provide information on three different scenarios before work can resume: (1) how Rover plans to complete drilling at the current location without losing any more mud, (2) change locations and run the second pipe under another part of the Tuscarawas River, or (3) forget about drilling and installing a second pipe altogether, and stick with just a single pipe already in place now. FERC’s letter brought a swift response. On Sunday, Rover provided a mountain of evidence to say the current plan of drilling under the river at the existing location is the right plan. Rover went one step further, asking FERC to allow them to begin drilling again by yesterday (Monday) afternoon at 3pm. To the best of our knowledge, that did not happen…
    Read More “Rover Again Asks FERC for OK to Restart Tuscarawas Drilling”

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    Clash of the Titans: PA Marcellus Gas Competes with TX Permian

    Last week MDN editor Jim Willis attended Hart Energy’s Marcellus-Utica Midstream conference in Pittsburgh (a series of stories are coming this week from that event). One of the stray comments Jim heard at the event was this: The chief rival or competitor to the Marcellus with respect to natural gas production is not, as you might assume (we sure did) the Haynesville Shale in Louisiana. No. The chief competitor, producing more and more volumes of natgas, is…the Permian! That’s right, an oil play! Why? When you drill for oil, you get other hydrocarbons out of the ground along with the oil. Primarily methane, or natural gas. It’s called “associated gas.” Even though most of what comes out of a Permian well is oil and not gas, because there are so darned many oil wells in the Permian (with more being drilled all the time), the total volume of gas coming from the Permian is going up, dramatically. The problem is, some Marcellus/Utica gas heads to the Gulf Coast to be used by petrochemical companies or to be exported. However, gas produced right there in the region is less expensive to get to market (shorter distance), so that Permian-sourced gas is competing, and increasingly crowding out, Marcellus/Utica gas. Investors have noticed and have, in a sense, “punished” some of the biggest of the big Marcellus/Utica producers by selling their shares, leading to a loss in share value. Among the hardest hit have been Southwestern Energy, Gulfport Energy, and Range Resources. The stock price for those three companies is down, since Jan. 1st, 33%, 30% and 25% respectively. A Bloomberg article says the stocks for those companies have been “mauled.” Indeed. Here’s some insight into how the Marcellus/Utica is increasingly going up against the oil giant Permian Basin, sometimes getting mauled…
    Read More “Clash of the Titans: PA Marcellus Gas Competes with TX Permian”

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    NJ Continues to Hassle PennEast Pipe with Refusals & Rejections

    The State of New Jersey and its elected leaders (Governor and Attorney General) continue their quest to hassle and block the PennEast Pipeline from entering a small portion of their state. Why? To answer that question you’d have to enter their brains to understand all of the political calculations that go on–a very scary proposition. NJ Attorney General Gurbir Grewal (far-left Democrat) on Friday rejected PennEast’s request to use state-owned land for small part of the pipeline’s route. Also last week, the NJ Dept. of Environmental Protection (an executive branch agency, reports to NJ’s newly elected LibDem Gov. Phil Murphy) told PennEast the DEP is closing the books on PennEast’s water crossing permit application for lack of information. PennEast says the DEP’s action was not a surprise and that they will refile the application with the additional information sought. It all just points to a very hostile (to private business) government that has seized power in The Garden State. Don’t worry, PennEast isn’t letting NJ’s hostility stop them. This pipeline will still get built…
    Read More “NJ Continues to Hassle PennEast Pipe with Refusals & Rejections”

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    Trump Tax Cut has Unintended Consequences for Pipeline Projects

    President Trump’s marvelous tax cut has had some unintended (negative) consequences for pipeline companies. Trade groups and some states are pressuring the Federal Energy Regulatory Commission (FERC) to force pipeline companies to cut the rates they charge customers in light of the Trump tax cut. The corporate tax rate is going from 35% (highest of any modern/Western country) down to 21%. Which will encourage all sorts of investment in the good old US of A. When pipelines file rate cases for how much they will charge customers to flow gas (or oil or whatever else) through the pipeline, part of the calculation for what FERC allows them to charge is based on profitability. Since those companies will now be a whole lot more profitable (tax payments going down), the customers using those pipelines want the rates recalculated to reflect the savings. In other words, they want part of the tax savings too. But wait just a rootin’-tootin’ minute! (says the pipeline companies). The pipelines have duly signed contracts in place. You can’t just rework a single portion of those contracts with the sweep of a pen. What about other components in the contract that are used in calculating prices? In some (many?) cases pipeline companies have borne increased costs that are not passed along to customers. If the customers (mainly utility companies) want FERC to adjust the rates, they may not like how those rates get adjusted considering all the other factors that could/should be changed. Maybe they’ll go up instead of down! A battle is brewing between utilities and the pipelines that feed them, all because of Trump’s tax cut…
    Read More “Trump Tax Cut has Unintended Consequences for Pipeline Projects”

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    PA Shale Wells Drilled Soars 56% in 2017; Impact Fee Up $5,400/Well

    In early 2012, Pennsylvania enacted the most sweeping rework of oil and gas laws in the state in decades (see Gov. Corbett Signs New Marcellus Drilling Law). Called Act 13, one of the provisions of the law is an “impact fee” collected on each horizontal shale well drilled. The fee is intended to offset the impacts of drilling in places where drilling happens, hence the name. However, in order to get enough support to pass Act 13, politics were played and 40% of the “fee” got re-allocated to non-impact uses–i.e., 40% of the fee became a tax (see PA’s New Tax on Drilling (er Sorry, Impact Fee)). In reality, PA’s impact “fee” is the equivalent of a severance tax. The main difference is that the fee is calculated according to a sliding schedule based on how long a well has been around. Beginning with the first year a shale well is drilled, and every year thereafter, drillers pay a set fee, regardless of how much gas is produced. If a driller drills a well but doesn’t complete it in year one, that driller still pays the same (very steep) fee, regardless of no production. In that way, an impact fee is superior to a severance tax as a revenue generator for the state. Impact fees are paid for 15 years. In setting up the somewhat complicated schedule for how much a driller will pay, it depends on how old the well is. The PA Public Utility Commission (PUC), the agency in charge of assessing and collecting the fee, periodically adjusts the fee schedule up to account for inflation. The fee assessed depends on how much the price of natural gas is selling for at the benchmark Henry Hub trading point (in Louisiana). In 2017 (which collected fees from drilling in 2016), if the price of natgas at Henry Hub averaged between $2.26 – $2.99 for the year (which it did, at $2.46/Mcf), the impact fee for a newly drilled well during the year of 2016 was $45,300. In 2018 (collecting fees from 2017), the price of natgas at Henry Hub was in the next higher bracket, averaging between $3.00 – $4.99 (2017 averaged $3.11/Mcf). So the fee for first year wells drilled last year will be $50,700–which is $5,400 higher than a driller would have paid the previous year. Our point: Drillers in PA pay big bucks in “fees” (i.e. taxes) to drill in the state. Slapping a severance tax on top of the impact fee would be a disaster, virtually shutting down any new Marcellus drilling. Yet that’s what Gov. Wolf and his Democrat comrades insist on doing. Below is the newly released impact fee schedule for 2018 (covering wells drilled in 2017), along with details on the whopping increase in the number of wells drilled in 2017 vs. 2016…
    Read More “PA Shale Wells Drilled Soars 56% in 2017; Impact Fee Up $5,400/Well”

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    Gov. Cuomo Triples Upstate NY Electric Bills by Blocking Natgas

    This is a somewhat personal story that perfectly illustrates the point we’ve been making for years. MDN editor Jim Willis lives with his wife and family in the Binghamton, NY area. Jim likes to say he “lives behind enemy lines”–meaning New York State under Andrew Cuomo and his radical left base are hostile to the fossil fuel industry. The cost of Cuomo’s actions for every New Yorker (at least those of us living in Upstate) is now on full display for all to see. A few weeks ago Jim got his monthly electric bill from New York State Electric & Gas (NYSEG, owned by the Spanish company Iberdrola). Jim’s eyes about fell out of their sockets. Jim largely uses electricity for heating (with a fuel oil furnace as backup). No natural gas lines where Jim lives, unfortunately. Even in the dead of winter Jim’s electric bill is rarely over $200 in any given month–typically around $150. This time? Nearly $700!!!! At first, Jim chalked it up to the cold snap and the constant running of his electric heat source. Then he spotted an article (below, sent to us by Vic Furman), that shows Jim is not the only one. Across the entire region folks received bills that are double and triple the usual amount. Why the spike in price? It seems the lack of natural gas via pipelines is not only hurting New England, it’s now hurting Upstate NY. Due to a lack of natgas supplies and the huge regional demand for natgas–for home heating as well as for electric generators–the spot price for gas went through the roof and along with it NYSEG’s cost for both natgas and electricity generated by natgas also went through the roof. Consequently, Cuomo’s frack ban and (now) pipeline ban on importing natgas from PA are having very real, tangible consequences–in our electric bills. All of Cuomo’s precious renewable sources of energy will not, indeed cannot, make up for a lack of natgas. Cuomo’s stupidity is costing ME real money…
    Read More “Gov. Cuomo Triples Upstate NY Electric Bills by Blocking Natgas”

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    PennEast Pipe Forced to Do It Hard Way – Using Eminent Domain

    As we told you last week, today (Monday, Feb. 5) is the final day for landowners who live along the path of the PennEast Pipeline to accept an offer from PennEast to lease their land for the pipeline (see PennEast Pipe Gives Holdout Landowners Feb 5 Deadline to Sign). The landowners have had near three years to deal in good faith negotiations with PennEast, and now time has run out. On Friday, a group of holdout landowners symbolically tore up their PennEast lease offers in a vain media stunt. Starting later this week they will receive something via certified mail they better not tear up–a court summons for an eminent domain proceeding. It’s a shame when it has to come to that, but denial is a strong emotion. Now it’s off to court they go where they’ll get a splash of reality…
    Read More “PennEast Pipe Forced to Do It Hard Way – Using Eminent Domain”

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    Federal Judge Pushes Pause Button on Mountain Valley Pipe in VA

    In mid-January MDN brought you the news that (sadly) Mountain Valley Pipeline (MVP) had to file in federal court to “condemn” some holdout landowner properties along the pipeline’s route (see Mountain Valley Pipe Tweaks Route, Asks VA Judge for Eminent Domain). MVP is a $3.5 billion, 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. Holdout landowners in Virginia hired attorneys who argued that because MVP continued to tweak the route of the pipeline (in an attempt to work WITH said landowners!), that serves as evidence MVP doesn’t know what it really wants and whom to condemn with eminent domain–therefore the whole thing should be put on hold. MVP wants condemnation using eminent domain for Virginia landowners to happen now, because they are playing Beat the Clock with tree clearing along the path of the pipeline, work that must be done by March 31st because federal law prohibits it after March 31st for fear of killing a few roosting bats (we kid you not). In a decision handed down last week, a federal judge gave both sides reason for hope. The judge ruled that MVP can proceed with eminent domain cases against some 300 landowners–a huge legal victory for MVP. However, MVP can’t (yet) enter those properties for tree clearing and survey work. Why? Because MVP hasn’t provided the judge with enough proof that they will be able to pay landowners a fair price for their property when the time comes to settle up. She’s not saying MVP can’t or won’t pay up, she’s saying she wants to see more evidence first (surety bonds), before she will let MVP begin work. Those opposed to the pipeline heralded the judge’s decision to temporarily prevent work as some sort of victory–which it is not. They lost the case! The properties are now condemned using eminent domain (or soon will be, once the court paperwork proceeds). The judge’s order temporarily prevents work, but we expect MVP will remedy that post haste so they can then start up the chainsaws and get to work…
    Read More “Federal Judge Pushes Pause Button on Mountain Valley Pipe in VA”

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    Atlantic Sunrise Pipe’s Positive Impact in Lancaster Already Felt

    Money–a lot of money–is flowing into Lancaster County because of construction work now being done on Williams’ $3 billion, 198-mile Atlantic Sunrise natural gas pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from northeastern PA with the Williams’ Transco pipeline in southern Lancaster County. Local media pitches the revenue and jobs created by the project as “temporary.” MDN once heard a union pipeline worker respond to that very argument at a FERC hearing (for the Constitution Pipeline) by saying he’s had an entire career of “temporary” pipeline jobs that last a few months or a year–making enough money to put his kids through college and make a nice living for himself and his family. Lancaster residents should jump for joy at their “temporary” blessing of this pipeline’s construction. Among the beneficiaries of these “temporary benefits” are “dozens of local businesses” and “more than 100 workers” who are employed full-time working on the project. An estimated $75 million (!) is now flooding into the Lancaster County economy, thanks to Atlantic Sunrise…
    Read More “Atlantic Sunrise Pipe’s Positive Impact in Lancaster Already Felt”

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    Spire Expects Early 2018 FERC Approval for M-U Gas to St. Louis Pipe

    How long does it take to plan and build a pipeline? Too long. Two years ago (February 2016) MDN told you about an exciting new market for Marcellus and Utica Shale gas that may open up one day in the Midwest (see New Midwest Pipeline to Tap REX’s Marcellus/Utica Gas). Laclede Group, a St. Louis-based natural gas utility, said they want to build a ~60-mile pipeline from St. Louis through southwest Illinois and connect to the Rockies Express (REX) and Panhandle Eastern Pipeline. The new pipeline would bring low-cost Marcellus and Utica Shale gas from REX to the utility–not only for resale to gas customers, but also potentially for new natgas-powered electric plants planned to replace retiring coal-fired plants. A year later (February 2017) Laclede was renamed Spire and the Spire STL Pipeline filed an official application with the Federal Energy Regulatory Commission to build their 59-mile, 24-inch diameter pipe that would flow 400 million cubic feet (MMcf) per day of yummy Marcellus/Utica gas from REX to St. Louis (see Spire Files Plan with FERC to Flow Marcellus/Utica Gas to St. Louis). Another year has slipped by–we’re now starting the third year of this project. We have an update from Spire…
    Read More “Spire Expects Early 2018 FERC Approval for M-U Gas to St. Louis Pipe”

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    Can Virtual Pipelines Rescue New England from Russian LNG?

    The whole story of Russian LNG coming to Boston to help New England with its crisis shortage of natural gas continues to irk us. Although Russia and the Yamal plant where the gas was liquefied were sanctioned under President Obama. However, the actual gas itself was/is not sanctioned, for whatever reason. We have a situation where New England continues to obstinately refuse new natgas pipelines, instead buying LNG from Russia during critical shortages. We’re paying (and depending on) our enemies for natural gas when world-class supplies of it exist a few hundred miles away in the Marcellus. We’ve written about this confounding situation since early January (see our Russian LNG stories here). Last Friday the co-founder of NG Advantage–a “virtual pipeline” company that compresses natural gas from interstate pipelines and transports it, via trucks, to businesses and organizations that want gas but can’t get it via pipelines–wrote an intriguing blog post. Tom Evslin’s post makes a case for using virtual pipelines (i.e. CNG transported by trucks) as an alternative to help alleviate the extreme winter shortages in New England. Could trucked CNG (and LNG) actually eliminate the need for a pipeline to New England? We would argue “no.” However, without a doubt a virtual pipeline could help in certain places and under certain circumstances. Here’s Tom’s argument in favor of using virtual pipelines to alleviate New England’s stubbornly high prices for natural gas, and possibly save us from importing Russian LNG…
    Read More “Can Virtual Pipelines Rescue New England from Russian LNG?”