Industrywide Issues

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    Cyber Attack Hits Pipeline Computer System, Rover Pipe Affected

    We’ve read warnings about the potential for cyber (computer) attacks on the U.S. energy industry for several months. We understand how such an attack might affect a nuclear plant, or perhaps the electric grid. Screw up the computers managing and running a nuke plant or a significant portion of the electric grid and you have a class-one serious situation on your hands. However, we didn’t really think about pipelines. Did you know that pipeline networks, like electric grids, are monitored and controlled by computers and those computers can be compromised? We have to admit it was not on our radar screen. But that has now happened–and it affects not only pipeline systems in other parts of the country, but right here in the Marcellus/Utica. Energy Transfer Partners uses a third party service called Energy Services Group to manage all of its pipelines–a massive nationwide network. Energy Services provides EDI (electronic data interchange) services that reportedly cut costs and increases the speed with which companies exchange documents that used to be paper-based. Documents like those used in buying and selling natural gas at various trading hubs along major pipelines. On Monday, Energy Services was attacked electronically, knocking the service out of commission until further notice. Note that gas flowing through pipelines has not been affected. The affected computers don’t turn valves on and off. However, the ability to know who’s gas is flowing through the pipeline (who bought and who sold) has been slowed–on all of ET’s pipelines, including the newly-minted Rover Pipeline…
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    Offer to Relocate Families Near ME2 Sinkholes; ME1 Down Until May?

    Sinkhole in Chester County, PA

    Sunoco Logistics Partners (aka Energy Transfer Parnters) has had its challenges in constructing the twin Mariner East 2 (ME2) pipelines across Pennsylvania. In March, MDN told you that underground horizontal directional drilling (HDD) work in Chester County had led to a third sinkhole developing in that area (see 3rd Sinkhole Appears Near ME2 Construction in Chester County, PA). For most of its length, ME2 is being built next to the existing ME1 (Mariner East 1), a liquids pipeline originally built in 1931. The third sinkhole in Chester County exposed a portion of ME1, leading to the state Public Utility Commission “temporarily” shutting down ME1 on March 7 (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). ME1 would be, according to Sunoco, out of commission for “10 to 14 days.” Nearly a month later it’s still not running and until the state Dept. of Environmental Protection gets solid answers about the sinkholes, it won’t restart. It now looks like ME1 won’t be operational again until May. ME1’s closure has put several shippers, primarily Range Resources, in a bind (see Range, CNX Look for Alternatives to ME1 Pipe Following Shutdown). Sunoco needs to conduct geotechnical studies near the sinkholes to get answers that will allow it to resume work. So, Sunoco has offered to temporarily relocate five families living near the three sinkholes–for up to six weeks–while it conducts tests of the area…
    Read More “Offer to Relocate Families Near ME2 Sinkholes; ME1 Down Until May?”

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    Will Trade War with China Affect $83.7B Investment in WV Shale?

    Chinese moo goo gai pan

    Last November President Trump and assorted state officials, including West Virginia State Commerce Secretary Woody Thrasher, visited China as part of a trade delegation. On that trip, China agreed to invest a total of $250 billion in American (mostly energy) projects, $83.7B of which (a full third!) will go to investments in West Virginia (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). It was all sunshine and flowers and butterflies. But now there’s a big, black cloud on the horizon (perhaps we always knew it was too good to be true). Following a seven month investigation into Chinese theft of American intellectual property, last week President Trump told the U.S. trade representative to levy tariffs on $50 billion worth of Chinese imports. China is threatening to impose tariffs on U.S. products in return. A good, old-fashioned trade war. The question has been raised, What about that promised $250 billion of Chinese investment in Uncle Sam? Will China move forward with those investments, or perhaps withhold them? According to one global energy expert, “The Chinese are going to see these things [the promised investments] as bargaining chips.” Which points out the problem with relying on an enemy’s investments…
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    PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak

    EQT had to take their case all the way to the Pennsylvania Supreme Court, but in the end, the company was victorious over a wildly overinflated $4.53 million fine levied by the state Dept. of Environmental Protection (DEP) for a leaky wastewater impoundment in Tioga County dating back to 2014 (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). While EQT did not say there wasn’t a problem with leaks at the site, they did say the way the DEP calculated the fine was unreasonable and arbitrary. In fact, EQT says the DEP levied the fine and took EQT to court because a few weeks prior EQT had sued the DEP over a different, unrelated matter (i.e., sour grapes on the part of the DEP). EQT appealed the fine and the case all the way to the PA Supreme Court, which heard oral arguments last November (see PA Supreme Court Hears Arguments in EQT Wastewater Leak Case). Last Wednesday the PA Supremes ruled (5-2) in favor of EQT, saying that the DEP’s levied fine was excessive and that the DEP misinterpreted language in the 1937 Clean Streams Law…
    Read More “PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak”

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    Marcellus-Fired Panda Hummel Electric Plant Roars to Life in PA

    It takes a long time to build a natural gas-fired electric power plant–especially a big one. We began writing about one of the largest coal-to-gas conversion projects in the country, happening in the heart of PA Marcellus country, back in February 2014 (see Panda Power Building 3rd Marcellus-Fired Electric Plant in PA). Panda Power Funds, a private equity firm located in Dallas, TX announced a partnership with Sunbury Generation to build a whopping 1,124-megawatt Marcellus gas-fired electric plant on the site of a retired coal-fired plant near Shamokin Dam in Snyder County, PA. Final testing is now underway at the facility, which was supposed to go online in February but is now scheduled to begin operations in May. Here’s an inside look at the complicated process of bringing a new power plant online…
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    One MVP Radical Protester Arrested, Another Goes Up a Pole

    Click image for larger version

    First they went up trees to try and stop the Mountain Valley Pipeline (MVP) from getting built (see WV Judge Refuses to Eject Tree Sitters Blocking Pipeline Work). Now they’re illegally erecting poles for crazies to sit in. That’s what paid, radical protesters do these days: think up the most freakish, idiotic, outlandish stunt they can pull (or pole), in an effort to get publicity for their misguided cause. Not far from where radicals built tree houses in the Jefferson National Forest, a group of protesters gathered on a gravel access road, erected a 50-foot pole (held in place with ropes to nearby trees), and one of the crazies scampered up to the top to sit there (and is still there) in an attempt to block construction vehicles from passing down the road. The protesters on the road near the pole were ordered to move by the police. Most did, although one of them was arrested. As for the woman up the pole, she’s sitting in a makeshift shelter up there and refuses to reveal her name, nor will she come down…
    Read More “One MVP Radical Protester Arrested, Another Goes Up a Pole”

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    PA DEP Releases Draft Final GP-5 & 5A Methane Regulations

    Last December the Pennsylvania Dept. of Environmental Protection (DEP) issued “draft final language” for the proposed General Permit 5A (GP-5A) and the revised General Permit 5 (GP-5)–regulations that supposedly will cut down on fugitive methane from escaping from drill pads and pipelines (see PA DEP Signals Onerous New GP-5 & 5A Methane Regs Coming 1Q18). The onerous regulations, which for now only apply to *new* sources (not existing) were originally prompted by bullying from the Obama Environmental Protection Agency. Even though EPA pressure has disappeared under President Trump, PA Gov. Wolf is still pushing these onerous new regs. GP-5 applies to pipelines and compressor stations, while GP-5A applies to well pads and drilling. Following a flood of new comments, the DEP tweaked the onerous regs once again (for maybe the third or fourth time) and last Friday afternoon, when nobody was working or looking or caring, the DEP published yet another revised final final final final final version of the regs (below). Are they any better than previous versions?…
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    FERC Won’t Extend Atlantic Coast Pipeline Tree Cutting Deadline

    Two weeks ago Dominion Energy asked the Federal Energy Regulatory Commission (FERC) for permission to extend tree cutting/felling season by an extra 45 days, from March 31 to May 15, in West Virginia, Virginia and North Carolina (see Atlantic Coast Pipe Asks FERC for More Time to Cut Trees). Due to restrictions for species like the threatened Indiana bat, tree cutting season is limited–from November 16 to March 31. ACP said it couldn’t meet the March 31 deadline due to a late start following state bureaucratic delays. In a presentation Dominion gave to North Carolina environmental officials a few months back, the company said if “we cannot start [pipeline construction] in time to ensure a full and efficient construction season and have to delay service by one year, the impact would be $1 billion.” Dominion maintains that worst case scenario has not yet happened. Following the FERC decision to deny extending the date for tree cutting, Dominion said they’ll shift things around and can still meet their contractual deadline of getting ACP up and running by the end of next year…
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    The Critical Role of Subcontractors in WV Shale Industry

    Charlie Burd, IOGAWV

    A recently published interview with Charlie Burd, executive director of the Independent Oil and Natural Gas Association of West Virginia, yields new insights into the current status of the oil and gas industry in the Mountain State. One of those insights is the importance of subcontractors–what we call the supply chain–to the oil & gas industry in WV (and elsewhere). We often refer to producers or exploration and production companies as “drillers.” To be honest, it’s almost always a hired subcontractor that does the actual drilling. And subcontractors do a host (most of) the other pieces of getting a well up and running–everything from water deliveries for fracking to fencing around well pads to hauling away drill cuttings and brine. Burd talked about the key role subcontractors play in the process. He also said that 99.9% of the small, “mom and pop” independent producers (conventional drillers) that have been around for the past 150 years are now out of business in WV, since the rise of shale drilling. That’s a pretty startling statistic. Oh! And Burd explained the difference between “major” oil and gas companies, like Exxon and Chevron, and “independent” companies like Antero Resources and Cabot Oil & Gas. We always wondered what earned the biggies their name “the majors,” even though there are some “independents” nearly as large (in revenue) as the majors. We now know the difference…
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    Natural Gas Prices in Texas Permian Drop Below Marcellus/Utica

    The biggest oil play in the United States is the Permian, located in West Texas and southeastern New Mexico. Two weeks ago MDN warned readers that natural gas in the Permian, which is a byproduct of the oil wells drilled there, is increasingly competing with Marcellus/Utica gas (see “Free” NatGas in Texas Permian Changes Shale Gas Economics in M-U). The coming clash continues to grow. In a Bloomberg article published yesterday, we learn that the price of natgas in the Permian at major trading hubs is now lower than the price for hubs around the Marcellus/Utica, which is truly a first! We also get an ominous prediction from an analyst who watches these things, who said in the next three to four weeks, “natural gas prices in the Permian can go to zero because it’s literally a byproduct.” Free gas! As we pointed out in our previous post on Permian and gas prices, oil drillers can actually pay up to $2.36 per thousand cubic feet to dispose of the natgas coming out of Permian oil wells. That is, they can pay people to take the gas–as a cost of extracting the oil. Roughly one-third of the hydrocarbons coming from Permian wells is natgas. The biggest problem in the Permian for natgas is also the biggest problem in the M-U: lack of pipelines…
    Read More “Natural Gas Prices in Texas Permian Drop Below Marcellus/Utica”

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    Opponents Slandering Potter Co. Wastewater Facility Legally Warned

    Is it free speech to make “false, destructive and defamatory statements” about a company and the project it proposes to build? Is it OK to pretend to be a news organization when you’re really just a shill for Big Green groups, and is your “speech” protected–when it’s false? Members of the Seneca Indian tribe and faux news outlet Public Herald have been put on notice, legally, by lawyers representing the proposed Epiphany shale wastewater recycling facility in Coudersport (Potter County, PA) and driller JKLM to “cease and desist” from their slandering, smearing false statements about the Epiphany project–statements that are misleading the public. Those served the legal notice say it’s an attempt to silence their free speech rights. What do you think?…
    Read More “Opponents Slandering Potter Co. Wastewater Facility Legally Warned”

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    Lansing, MI Approves Borrowing $500M for Gas-Fired Electric Plant

    In December MDN brought you the news that the Lansing, Michigan Board of Water & Light (BWL) wants to build a brand new $500 million natural gas-fired power plant (see Lansing, MI to Build New 250 MW Gas-Fired Electric Plant). The new plant will generate 250 megawatts of electricity, create 1,200 construction jobs, and go online in 2021. It will replace (and retire) two BWL coal-fired plants. Out with old, in with the new. We’re interested in the project because it is a potential new demand source for Marcellus/Utica Shale gas. On Tuesday, BWL voted, unanimously, to approve borrowing up to $500 million to construct the project. They did so over the objections of a group of fossil fuel haters who apparently would rather sit in the dark rather than build a plant that uses a dreaded fossil fuel. BWL board members had to put up with the usual fossil fuel speechifying, and then proceeded to move forward like the adults they are, over the objections of the petulant children present…
    Read More “Lansing, MI Approves Borrowing $500M for Gas-Fired Electric Plant”

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    Free Pipeline Training Course in April in SWPA & Eastern OH

    The Gas Technology Institute (GTI) has previously offered a 100% free training program for those interested in a career building pipelines in the Marcellus/Utica region (see 4-Wk FREE Training Program Helps Unemployed Get M-U Pipeline Jobs and Still a Few Openings for Free Training for M-U Pipeline Jobs in SWPA). GTI is offering the same training program once again in April, at two locations: Armstrong County Industrial Development Council in Freeport, PA, and Belmont College in St. Clairsville, OH. Each location is limited to 20 students. If you are interested and live somewhere within driving distance of either location, what are you waiting for? Sign up before all slots are taken! Starting salaries for graduates “often exceed $50,000” and can lead to careers with salaries in the six-figure range (hey, where do we sign up?!). We have the details of how to enroll for FREE in this valuable training course–a course worth $3,500…
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    Riverkeeper, Big Green Groups Want FERC to Bend Rules for Them

    We are a country governed by the rule of law. Part of our system of laws (for better or worse) invests government bureaucracies with delegated power to make rules and regulations–which carry the weight of law. Children who are not disciplined (at home and at school) grow up to be adults who think silly things like rules don’t apply to them–because they don’t want them to. THE Delaware Riverkeeper falls into that camp. The Federal Energy Regulatory Commission (FERC) has rules and regulations in place to keep the agency from descending into chaos in reviewing and approving pipeline projects. One of FERC’s rules, which has been on the books for years, is that if a person or group wants to “intervene” (become an intervenor) in a project, they must file with FERC “in a timely manner.” FERC sets the amount of time, which varies with each project. It’s been our observation FERC gives at least 30 days, sometimes more, for folks to file to intervene. One of the sleazy strategies used by Riverkeeper is to get thousands of individuals (including children) to sign up as intervenors for a project in a quest to flood and overload the FERC system, slowing or stopping progress on a given project (see FERC Confirms “Intervenors” Slowing Down Pipeline Approvals). FERC has had enough. FERC commissioners have voted to tighten up the loosey-goosey way FERC has treated people and groups who file late to intervene. No more bending of the rules. In the past, Riverkeeper and others have filed to intervene weeks after the deadline for such action, and FERC has just added them as intervenors anyway. No more. Either Riverkeeper and their ilk file on time from now on, or they won’t be considered intervenors, which has them hopping mad…
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    Tallgrass Energy Eliminating MLP – First “Casualty” of Tax Cut?

    Last week MDN brought you the news that the Federal Energy Regulatory Commission (FERC) had taken “significant action” to address the Trump tax cut legislation enacted last December (see FERC Takes Aim at Adjusting Pipe Rates in Light of Trump Tax Cut). FERC wants to be sure the tax cuts coming to electric companies and pipeline companies are passed on to consumers and pipeline shippers. The agency proposed new solutions to eliminate “tax loopholes” for natural gas pipelines. Closing these so-called loopholes will eliminate certain tax benefits for MLPs–master limited partnerships. Many pipeline companies (most) are organized as MLPs, which allows tax advantages to flow to investors. With certain tax benefits for MLP unitholders on the chopping block, all of a sudden some MLPs don’t look like such a hot investment anymore, at least on paper. Some analysts have speculated this may be the beginning of the end for MLPs. A few years ago Kinder Morgan got rid of all it’s MLP subsidiaries, combining them all into a single “C” corporation. Now, Tallgrass Energy, builder/operator of the mighty Rockies Express (REX) pipeline which flows Marcellus/Utica gas, is doing the same as Kinder did. Which causes us to ask the question, is Tallgrass’ MLP the first “casualty” of the Trump tax cut among pipeline companies?…
    Read More “Tallgrass Energy Eliminating MLP – First “Casualty” of Tax Cut?”

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    MVP Pipeline Cleared to Begin Building Pipeline in Virginia

    In January, MDN reported that Mountain Valley Pipeline (MVP)–a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA–had received permission from the Federal Energy Regulatory Commission (FERC) to begin tree clearing and construction of access roads and construction yards in five West Virginia counties (see Mountain Valley Pipe Gets FERC Approval to Begin WV Construction). That was MVP’s very first permission to begin construction-related activities. It was the trickle. The flood gates burst open in February when FERC issued four new orders granting MVP permission to continue not only tree clearing and building roads, but also to begin construction of the actual pipeline itself in WV, and tree clearing/preliminary construction activity in VA (see FERC Grants MVP OK to Begin Pipeline Construction in Virginia & W.V.). The activity in VA was in just one county (Giles) and in one location. MVP still could not construct pipeline in VA pending required state permits. The situation in VA fundamentally changed this week. On Monday, the VA Dept. of Environmental Quality (DEQ) issued erosion, sediment and storm water control permits for the project–meaning actual pipeline construction can now begin. And yesterday, FERC granted MVP permission to construct pipeline not only in Giles, but also in Craig, Montgomery and Roanoke counties. MVP is now fully authorized in VA and there’s no stopping it…
    Read More “MVP Pipeline Cleared to Begin Building Pipeline in Virginia”