Oil & Gas Industry Created 656K Jobs, $90B in PA-OH-WV in 2015
Yesterday the American Petroleum Institute (API) released a new study showing that the natural gas and oil industry supported 10.3 million U.S. jobs and added $1.3 trillion to the nation’s economy in 2015. The study, “Impacts of the Natural Gas and Oil Industry on the US Economy in 2015” (full copy below) found that jobs supported by the o&g industry increased by half a million since 2011, and showed that all 50 states, whether producing or non-producing, continued to benefit from the o&g industry. The study was conducted by PricewaterhouseCoopers (PwC) and commissioned by API. Yes, it’s an industry-funded study. But hey, if we don’t do the research and toot our own horn, you can be sure anti-fossil fuelers won’t do it for us! This is solid, no-nonsense (and real) economic research. We thought it would be interesting to look at the impact of the o&g industry in Pennsylvania, Ohio and West Virginia–the only three states producing Marcellus and Utica Shale gas and oil. Yes, each of those states still has a thriving conventional o&g industry as well and conventional numbers are part of the study–but let’s be honest. The unconventional (shale) sector dwarfs production of the conventional sector. When you look at o&g’s impact in our region, you find that it created 322,600 jobs in PA, 262,800 jobs in OH, and 70,900 jobs in WV. Value added (economic impact) for each state was: $44.4 billion in PA, $37.9 billion in OH, and $8 billion in WV. Add them all together and you get roughly 656,000 jobs and $90 billion of economic contribution in 2015. From one industry–oil and gas. WE LOVE FOSSIL FUELS!…
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Many times MDN has opined, as we cover the news about pipeline projects, that landowners need to realize they can’t just act like children stomping their feet and refuse to deal with pipeline companies–and expect the companies to give up and go away. Doesn’t happen. However, if landowners behave like rational adults and talk to pipeline companies–“Hey, don’t run it here through my best hay field but over there, through that field”–they stand a much better chance of a positive outcome. Landowners need to be respectful, open, honest, firm, but above all, talk to pipeline companies when they come calling. And when they do, they almost always get a much better result than they otherwise would have. We spotted an article written by a law firm operating in Ohio that takes the approach we’ve advocated. Sitterley, Vandervoort & Davis writes, “While the knee-jerk reaction may be to fight, to make it as difficult as you can for the pipeline company, employing a “take-no-prisoners” attitude that is aggressive may not be the best decision.” Well said. Sometimes a more firm approach is warranted–we’re not saying you have to fold like a cheap suit. What we are saying is that there’s a time and place for being nice, and maybe later, not so nice. Kindness works best…
In a surprise move, Energy Transfer Partners has sold what amounts to be 32.44% of the ownership of the still uncompleted Rover Pipeline to Blackstone, a private equity and so-called alternative equity firm based in New York City. In fact, Blackstone is the largest alternative equity firm (investing in things other than stocks/bonds/cash) in the world. Blackstone is paying ET $1.57 billion in a somewhat complicated transaction. There are multiple companies, on paper, involved. ET has a subsidiary (on paper) called HoldCo which owns 65% of the Rover project. Blackstone (and its subsidiary Blackstone Energy Partners) is buying 49.9% of HoldCo. When you do the math, it works out to be a 32.44% stake in the Rover Pipeline venture. Rover, as we have covered, is the $3.7 billion, 711-mile pipeline project that will run from PA, WV and eastern OH through OH into Michigan and eventually into Canada. The project is facing setbacks and delays in both Ohio and West Virginia due to various accidents and spills. Phase 1 of the project–from Cadiz, OH to Defiance, OH–was supposed to be online by yesterday. That has now slipped to “late summer” (see 
In June EQT and Rice Energy announced that EQT will buy out and merge in Rice Energy, to create (in EQT) the largest natural gas-producing company in the United States (see 
In early April of this year the 2017 AAPG (American Association of Petroleum Geologists) Annual Convention & Exhibition was held in Houston, TX. During one of the sessions, William Zagorski and Taylor McClain delivered a talk called “Discovery of the Utica Shale: Update on an Evolving Giant.” The interesting thing is that Zagorski and McClain work for Range Resources–the first driller in the Marcellus, not the Utica. We don’t have a transcript of that talk, but we do have an abstract and the slide deck used during the talk (below). The slide deck is fascinating. It begins with a history of the Utica. Did you know that the earliest Utica discoveries were in Ontario, Canada? And that the earliest drilling done in the play here in the U.S. was done in Upstate New York–near the Watertown area? No, we didn’t realize that either. In fact, a large swath of the Utica Shale layer underlies New York State–what a pity we can’t explore it because of a corrupt dictator by the name of Andrew Cuomo. At any rate, below is the slide deck, with slides outlining where the “wet gas” and “dry gas” zones are in the Utica. And exploring how Ohio became synonymous with the term Utica Shale…
The radicals at the Sierra Club are taking another run at stopping Dominion’s Atlantic Coast Pipeline (ACP) project in its tracks–before the first inch of pipe is laid. ACP is a $5 billion, 594-mile natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina. This time Sierra Club nutters are using a novel approach to try and stop ACP. They’ve asked North Carolina regulators to revoke approval of affiliate agreements by Duke Energy to use the gas that will flow through the pipeline. The Sierra Club’s argument is that the agreements, signed in 2014, are no longer valid. Duke doesn’t need as much natural gas (for electric generation) as they thought they would. And therefore to stay locked into the agreement would be an unfair burden to Duke’s rate payers. If Duke were to pull out of the deals, the ACP project would collapse, which is what Sierra Club happens. Duke has responded that the gas will be used for more than electric generation. Given that NC now has a Dem governor who doesn’t like fracking (see 
What’s the latest with the proposed virtual pipeline in Broome County, NY? NG Advantage wants to build a “virtual pipeline” operation in a suburb of Binghamton. The location NG picked, after considering up to six locations in the region, was selected because of it’s proximity to major highways, proximity to the Millennium Pipeline, and availability of high-power electric lines. A virtual pipeline is nothing more than a compressor plant (series of compressor plants) that grabs gas from a pipeline, in this case the Millennium, and compresses it and loads it onto special tractor trailers that then deliver the gas to industrial customers like manufacturing plants, hospitals, and even small regional gas distribution systems servicing residential homes. The location NG selected, in the Town of Fenton (within spitting distance of Hillcrest and Port Dickinson) was approved by the Town of Fenton after a detailed review. The area they selected is zoned industrial and is, in fact, a former dump site. However, residents from nearby neighborhoods (Hillcrest and Port Dick) were not aware of the project (so they claim) and when construction began to clear the dump site, and residents learned what was going to be built at the site, some of them demanded court action to oppose it. So far we’ve had two court cases asking county-level court (called “Supreme Court” in NY) to stop the project, which it temporarily has. And there we sit–waiting on a local court. When traveling through the neighborhoods near the site you see plenty of “No Compressor Station” signs. Ask any of the locals why they oppose it and the issue pretty much centers on truck traffic. The plant itself is safe. It doesn’t emit anything in the way of air pollution. It’s quiet–running on electric motors. The only thing people have to complain about is 3-4 trucks an hour going in and out of the plant. That’s it. But that’s enough to warrant a major fuss. The very latest is that State Senator Fred Akshar and Assemblyman Clifford Crouch, both of whom represent people in the Town of Fenton, visited the NG Advantage facility in Vermont last week–a facility similar to the one proposed for Fenton. They wanted to see it for themselves. Neither rep really has a say in what will happen in Fenton (the matter is in the courts at this point), but at least they informed themselves about the issue and can talk, rationally, with some of their irrational constituents…
West Virginia University professor and researcher Dr. Michael McCawley, chairman of the Dept. of Occupational & Environmental Health Sciences in the School of Public Health, has been studying the health effects of fracking since 2012. Dr. McCawley launched the Marcellus Shale Energy and Environment Laboratory (MSEEL)–a project that drilled a test well is providing real-time air, noise, occupational safety and health monitoring over a five-year period (see 
Late last week Cabot Oil & Gas, one of our favorite big Marcellus drillers, released their second quarter 2017 update. And man oh man, was it full of interesting items! Daily natural gas production was up 14% over the same period last year. During 2Q17, Cabot averaged 1.77 billion cubic feet (Bcf) per day of net Marcellus production (2.1 Bcf/d gross operated production). Also during 2Q17, Cabot drilled 13.7 net Marcellus wells, completed 8.0 net wells and placed 6.0 net wells on production. Financially, the company continues to be a cash-making machine, generating positive free cash flow for the fifth consecutive quarter. During the first half of this year, it cost Cabot an average of $2.01 per thousand cubic feet (Mcf) to extract and sell the gas. That’s all expenses. And Cabot made an average of $2.51/Mcf selling that gas. That’s a profit of $0.50/Mcf (or 20% profit). If we could invest $1 and get back $1.20 for every dollar invested, we’d be happy to do that all day long! Cabot is currently operating two drilling rigs and one completion crew in the Marcellus. One of the most interesting (and underreported) parts of the Cabot conference call last Friday is CEO Dan Dinges’ comments on the long-delayed Constitution Pipeline. He said, “we feel more optimistic about this project coming online in the next few years than we did say a year ago.” It seems Cabot (and Williams, the builder of the Constitution) are closely watching what happens with the Millennium Pipeline and Millennium’s request to FERC to override the New York Dept. of Environmental Conservation (DEC), which is blocking the Millennium(and the Constitution). Although the Constitution awaits a court decision from the U.S. Second Circuit Court, they are planning other strategies. Dinges also addressed the PennEast Pipeline project, now stalled in New Jersey. Below is last week’s update, excerpts from the conference call, and the Cabot slide deck full of good information…
MPLX, which is the midstream subsidiary of Marathon Petroleum (essentially MarkWest renamed, since the merger), issued its second quarter 2017 update last week–and wow what an update! MPLX’s profit in 2Q17 is up 10x from 2Q16–to $190 million. Revenue is up 31% in 2Q17 from a year earlier–to $916 million. It pays to be in the midstream. The company processed 4.7 billion cubic feet per day (Bcf/d) of Marcellus/Utica gas and liquids, which is up 14% over the same period last year. Just one more bit of evidence that the industry is picking up again. This past quarter MPLX started up a 20,000-barrels-per-day fractionation train (de-ethanization) at the Bluestone complex (in Butler County, PA) in June to support growing natural gas liquids (NGL) production in the Marcellus shale. However, not all areas were up equally. Of particular note, MPLX saw a decrease in processing volumes in the Utica, and an increase in the Marcellus. On the conference call, MPLX CFO Pam Beall said right now the Utica is their “weak spot” because some producers are shifting their spending away from some areas in the Utica–spending more in other areas, including the Marcellus. However, MPLX president Mike Hennigan believes the Utica “weakness” is temporary and will pick up again. Below are excerpts from last week’s conference call, the full 2Q17 MPLX update, and the slide deck used on the conference call…
In February the Federal Energy Regulatory Commission (FERC) issued a draft final environmental impact statement (DEIS) for two important pipeline upgrades to carry more Marcellus/Utica gas to southern markets–Mountaineer XPress and Gulf XPress (see 
Pipeline projects are facing still opposition from nutty/radical environmentalists who seem to have plenty of money to litigate and attempt to tie up projects for as long as possible. Ultimately, at least in most cases, pipelines prevail and get built. But it does take longer, no doubt about that. In the meantime, railroads have stepped in to take up some of the slack. We’re suckers for a good railroad story. We spotted one about rail giant CSX and how the company has seen an uptick in hauling natural gas liquids in the Marcellus/Utica region. Stuff like propane (LPG, or liquefied petroleum gas). CSX is also seeing an uptick in hauling frac sand. All of which points to one thing: drilling in the Marcellus/Utica has/is picking up…