Industrywide Issues

CNG/LNG | Commodity Price | Exporting | Industrywide Issues

LNG Exports to the Rescue in Northeast? Not So Fast
February 29, 2016February 29, 2016

The answer to low prices for natural gas in the Marcellus/Utica is more demand. More demand comes either from new sources using natgas within the region–like building power plants–or sending the gas out of the region. Sending it out involves pipelines, mostly. One of the great hopes for drillers and midstream companies has been the prospect of exporting our natural gas to other countries via LNG (liquefied natural gas). Dominion is right now building the Cove Point liquefaction facility in Maryland with the prospect of bringing it online in 2017. All of the LNG Dominion can produce at Cove Point will go to two countries: Japan and India (see Dominion’s Cove Point LNG Facility Achieves Important Milestones). More northeast gas will head to Japan via the Gulf Coast (see Marcellus/Utica Gas Going to Japan: TGP Signs 20-Year Export Deal). But here’s the thing: Japan is bringing their nuclear power back online, and they’re bringing a lot of solar sources online–meaning they don’t need as much natgas as they used to. In December we told you that LNG for delivery to northeast Asia (Japan and Korea) would average $7.397 per million British thermal units (MMBtu) for January delivery (see Platts Says LNG Heading to Japan & Korea Fetching $7.40/Mcf). Looking to March, LNG for delivery to Asia is down to $5.339/MMBtu–the lowest monthly price since September 2009. And there’s no indication it will go higher any time soon. Our point? LNG exports are not a panacea. Yes, Europe is somewhat interested (and that’s good). But world LNG supplies far outstrip demand at this time…
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Commodity Price | Crude Oil | Industrywide Issues

US Shale Industry Puts OPEC on Notice: We’ll Drill at $40/Barrel
February 29, 2016February 29, 2016

We don’t often write or highlight stories about oil and OPEC. However, there is a connection between the price of oil and the price of natural gas–and there is a connection between OPEC and the price of oil. For more than a generation OPEC has been able to, pretty much single handedly, control the price for a barrel of oil. If OPEC wants the price to go up, they scale back production. Prices to go down–start pumping more. Then God blessed America one more time and gave us the shale revolution. At $100 per barrel, drillers are willing to pump all day long. OPEC (essentially Saudi Arabia) stepped in with a strategy of pumping more to drive the price into the basement in an effort to bankrupt U.S. shale drillers–thereby giving them back their monopoly. Nice people those Saudis. Such great friends to the U.S. (NOT) When prices hit below $30 per barrel, many companies (most) stopped drilling here at home. They can’t make any money on those prices–in fact they lose money. The received wisdom is that you can’t make money pumping shale oil below $70/barrel. But the thing about Americans and American ingenuity is that we tinker and create and experiment. And now we’ve figured out how to make money when the price is low. How low? The shale industry is now sticking its finger in OPEC’s eye and saying that $40 is the new $70 when it comes to the price at which they’re willing to fire up the drilling rigs. So take that OPEC…
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Energy Services | Hydraulic Fracturing | Industrywide Issues | Nine Energy Services

Fracking Tech Breakthrough – Go Big or Go Home
February 29, 2016February 29, 2016

Every now and again we’ll point out a technology story that we find interesting. This is one of those stories. Nine Energy Service, an oilfield services company that competes with companies like Halliburton and Baker Hughes, recently completed a 50-stage frac in a Bakken Shale well. Nine Energy operates in the Marcellus/Utica, which is why we’re interested in this Bakken well story. The length of the well was 10,000 feet long laterally (horizontally). Nine Energy completed the entire frack in 50 hours–about an hour per stage. They used 3.5 million pounds of proppant and 52,300 barrels of fluid during the fracking process. Once again American ingenuity at work. A true “go big or go home” moment!…
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Atlas Energy | Energy Companies | Industrywide Issues | Jobs | Pennsylvania | Statewide PA

Atlas Energy Issues 2015 Update + More Details on Company Layoffs
February 26, 2016February 26, 2016

Yesterday Atlas Energy issued its fourth quarter and full year 2015 update. Atlas, as we’ve pointed out in the past, has sold most of its Marcellus assets in two huge deals: a $4.3 billion deal with Chevron in 2011 and in a $7.7 billion deal with Targa Resources in 2014. Atlas operates mostly conventional (some unconventional) oil and gas wells in a number of states: New York, Pennsylvania, Ohio, West Virginia, Virginia, Tennessee, Indiana, Alabama, Colorado, Oklahoma, Texas and New Mexico. Sizable company. Recently, as MDN has exclusively reported, the company laid off a number of its employees (see Atlas Energy Update – 125 Layoffs Companywide). We’ve since learned, from a highly placed source with knowledge of the layoffs, that the number of companywide layoffs is closer to 150–approximately 20% of the Atlas workforce. There’s no mention of that in yesterday’s update. So what does the update show? Atlas lost $240 million in 2015–but if you back out the paper losses of impairments and depreciation, the company actually made money. In the update Atlas mentions they shut in their prolific Marcellus wells in Lycoming County, PA during 4Q15 due to low prices. Below is the Atlas update, and more details about how many Atlas employees were laid off–and where…
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Energy Services | Energy Transfer Partners | Industrywide Issues | M&A | Williams

ETE Wants Out of Williams Merger/Takeover, Offering $2B Breakup Fee
February 26, 2016February 26, 2016

It was a long courting period before Energy Transfer Equity finally cajoled, harangued, and eventually forced the board of Williams to agree to a merger/takeover. ETE’s billionaire CEO Kelsy Warren revealed he had been propositioning Williams for over six months–offering Williams $64 per share to buy the company, totaling $48 billion (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). Williams resisted, but eventually they caved and agreed to the deal–although the deal price went down $10 billion by the time they accepted (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Like a lover who finally had his way and then finds out it wasn’t “all that”, it seems Warren is having second thoughts. The New York Times is reporting that the deal “has become a nightmare” and Warren wants out and is offering to pay Williams a $2 billion break-up fee…
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Energy Services | Industrywide Issues | Pennsylvania | Pipelines | Statewide PA | Sunoco Logistics

Sunoco LP Delays Construction of Mariner East 2 Pipeline
February 26, 2016February 26, 2016

On a quarterly analyst phone call yesterday, Sunoco Logistics Partners CEO Mike Hennigan admitted applying for and receiving “hundreds of permits” has delayed construction of the Mariner East 2 pipeline. There is no worry that the project won’t happen–it will. It’s just that the timetable for when construction begins (and ends) has changed from a year ago when they first announced the project. In prepared remarks, and then later under questioning from several analysts, we have discovered that Sunoco LP will not make a definitive go/no go decision on whether to build a second pipeline as part of the Mariner East 2 project, until the backhoes begin to dig for the original Mariner East 2 pipeline. When will that be? Hennigan was hard to pin down. One analyst made a reference to ME2 being ready in either first or second quarter 2017–but Hennigan would not verify that timeline. Below are select portions of the phone call transcript where Hennigan and others are talking about Mariner East 1, 2, 2X and the Marcus Hook refinery…
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Anti-Drilling/Fossil Fuel | Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Trial Update: Scott & Monica Ely’s Testimony Destroyed
February 26, 2016February 26, 2016

There was a ton of news coming out of the trial two Dimock families have brought against Cabot Oil & Gas in Scranton, PA yesterday. But you wouldn’t know it if you read the Democrat-controlled (and anti-drilling) Scranton Times-Tribune–the newspaper of “record” in the very place where the trial is being held. They’ve quit writing about the trial because the news is so bad for anti-drillers. Both Scott and Monica Ely testified and under cross examination their testimony was obliterated–their claims exposed as lies. Here’s the latest from FrackNation filmmaker Phelim McAleer who has been following the trial from the beginning, and from Natural Gas Now…
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Electrical Generation | Industrywide Issues | Ohio | Trumbull County

Lordstown, OH May Get Second Utica Gas-Powered Electric Plant
February 26, 2016February 26, 2016

An $800 million electric generation plant planned for Lordstown (Trumbull County), OH that will be powered with Utica Shale gas won village approval last summer (see Lordstown $800M Gas-Powered Electric Plant Gets Village Approval). The Lordstown plant then won state approval in the fall (see Lordstown $800M Gas-Powered Electric Plant Gets OH State Approval). Now comes word that the company planning to the build the plant–Massachusetts-based Clean Energy Future–is considering building a second plant at the same location. Here’s an update on the first plant, scheduled to break ground on April 1, and the rumors swirling about a second plant…
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Industrywide Issues | Regulation

EPA’s McCarthy Addresses O&G Industry: Arrogant, Clueless, Both?
February 26, 2016February 26, 2016

Federal Environmental Protection Agency (EPA) Administrator was invited and to her credit showed up at IHS’ annual CERAWeek conference earlier this week–a gathering of energy companies (particularly oil and gas companies). She gave the opening plenary speech and following that speech she was interviewed by IHS Vice Chairman Daniel Yergin. In response to a question about EPA regulation of the oil and gas sector, she said the EPA, “doesn’t regulate the oil and gas sector the way we do other sectors.” Does she REALLY believe that? If she does, she’s even more clueless than we thought. The Gas Processors Association isn’t having any of it. They responded with a prime statement…
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Energy Services | GreenHunter Resources | Industrywide Issues | Regulation | Wastewater

Coast Guard Caves to Political Pressure, No Wastewater Barging
February 25, 2016February 25, 2016

What a major shame and disappointment. The Obama bullies have gotten to the U.S. Coast Guard (USCG) and convinced the once-proud protector of our waterways to withdraw a proposed policy they previously floated in 2013 to allow frack wastewater to be shipped on barges down rivers, like the Ohio. The USCG has officially withdrawn their previously published draft policy–a policy that never went into effect–and says drillers and barge operators can still potentially barge wastewater–but it will be on a case by case basis (they’ve yet to approve a single case). Lots of red tape and hoops to jump through, making it virtually impossible to get a shipment approved. It was one year ago this month that a controversy erupted when GreenHunter Resources said an existing USCG regulation from 1987 already grants them the right to barge produced water–i.e. brine, or the water that comes out of the hole long after frack wastewater or flowback is done coming out. The USCG disagreed (see GreenHunter/Coast Guard War of Words — MDN Explains It). GreenHunter kept up the pressure and said they would begin brine shipments without authorization from the USCG (see GreenHunter to Coast Guard, We’re Barging While You Fiddle Around). It is unclear to MDN whether or not that ever happened–we don’t believe GreenHunter ever did send a brine shipment via barge. What happens now? Can GreenHunter and others potentially barge brine “case by case”?…
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Atlas Energy | Energy Companies | Industrywide Issues | Jobs

Atlas Energy Update – 125 Layoffs Companywide
February 25, 2016February 25, 2016

On Tuesday, after receiving ongoing tips that layoffs had occurred at Atlas Energy (a company with assets in the Marcellus/Utica), we published a post with an unconfirmed rumor that Atlas had laid off 30 or more people in its Waynesburg, PA location (see Atlas Energy – Rumored Layoff of 30+ People in PA). We later received another tip that indicated the layoffs may have been more “surgical” than “mass” in nature. Since that time, we’ve received a fifth tip–this one from a highly place source that we trust implicitly. This new tipster could not verify the 30 layoffs in Waynesburg, but the tipster does have knowledge that recently the company laid off ~125 people companywide. Atlas has still not responded to our requests for comment. We’ll continue to update when/if we learn more.
Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Dimock Resident Scott Ely Takes the Stand in Lawsuit Against Cabot
February 25, 2016February 25, 2016

Yesterday the lead Dimock plantiff in the lawsuit against Cabot Oil & Gas, Scott Ely, was on the witness stand to talk about how Cabot destroyed his water supply. Except when you read even biased news sources like PBS’ StateImpact Pennsylvania, it appears Ely didn’t do a lot of talking about his water but about his own tenure in working for Cabot. Ely attempted to smear Cabot’s reputation by making wild claims about the reckless nature of their operations. Of course Ely’s attorney hopes the jury will infer that if Cabot was reckless in other activities, they were likely reckless when they drilled near Ely’s home and caused his water to become contaminated with methane–a problem that is fixable (although Ely wouldn’t allow Cabot to fix it). In addition to Ely’s testimony, his attorney asked the judge, yet again, to allow 300 new pieces of “evidence” that she tried to slip in at the last minute, an ambush of Cabot’s attorneys. And once again the judge said “no” to her request…
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Statewide PA

Guest Post: 7 Important Points to Know About Dimock Trial
February 25, 2016February 25, 2016

By Phelim McAleer

The Ely and Hubert families of Dimock, Pennsylvania are suing Cabot Oil & Gas for allegedly polluting their water. The case is hugely significant because Dimock has been characterized as “Ground Zero” for water allegedly contaminated by fracking. It was featured in the documentaries Gasland 1 & 2 and has been the subject of national and international news reports. Countless celebrities have also pushed the lie that Dimock’s water was contaminated with fracking fluid. But the case has thrown serious doubts on the narrative being spun by activists. The plaintiffs’ case is looking very shaky, indeed. Here are seven key points that have emerged as the case enters its second day.
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Coterra Energy (Cabot O&G) | Energy Companies | Industrywide Issues | Litigation | Pennsylvania | Susquehanna County

Guest Post: Dimock Plaintiff Exposed Under Cross Examination
February 25, 2016February 25, 2016

By Phelim McAleer

The Ely family in Dimock, Pennsylvania is suing an oil and gas company alleging they contaminated their water well through fracking. Dimock has become a focal point for anti-fracking activists with many calling it “Ground zero” for pollution. Dimock and the Ely’s have been featured in national and international news reports and documentaries. Celebrities such as Mark Ruffalo, Yoko Ono, and Susan Sarandon have visited the tiny community to sympathize. But yesterday in the first day of the trial, facts started to emerge that show the truth is much different from the previously reported stories. Questioned under oath, Scott Ely’s claims look a lot less certain and he looks a lot less credible. Below are five facts that emerged during the first day that expose serious problems with Ely’s claims that his water was contaminated by fracking.
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CNG/LNG | Exporting | Industrywide Issues

Cheniere Finally Ships First Sabine Pass LNG Export – to Brazil
February 25, 2016February 25, 2016

Seems like it’s been forever in coming, but finally (!) Cheniere Energy has shipped their first LNG tanker of exported shale gas from the Sabine Pass facility on the border of Texas and Louisiana. We don’t know if any of the gas liquefied at the facility was from the Marcellus/Utica, but we do know that at some point it will be, which is why we’re excited about this new market opening up. This first tanker full of LNG (liquefied natural gas) set sail for Brazil yesterday and will dock in a few days at the regasification terminal in All Saints’ Bay, Bahia…
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Energy Companies | Energy Services | Ethane | Exporting | Industrywide Issues | Pipelines | Range Resources Corp | Sunoco Logistics

Marcellus Ethane Export Sets Sail “Within a Week” from Philly
February 25, 2016February 25, 2016

We’ve been predicting for some time, but the day is almost here when the first export shipment of Marcellus and Utica ethane will leave the Marcus Hook terminal in Philadelphia and head to Norway. Genscape, which monitors pipelines and trucks and ships and uses really cool technology to alert them of when these things are about to happen says the first ethane export from Philly will happen “within a week”…
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