Industrywide Issues

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    Reuters Says Marcellus “Finally Succumbs” to Production Downturn

    The Reuters news service is, somewhat gleefully, reporting that America’s biggest gas field–the Mighty Marcellus–“finally succumbs to downturn.” The article in which they announce this “fact” breathlessly reports preliminary (i.e. not yet solid, as in draft) figures from DrillingInfo are at odds with projections from the U.S. Energy Information Administration (EIA). According to Reuters, the EIA’s numbers are too rosy, showing a year-over-year decrease in Marcellus production won’t happen until 2019. DrillingInfo, according to Reuters, indicates a year-over-year decline will come next year, in 2016. Who’s right?…
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    Kinder Morgan Steps Up Marcellus/Utica Investment with NGPL Buyout

    On Monday the largest pipeline company in the United States, Kinder Morgan, and their partner Brookfield Infrastructure Partners, announced a deal to buy out a third partner in the Natural Gas Pipeline Company of America (NGPL). When the deal is done, both Kinder Morgan and Brookfield will each own 50% of NGPL, although Kinder is the pipeline operator. NGPL, in case you haven’t heard of it, is a huge interstate pipeline system located in the Midwest and southwest. (See a copy of Kinder Morgan’s pipeline systems map below. The dark green lines represent NGPL.) So why is the NGPL buyout in the Midwest/southwest a Marcellus/Utica story? Because NGPL is currently building an expansion in the Chicago area, appropriately called the Chicago Market Expansion Project. That expansion will carry gas coming into the NGPL pipeline where it intersects with the Rockies Express (REX) pipeline in in Moultrie County, Illinois northward into the Chicago area. REX recently reversed its flow and now carries Marcellus/Utica gas to Moultrie—meaning more Marcellus/Utica gas will be flowing to the Chicago area starting in 2016 when the Expansion Project is put into service (see 1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1). A little over two months ago Kinder Morgan announced they would reverse the flow for part of NGPL and begin sending northeast gas south, to the Gulf Coast (see Marcellus/Utica Gas Heading to TX LNG Export Plant…in 2018), meaning gas arriving at Moultrie will not only go north, it eventually will go south too. So the NGPL purchase is very much about the Marcellus/Utica…
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    Decision-time for Landowners in Demchak/Chesapeake Royalty Case

    lawsuitIs the long, sordid affair over Chesapeake Energy screwing Pennsylvania landowners out of royalties finally near an end? Chesapeake and some landowners, part of the “Demchak” class action lawsuit–certainly want you to think so. A year ago MDN told you about a settlement between “several thousand” Pennsylvania landowners and Chesapeake over the royalty issue–Chessy deducting post-production payments by pipeline companies in what some call a scam that leaves landowners signed with Chesapeake receiving royalty checks that are pennies on the dollar compared to what they should receive. The new settlement for those “several thousand” would be 2/3 of $11 million, after the lawyers get their 1/3 cut (see Chesapeake & PA Landowners Settle Royalty Lawsuit…Again). Many PA landowners who are leased with Chesapeake now face a decision–and doing nothing is not an option. The lawyers and the court are about to close the door on what is called the Demchak class action lawsuit. PA landowners with a “market enhancement clause” in their lease should have already received a form letter announcing that unless they opt out of the settlement, they will be included. Below we have an excellent outline of what your options are according to the PA National Association of Royalty Owners (NARO), along with the opinion of one Bradford County landowner who is less than thrilled with the Demchak settlement…
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    DUC DUC Goose! The Growing Backlog of Uncompleted Shale Wells

    Ever hear of a DUC? No, we didn’t forget the “K” on the end of DUC. It stands for Drilled but UnCompleted (DUC) wells. Completing a well means taking the final step of fracking the well and hooking it up to production. Lately there’s been a lot of talk about DUCs–a large inventory of wells drilled (holes in the ground) not yet completed. Completing a well takes a lot of sand, water and money. There’s little incentive to complete wells when commodity prices for oil and gas are so low. In some cases drillers will drill the borehole and not complete a well as a way of holding their acreage before a lease expires. In other cases, they’d love to finish the job–but the price they will get is too darned low, so they put completion on hold. Sometimes a driller has contracted for a rig and crew to operate it–instead of canceling and owing that money anyway, they go ahead and drill. How many DUCs are there in general, and in the Marcellus/Utica specifically? The honest answer is, no one knows for sure. But smart analysts can make some pretty good guesses, based on company reports and their own industry knowledge. Below we bring you the latest we can find on DUCs–specifically how many DUCs there are in the Marcellus/Utica…
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    Shale Gas Faces Double Trouble: Low Prices & Pipeline Opposition

    According to the Institute for Energy Economics and Financial Analysis (IEEFA), the natural gas industry faces a double “new normal” that hobbles the industry: (1) low prices for natural gas for the foreseeable future, and (2) public opposition to pipeline expansion, especially in New England. Here’s what IEEFA’s executive director, Sandy Buchanan, says about this double threat to our beloved industry…
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    PA Senate Committee Votes to Recommend AG Kane’s Removal

    Last Wednesday, the Pennsylvania State Senate committee investigating PA Attorney General Kathleen Kane recommended to the full Senate that she be removed from office. Now. Before any more damage is done to the office of the AG. We’ve long covered the scandal that is about to bring down Kathleen Kane (see our Kane stories here). The scandal bringing her down has nothing to do with the Marcellus Shale, other than it will rid us of a liberal Democrat who illegally targets the drilling industry. No–she has herself to thank when she finally walks (or is dragged) through the exit door. She is a mean, vindictive person who sought to discredit a political enemy by leaking privileged grand jury testimony to a reporter (a felony), and then lying under oath about it (which is perjury, another felony). In fact she’s been indicted on a number of crimes. Last week the PA Senate said “enough is enough, it’s time for her to go.” And what did Kane do? Once again, like a broken record, she said a bunch of dirty old men who work for the state and who swapped porn using their state email accounts are out to get her because she discovered their dirty little secret…
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    Jimmy Stewart Makes the Case for NEXUS Gas Pipeline in Ohio

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    Jimmy Stewart, president OGA

    Jimmy Stewart (no, not that one, another one!) is the former Majority Leader of the Ohio Senate. After his days in the Senate, Stewart joined the Ohio Gas Association as its President. Perhaps feeling the need to push back against the steady drumbeat of negativity coming from anti-frackers who also oppose pipelines in the Buckeye State, Stewart wrote a powerful guest column for the Cleveland Plain Dealer to make the case for major new natural gas pipelines in general, and to make the case for Spectra Energy’s NEXUS Gas Transmission pipeline in particular. Here is that powerful column…
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    Will Low Oil/Gas Prices Lead to ‘Social Unrest’? $25/Bbl Coming?!

    The low price of oil (and gas) is blamed for a lot of things. You can add one more to the list: social unrest. You might think oil and gas prices being obscenely high would lead to “social unrest,” but according to analysts at RBC Capital Markets, it’s the opposite. The theory goes like this…In big oil countries like the U.S., Russia or even “wealthier” Middle Eastern countries like Saudi Arabia, when the price of oil crashes, they have the national resources to ride out the price collapse (i.e. keep welfare programs going)–until the price rebounds. But not all oil exporting countries are so fortunate. What if the price of oil hits the $25 per barrel range next year, as is predicted by RBC Capital Markets? According to their analysts, there are some (socialist) countries that will stop paying for public programs, and that will lead to “social unrest” as those addicted to the public teat get weened (think Greece). Among those countries are what RBC calls “the Fragile Five”–countries where ISIS is believed to be active. Which countries are they?…
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    Paris Climate Summit Jazzes Obama…Why it Doesn’t Matter

    Yesterday our Dear Leader, Barack Hussein Obama (BHO), addressed global warming nutters from around the world who came to Paris to agree to less freedom for citizens of the United States (and to sentence developing countries to lifetimes of misery). That about sums up what the United Nations twenty-first conference of the parties (COP-21) is all about. It’s about limiting economic activity in countries around the world under the pretense of man-made global warming. What’s funny about yesterday is that even one of their own, BHO, was a little too windy for the assembled nutters. Apparently you can have too much wind–who knew? BHO, like other world leaders to address the assembled warmers, was given a 3-minute time slot to spout his opinions blaming the USA for global warming. But BHO, like the Energizer Bunny, just kept going and going and going. At the nine minute mark the Frenchies started to hit the buzzer and kept stabbing it periodically to signal BHO it was time to get his @$$ off the stage. But the tone deaf BHO kept right on jabbering until he was done reading the last word the teleprompter told him to read–some 11 minutes after he began. Below we have the story of BHO’s long-winded address to COP-21, along with some rational views about what this ill-fated conference is really all about, and why no agreement BHO signs will ever see the light of day (or matter) in the good old US of A…
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    Free Book: Why Scientists Disagree about Global Warming

    All eyes are currently on Paris and the United Nations twenty-first conference of the parties (COP-21). COP-21 is an attempt to force all of the nations of the world to sign on to the myth of man-made global warming–and force them to reduce carbon output, which they believe will lower said global warming. In reality not even the people attending really believe in this nonsense–they use it as a method of controlling the citizens of the world. It’s about power–and the abuse of power. But let’s pretend there are some who do really believe this childish nonsense. What arguments do they use? One of the chief arguments is a lie so often repeated it’s now believed–that there is a “consensus” of scientists that man-made global warming is real. Something like 97% of all scientists believe it. Thing is, that statistic is pulled from an artificially low, select number of scientists. It’s not real. Yesterday, as COP-21 got under way, the Nongovernmental International Panel on Climate Change (NIPCC) released a new book titled “Why Scientists Disagree about Global Warming: The NIPCC Report on Consensus” (get a free copy below). This important new book lays bare and refutes the claim that there is a “scientific consensus” on the causes and consequences of climate change…
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    PA Supreme Court to Hear Case on Banning Drilling on State Lands

    Pennsylvania’s Democrat Supreme Court will take up the issue of whether or not private property rights still exist in the Keystone State. That’s the clear legal issue before the court over whether or not the State of Pennsylvania can continue to allow oil and gas drilling on state lands and use the revenues it receives as part of the general fund. Lower courts have all ruled that yes, the state can legally lease its own property, and allow drilling under public land for which it doesn’t, in some cases, own the mineral rights. But radical environmentalists are attempting to abuse the state’s highest court–now packed with liberal Democrats–to achieve what they can’t achieve by any other means. They’re hoping the high court will find a new cockamamie “right” to protect the environment that trumps public and even private property rights in the process. That is, they’re hoping the Supremes will rule that the state MUST ban drilling on state-owned land, in order to protect Mother Earth…
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    How a Louisiana LNG Export Facility is Connected to the Marcellus/Utica

    An article about Cheniere Energy’s Sabine Pass Liquefaction Project (LNG export plant) in remote Louisiana caught our attention for a couple of reasons. First, the plant will make its first shipment of LNG in January. Some of the natural gas the hungry Sabine Pass facility will use will (eventually) come from the Marcellus/Utica, via pipeline. That makes the Sabine Pass plant story an important story for our region. Second, the plant is a picture of/preview for what is coming to other regions where such facilities are built–like Cove Point, Maryland where Dominion is currently building (about half done) the Cove Point LNG export facility. Sabine Pass is a massive economic and job creation engine for Louisiana’s south coast. So too will Cove Point be for Maryland in the Chesapeake Bay area…
    Read More “How a Louisiana LNG Export Facility is Connected to the Marcellus/Utica”

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    State Official Calls Shale Impact “Profound” on PA Agriculture

    Recently the Pennsylvania Agriculture Department Executive Deputy Secretary, Michael Smith, addressed the Natural Gas Task Force for the County Commissioners Association of Pennsylvania (CCAP) in Hershey. He had some interesting things to say about shale development in the state. Among them: Shale’s impact on agriculture in the state will be “profound” and “transformative.” Did he mean that in a good way, or a bad way? Yes…
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    Antis Ramp Up to Discredit EPA Study that Found Fracking is Safe

    It was certainly a major blow to radical environmentalists when, after studying fracking for more than four years (reviewing some 950 studies, including conducting several original studies of its own), the federal Environmental Protection Agency announced what everyone already knew: fracking is safe (see EPA Draft Report Says Fracking Doesn’t Pollute Groundwater Supplies). Science is science and facts are facts. The announcement took the wind out of the sails for anti-fossil fuel nutters who thought they could convince everyone to return to the stone ages and eliminate the use of fossil fuels. However, science has been corrupted and politicized–just witness the global warming debate. Radical environmentalists knowing they can never convince the hoi polloi, the great unwashed, the people they consider idiots, to go along with their holier-than-thou energy plans to eliminate fossil fuels, if fracking is perceived as anything but evil–are fighting back. Here’s the plan. Get the EPA to discredit its own study. That process is now underway. In October the usual radical suspects showed up at EPA HQ to demand they turn their backs on their own study (see Anti Groups Try to Convince EPA They Got it Wrong with Water Study). Apparently they got through to at least a few sympathetic “scientists” who are members of the EPA’s own Scientific Advisory Board…
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    Guernsey County, OH a Microcosm for Shale Economics in Northeast

    Have we entered the oil and gas apocalypse? If you’re one of some 230,000 oilfield workers out of a job in the past year, you may think so (who can blame them?). The reality is, however, that although rig counts are down (way down), permits issued are down, and in general drilling of new wells is down–drilling IS still happening. Businesses in the supply chain–those servicing the upstream and midstream sectors–are still making money. Not as much money, but we haven’t entered the apocalypse–not yet anyway. Example: Cambridge (Guernsey County), Ohio, where drilling happens less these days–but drilling still happens and local businesses like restaurants make more money than they did prior to the Marcellus/Utica fracking miracle…
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    Success Story: Welder Starts Pre-Fab Company in PA Shale Country

    MDN has previously marveled and talked about the amount of money welders can command in the shale industry–upward of $1,000 per day (VERY long, 12-hour days). It’s hard work out in the elements–not for the faint of heart. Today there are fewer welding jobs simply because there’s less drilling going on and therefore less wells that need pipelines connected to them. However, this is a story about a welder who didn’t just settle for welding pipelines and equipment at drill pads. This is the story of a welder who have the guts to start his own pre-fab business in the heart of Pennsylvania shale country–and hit it big. Make no mistake, this is not like hitting the lottery. Starting and running a business is HARD work. But if you have what it takes, it can pay off in spades, as it has for our latest Hero of the Marcellus, welder Bill Emick…
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