Sierra Club Asks NC Regulators to Revoke AC Pipeline Contracts
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 The Sierra Club’s argument is that the agreements, signed in 2014, are no longer valid.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 NC Fracking Remains in Limbo, 5 Yrs After Legislature Approved It), and given that regulatory functions come under the oversight of the executive branch, it does raise a minor red flag that the Sierra Club has launched this latest effort. Will it get traction with NC regulators?…
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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 
In June, a group of radical “environmental” organizations filed a lawsuit in the U.S. Court of Appeals for the Fourth Circuit against the West Virginia Dept. of Environmental Protection–for doing their job (see 
MDN previously reported about problems experienced in Chester County, PA (suburb of Philadelphia) with underground horizontal directional drilling (HDD) by Sunoco Logistics Partners for its Mariner East 2 Pipeline project (see 
In January 2016, MDN told you about a $130 million, 30-mile natural gas pipeline proposed by New Jersey Natural Gas (NJNG) to connect NJNG’s distribution system serving customers in Ocean, Burlington and Monmouth counties (in NJ) and the interstate pipeline system adjacent to the New Jersey Turnpike. The idea came about after Superstorm Sandy. How can NJNG create reliable natgas service in the region, preventing major disruptions like that which happened after Sandy? The “Southern Reliability Link” pipeline project was the result, and in January the NJ Board of Public Utilities (BPU) approved it 5-0 (see 
Yesterday MDN brought you the exciting news that Millennium Pipeline has asked the Federal Energy Regulatory Commission (FERC) to overrule the New York Dept. of Environmental Conservation–politicized and corrupted by Gov. Andrew Cuomo–and issue permission to commence construction of a very small 7.8 mile pipeline that will connect Millennium to a natural gas-fired power plant now under construction in Orange County, NY (see 
For some time we’ve covered opposition to the proposed 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. One of the hotbeds of opposition is in the Bent Mountain area of Roanoke County, VA (see our 
NEXUS Pipeline is a $2 billion, 255-mile interstate natural gas pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada. NEXUS was one of the large pipeline projects left out of a list of pipelines that received final Federal Energy Regulatory Commission (FERC) approval back in early February, just prior to FERC losing a quorum of voting members (see 
This is it folks. This is the case that will crush New York Gov. Andrew Cuomo’s blockade of important pipeline projects in the Empire State. For 19 months the New York Dept. of Environmental Conservation (DEC) has dithered around, at the prompting of Andrew Cuomo, and has refused to grant federal Section 401 Water Quality Certification stream crossing permits for a tiny 7.8 mile pipeline spur off the Millennium Pipeline in Orange County, NY, called the Valley Lateral Project, to feed a gas-fired electric generating plant that is now under construction. Statutorily NY has 12 months (1 year) to review such an application and act on it. NY has refused to act on it. So Millennium took the NY DEC to the U.S. Court of Appeals for the District of Columbia Circuit. In June the court dismissed the lawsuit by Millennium, which at first blush may seem like a blow. But it was the reasoning and opinion of the judges in dismissing the case that will change everything in New York. The judges said there is no case because if, as Millennium says, the DEC is denying the water permits, FERC itself has the power to jump back in and simply override NY DEC and issue the permits (see 
Anti-fossil fuelers who irrationally hate anything to do with natural gas, including the super-safe pipelines that flow it, have found a sympathetic judge inside the Dept. of Environmental Protection’s Environmental Hearing Board to side with them in a campaign to stop the Mariner East 2 pipeline project. At least temporarily. Yesterday Environmental Hearing Board Judge Bernard Labuskes, Jr. issued an order stopping all underground horizontal directional drilling (HDD) across PA related to the ME2 project. The order affects some 55 different locations where HDD is being used. Headlines in left-leaning anti pubs like StateImpact Pennsylvania and the Pittsburgh Post-Gazette mislead people into thinking ALL construction of ME2 has stopped. That is manifestly untrue. The only thing stopped, for the next two weeks, is HDD. The other 90% (or more) of the project, which is digging trenches for the twin pipelines, continues. Only in locations where ME2 must drill underground–say under a stream or roadway–are affected by the judge’s order. The order is in response to an appeal by radical Big Green groups, including the anti-fossil fuel Clean Air Council (of Philly), THE Delaware Riverkeeper (Maya van Rossum), and Mountain Watershed Association (see 
Rover Pipeline has had trouble with the Ohio Environmental Protection Agency (OEPA). The OEPA has jumped on Rover’s back and hasn’t gotten off–over spills of drilling mud and mishandling (according to OEPA) torrential rainwater that ended up in Rover trenches, which Rover pumped out, flooding local farmers’ fields (see 
New York City needs more natural gas pipelines–and it needs them BAD. That’s the upshot of a newly released report from the New York Building Congress, a trade group representing some 450 other building-related trade groups with 250,000+ members. The report, titled “Electricity Outlook: Powering New York City’s Future” (full copy below) says NYC needs more pipelines built before the Indian Point Nuclear plant closes in 2021–both for electric generation (to replace Indian Point’s electricity) and because of the prohibition coming on heavier fuel oil used for wintertime heating. Interesting (and mind-blowing) fact: 81.5% of the electricity flowing in the five boroughs of NYC comes from natural gas-fired electric plants. The report calls for the Federal Energy Regulatory Commission to promptly approve Transco’s Northeast Supply Enhancement Project, when FERC has a quorum, which will flow more PA Marcellus gas to NYC and New Jersey. The report also calls on officials to approve Millennium Pipeline’s expansion request in Upstate. Of course the irony is not lost on those of us who live in Upstate New York–the irony being that we could be the ones providing at least some of that natural gas to our cousins in the City, if sleazeball Gov. Andrew Cuomo hadn’t banned fracking. So yes, New York needs more natural gas and needs it asap, but New York has banned the production of it–so we’ll have to get it from places like Pennsylvania, Ohio and West Virginia instead. Bad for us, but good for them…