Atlantic Sunrise Will Pump $1.6B into Economy, Create 8K Jobs
Williams pushed out a new economic analysis of their Atlantic Sunrise pipeline project yesterday. The project, if built, will cost $2.1 billion and consist of compression and looping of the Transco Leidy Line in Pennsylvania along with a greenfield pipeline segment, called the Central Penn Line, connecting the northeastern Marcellus producing region to the Transco mainline near Station 195 in southeastern Pennsylvania. Additional existing Transco facilities are being added or modified to allow gas to flow bi-directionally. The preliminary project design includes 178 miles of new greenfield pipe (Central Penn North & Central Penn South), two pipeline loops totaling about 12 miles (Chapman Loop, Unity Loop), 2.5 miles of existing pipeline replacement, two new compressor facilities in PA, and other facility additions or modifications in five states (PA, MD, VA, NC, SC). There’s been some push back by small groups of anti-drillers in places like Lebanon County and Lancaster County (PA) where a phony Indian tribe claims the pipeline will run through ancient burial grounds (see Convicted Lancaster Protesters Taunt Williams After Court Date). Meanwhile, the adults at Williams continue to make progress. The analysis they released yesterday shows the Atlantic Sunrise project will pump $1.6 billion into the economies of the states where it’s built, and create 8,000 jobs…
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It is true that what goes up must come down? As a general rule, yes. That age-old wisdom is manifesting itself in both oil and natural gas production from shale plays. Two days ago our favorite report from our favorite government agency–the Drilling Productivity Report (DPR) from the U.S. Energy Information Administration (EIA)–was issued. It shows something we haven’t seen before: negative numbers in some of the production columns for some of the shale plays–in both oil and natural gas. No, the Marcellus and Utica are not in the negative (they will both produce more oil and gas in April than they did in March). However, the rate of increase in production for the Marcellus and Utica, indeed all of the shale plays, is much less than it has been previously. Scaling back on new drilling will, sooner or later, affect production. We’re now seeing it in the numbers…
David Fessler is energy and infrastructure strategist (i.e. stock analyst/researcher) with The Oxford Club–a publisher based in Baltimore, Maryland that publishes the Oxford Resource Explorer, among other financial publications. Fessler spends his days immersed in the energy industry and in the stocks of companies in that industry. Fessler and The Oxford Club have produced a special report called “The Oil Company Death List” which is a list of 19 publicly-traded oil and gas companies that, according to a formula worked out by Fessler, will “die soon.” That is, they’ll go bankrupt if they don’t sell themselves or otherwise sell off major assets. Why? They’re “swimming in debt” and way over leveraged with “ugly balance sheets.” Fessler’s simple formula is all about a company’s debt ratio. When a company’s debts reach 4 times or higher its earnings (EBITDA), that’s a huge red flag. Below we have the list of 19 on the “death list” along with a copy of Fessler’s full report (describing his methodology). The interesting/troubling aspect is that 8 of the 19 are Marcellus/Utica operators–one of which is #1 for highest debt-to-earnings ratios. Some companies in the list surprised us–others did not. Is your favorite Marcellus/Utica driller in the list?…