Latest OH Wayne Natl Forest Auction a Bust – Leases Go for $3/Acre

The fifth auction by the federal Bureau of Land Management (BLM) of federally-owned acreage in Wayne National Forest (WNF) to allow shale drilling was, in a word, a bust. The first four auctions offered up a total of 2,396 acres in total, and sold for over $8 million (average of $3,354 signing bonus per acre). The fifth auction of two smaller parcels–39.6 acres in Monroe County, and 305.8 acres in Noble County–sold for a piddly $2 and $3 signing bonuses per acre, respectively. What in the world happened? MDN reader and friend Charles Winslow, owner of The Wells Inn in Sistersville, WV, writes the INNformer publication. Charles recently published an excellent article about the recent auction and its lackluster results in the INNformer. He offered MDN the opportunity to reprint it (below). Charles finds there are a number of factors for the low auction price–but primarily the blame can be laid at the foot of regulatory uncertainty…
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Utica Pipeline Explosion in Noble County, OH Affects Natl Output

Seneca Lateral pipeline fire – Noble County, OH

On Wednesday around 2:30 am in the morning, a section of 24-inch pipeline that runs from the MarkWest Energy natural gas processing plant in Noble County, OH and the Rockies Express (REX) pipeline (also in Noble County) exploded and caught fire. The Noble County Emergency Management Office says it happened about three miles north of Summerfield, Ohio, near Ohio State Routes 513 and 379. Fortunately, no one was injured. Neighbors heard the explosion and saw a glowing night sky. The only damage was to some nearby trees. That short segment of pipeline is known as the Seneca Lateral, owned by Tallgrass (owner of REX Pipeline). Tallgrass is investigating the cause of the accident. Believe it or not, that one pipeline and the gas it flows from the MarkWest plant to REX, carrying it to the Midwest, has caused the entire national output of natural gas to decrease by an estimated 2%, according to Reuters. A single small pipeline can actually move the needle on output! Right away the Sierra Club jumped into the story with a wild claim that the pipeline was not properly reviewed before regulators signed off on it. Typical headline-grabbing propaganda from the Clubbers. Here are the details we could find about the explosion/fire…
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More of Rover in Eastern Ohio Coming Online in Time for Star Wars

The mighty Rover Pipeline project marches on toward 100% completion, even though the Ohio EPA is doing its best to stop it (see Rover Ignores Shrill Ohio EPA, Asks FERC to Continue HDD Drilling). Because of previous issues with underground horizontal directional drilling (HDD), the Federal Energy Regulatory Commission (FERC) first put the brakes on Rover, then later eased off the brakes, but still keeps Rover on a tight leash, preventing Rover from moving at the faster pace they’d like move at. Especially with respect to work in eastern Ohio. Rover is a $3.7 billion, 711-mile natural gas pipeline that (will eventually) run from PA, WV and eastern OH through OH into Michigan and on to Canada. A large portion of the pipeline, designated Phase 1A, began flowing natural gas on Sept. 1st (see Big Portion of Rover Pipeline Now Up & Running – Thru Most of Ohio). However, Phase 1B work in eastern OH and WV, which will feed more Marcellus/Utica gas to the main part of the pipeline, has been stymied by slow HDD work. At least some of 1B is now ready to begin. Yesterday Rover asked FERC for permission to begin service on three lateral pipelines totaling nearly 62 miles, and to start up three compressor stations and seven metering stations–in Ohio’s Noble, Monroe and Harrison counties. Rover is asking FERC to hurry it up so they can begin service by next week, in time for the Star Wars: The Last Jedi premier on Dec. 14…
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Marcellus/Utica Gas “Briefly Trapped” by Tetco Pipeline Outage

Canadian company Enbridge owns the mighty Texas Eastern Transmission Company (Tetco) pipeline system in the U.S. Last Wednesday, as workers were installing test equipment along the line in Noble County, OH, the workers noticed soil around the pipeline moving around. Not a good situation. So they shut off the flow of gas through that section of the pipeline, south of the Berne compressor station in Noble County. That portion of the pipeline went from flowing 1.6 to 2.3 billion cubic feet of gas per day (depending on the news source), down to flowing zero. The situation was investigated and the pipeline returned to service on Sunday, Oct 15th. In the meantime, from the 11th to the 15th, Tetco declared the situation “force majeure”–meaning “due to circumstances beyond our control we have to shut it off.” We assume force majeure was declared because shippers who wanted to move gas through the pipeline, and buyers on the other end, were screwed for a few days. Shippers lost money from gas they could have sold and buyers had to scramble to try and find other sources to meet demand. Economic losses for both. We’re guessing declaring force majeure lets Tetco off the hook legally for any potential monetary damages its customers experienced during the outage…
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Carrizo Sells 26K Prime Utica Acres for $62M

This morning Carrizo Oil & Gas announced it has sold “substantially all” of its Utica Shale assets, located primarily in Guernsey County, OH, for a grand total of $62 million. The Carrizo website says the company owns 25,900 acres in the Utica. Do the math, and if they sold all 25,900 acres for $62 million it works out to a relatively low $2,394 per acre–essentially a fire sale compared with lease prices in that area which are double that amount. Once upon a time Carrizo had big plans for the Utica. They (wisely) sold off their northern Utica acreage and retained their southern acreage in 2012 (see Carrizo Exits Northern Utica Shale, Retains Southern Acreage). The company has drilled four Utica wells–all of them in Guernsey County, with three of the four producing gas and oil. But the oily Eagle Ford play caught the company’s eye and in 2015 Carrizo quit drilling in the northeast (see Carrizo Cuts Budget 35%, No Drilling Planned in Utica/Marcellus in 2015). Since that time, they have not drilled any new wells in the Marcellus/Utica. In May of this year, Carrizo put all of their Marcellus/Utica assets up for sale (see Carrizo O&G Puts Up ‘For Sale’ Sign on Marcellus/Utica Assets). So it should be no surprise they’ve found a buyer (unnamed) to pick up prime acreage in the Utica…
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Artex Energy Selling 14,885 Utica Acres in Eastern Ohio

Artex Energy Group, a subsidiary (on paper) of Marietta, OH-based Artex Oil Company, is selling 14,885 Utica Shale acres located in Noble, Guernsey, Washington and Tuscarawas Counties (southeastern OH). On its website, Artex claims it is “one of the largest oil and gas producers in Ohio” pumping out “millions of dollars per year in royalties to landowners.” The company says it has drilled and operates “more than 600 operated wells in Ohio.” Some of those wells are Utica Shale wells. However, many of their wells are conventional (vertical only) non-shale wells. The auction notice says 87% of the leases being offered are held by production. Over 2,000 acres is part of a joint venture Artex has with Antero Resources on land in Noble and Washington Counties. Artex is accepting bids now and will accept bids through March 2nd, with a target closing date of March 31st. Here are the particulars of what is being offered for sale…
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Rex Energy Sells 4,100 Acres, 14 Utica Wells in OH to Antero Resources

Rex Energy announced yesterday the company has cut a deal with Antero Resources to sell all of Rex’s “Warrior South Area” assets to Antero. Which may should like a big deal, but really isn’t. The assets sold include 4,100 net acres in perhaps the hottest part of the Ohio Utica Shale: Guernsey, Noble and Belmont counties. It also includes 14 Utica Shale wells. However, the wells are only producing 9 million cubic feet per day (MMcf/d) collectively. The sale price is $30 million–or $7,317 per acre. Rex says the acreage and wells are in a “non-core” area for the company. Rex, a driller focused mainly on the Marcellus/Utica (headquartered in State College, PA), has had its share of financial challenges. In December the company was warned by the New York Stock Exchange that the per share price is too low and the stock is in danger of being delisted (see Rex Energy Stock Threatened with De-Listing by Nasdaq). This sale is the latest in a string of sales meant to improve the company’s financial health…
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Eclipse Sells 9,900 “Non-Core” Acres in OH for $6,444/Acre

Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA that drills mostly in Ohio, announced yesterday they sold 9,900 net acres in eastern Noble County and western Monroe County, OH for $63.8 million to an undisclosed buyer. That works out to be $6,444 per acre. The assets are in areas that are (currently) undeveloped, according to the company, and not in the “core” of where Eclipse wants to drill. Here’s the company announcement…
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FERC Tells Rover, Leach XPress Pipes to Redesign Routes in SE OH

FERC logoTwo major pipeline projects have just received a big red light from the Federal Energy Regulatory Commission (FERC), pending changes to their plans. Energy Transfer’s Rover pipeline, a $3.7 billion, 711-mile Marcellus/Utica natural gas pipeline that will run from PA, WV and eastern OH through OH into Michigan and eventually into Canada, along with Columbia Pipeline’s Leach XPress, running from Marshall County, WV through Ohio to Leach, KY, got word from FERC that a small section where the pipelines cross must be reworked or it’s a “no go” for both projects…
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9 Years Later Fracking Set to Begin in Ohio’s Wayne National Forest

Wayne National Forest (WNF) is the only national forest in Ohio and portions of it are found in Athens, Gallia, Hocking, Jackson, Monroe, Morgan, Noble, Lawrence, Perry, Scioto, Vinton, and Washington counties. WNF is a “patchwork” of public land scattered among private land. Some 60% of the mineral rights below WNF are privately owned. Back in 2012 MDN told you that the U.S Forest Service, after holding up drilling in WNF since 2006, had cleared the way to allow fracking to begin (see Fracking Coming to Wayne National Forest in SE OH). Then any potential fracking came to a screeching halt because it was delayed by yet another federal agency–the Bureau of Land Management (BLM). Since 2012 the BLM has moved like a snail, but finally (finally!) the BLM has scheduled public scoping hearings for Nov. 17, 18 and 19. Things are moving once again. Once the hearings are done, there will no reason not to move forward with plans to drill (and frack!) in the WNF…
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Top 6 Utica Natgas & Top 6 Utica Oil Wells by Production in 1Q15

Top 6Yesterday the Ohio Dept. of Natural Resources (ODNR) released their first quarter production numbers for both oil and natural gas (see our companion story today). Below are details for the top 6 natural gas producing wells, and the top 6 oil producing wells in the state. Rice Energy and Antero Resources split the top 6 natural gas wells with three apiece. Of note, Rice’s wells took the top 3 slots. Aubrey McClendon’s American Energy drilled the most top oil wells (4 of the top 6), followed by one apiece for Antero Resources and PDC Energy…
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CONSOL Energy Narrows Future Marcellus/Utica Dev to 5 Counties

CONSOL Energy released its first quarter 2015 update on Tuesday. Like virtually every other Marcellus/Utica driller, CONSOL’s 1Q15 profits dropped quite a bit–in this case 32%. But there was plenty of good news in Tuesday’s update. CONSOL reports Marcellus Shale production was up an impressive 75% year over year for the first quarter. They cut their costs in the Marcellus–from $3.18 per Mcfe in 1Q14 to $2.62 per Mcfe in 1Q15–$0.56 per Mcfe improvement (18%). The company achieved all-in cash costs of only $1.67 per Mcfe in the Marcellus Shale, which “continues to be the growth engine of the company.” Meanwhile, CONSOL continues to ramp up their Utica program. The company is currently drilling Utica wells in four counties: Greene and Westmoreland counties in PA; Monroe County, OH; and Marshall County, WV. CONSOL says the Utica wells they are currently drilling will come online in the second half of this year. However, given the current low price climate and cutbacks, CONSOL streamlined both its Marcellus and Utica operations in 1Q15. They’ve narrowed future Marcellus development to primarily Greene, Washington and Allegheny counties in PA; wet Utica development to Noble County, OH; and dry Utica development to Monroe County, OH…
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Noble County, OH in Love with the Leach Xpress Pipeline

It’s not often you read about a pipeline project that’s “well received” by both the elected leaders of a county and the landowners in that county. But such is the case with the Leach Xpress Pipeline in Noble County, OH. Leach Xpress, you may recall, is being built by Columbia Pipeline Group and will begin in Marshall County, West Virginia, cross Ohio and end up in Leach, Kentucky (see Columbia Gas: $1.75B for 2 Projects to Send Marcellus Gas to Gulf). Why are the folks of Noble County in love with the Leach Xpress? For one thing, it will generate $6.2 million per year in tax revenue, with 63% of that going to school districts in the county…
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EnLink OH Condensate Pipe in Trouble? Open Season Extended Again

EnLink Midstream is clearly having trouble getting enough business to justify building a new condensate pipeline in Ohio. In August 2014, EnLink announced a new 45-mile condensate pipeline that will stretch across Guernsey, Noble and Washington counties in Ohio (see EnLink Midstream Announces New Condensate Pipeline in ORV). The project, which connects to another EnLink pipeline in Washington County, is called the Ohio River Valley Pipeline, or ORV. In mid-December, EnLink launched a 30-day binding open season for shippers to sign up for capacity on the new pipeline (see EnLink Launches 1 Month Open Season for ORV Condensate Pipeline). An open season is the time when shippers sign on the dotted line and commit to paying for and using the pipeline when it’s built. If EnLink doesn’t get enough customers, they won’t build it. In January EnLink announced there were extending the open season another six weeks (see EnLink Extends Open Season for OH Condensate Pipeline by 6 Weeks). Those six weeks have come and gone, and guess what? EnLink has just announced they’re extending the open season again, another six weeks…
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EnLink Extends Open Season for OH Condensate Pipeline by 6 Weeks

In August 2014, EnLink Midstream announced a new 45-mile condensate pipeline that will stretch across Guernsey, Noble and Washington counties in Ohio (see EnLink Midstream Announces New Condensate Pipeline in ORV). EnLink calls the project, which connects to another EnLink pipeline in Washington County, the Ohio River Valley Pipeline. In mid-December EnLink launched a 30-day binding open season for shippers to sign up for capacity on the new pipeline (see EnLink Launches 1 Month Open Season for ORV Condensate Pipeline). Midstream companies won’t build expensive pipelines (this one will cost $250 million) unless they have 15-20 contracts in place to guarantee they’ll make their money back. Today EnLink announced they’re extending the open season another six weeks–to the end of February. Oh oh, must mean they don’t yet have enough interested customers to build it…
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