Utica Shale’s Impact on Ohio Past 10 Years: $100 Billion!

Aubrey McClendon, co-founder of Chesapeake Energy and founder of American Energy Partners (renamed to Ascent Resources) was the first to recognize the importance of the Ohio Utica Shale and once famously said the Utica is “the biggest thing to hit Ohio since maybe the plow.” Turns out he was right, God rest his soul. The Consumer Energy Alliance (CEA), a national group of families, farmers, small businesses, distributors, producers and manufacturers joined together to support America’s energy future, has just released a report that shows from 2006 to 2016, Ohioans saved more than $40 billion (!) on energy costs (natural gas and electricity) because of the Ohio Utica Shale. The report, titled “The Benefits of Ohio’s Natural Gas Production to Energy Consumers and Job Creators” (full copy below), breaks down the savings this way: Ohio residential customers saved close to $15 billion during the 10-year period, while commercial and industrial consumers saved more than $25 billion. But that’s not all. The report also quotes JobsOhio in saying that shale-related investment in the Buckeye State from 2011-2017 was a staggering $63.9 billion. If you add those two numbers together, the amount of money saved on energy (and therefore spent on other things), and the amount of money invested, it totals more than $100 billion of economic impact from shale in Ohio–in ten short years. Put another way, one-tenth of trillion dollars has been spent in Ohio because of shale. Mind-blowing…
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Crude Oil Truck Drivers Needed in Ohio Utica

While the Marcellus Shale play is mostly about natural gas, with some natural gas liquids in the southwestern part of the play, the Utica play in Ohio is a different story. Yes, a lot of natgas and NGLs get produced in the Utica, but the Utica also has a lot of oil coming out of the ground. Crude oil. Straight from the Utica/Point Pleasant rock layer. Something that hadn’t dawned on us (until now) is this question: How do Utica drillers get their crude to refineries? With natgas and even NGLs, it’s done mostly via pipelines. When’s the last time you heard about a “gathering pipeline” running to a well pad for crude oil? Yeah, never. So how do drillers get all that oil to refineries? They truck it. Another interesting factoid: those Pilot Flying J truck stops don’t only sell refined petroleum (diesel) to truckers, some of those operations also truck raw crude to refineries. The Pilot Flying J in Canton, OH is one such operation–and they currently have a shortage of truck drivers to haul Utica crude. It’s a “trucker’s market” right now. If you have a Class A commercial driver’s license with Hazmat (hazardous materials) and tanker endorsements, Flying J wants to talk to you, stat…
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Chesapeake Energy 2Q18: $2B Utica Deal Last Major Asset Sale

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Chesapeake Energy released its second quarter 2018 update yesterday, and hosted a conference call with investor/analysts. Some of the big talk revolved around Chessy’s recent announcement it is selling its Ohio Utica assets for $2 billion (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). While that announcement last week caused Chesapeake’s stock price to pop up, yesterday’s announcement that the company lost $40 million in 2Q18 caused stock prices to go back down. CEO Doug Lawler put a good spin on the news, and indeed there is reason to be optimistic. The company is moving in the direction of profitability. Lawler said the $2B sale of Ohio Utica assets will be used to pare down the company’s $9+ billion debt. He also said the Utica sale is the last major asset the company will sell in its bid to reduce outstanding debt. So what will they do to further reduce the company’s high debt? Lawler said, “Going forward, organic production growth, exploration, strategic acquisitions and portfolio management” will get the job done. As we’ve previously noted, Chesapeake is in the midst of converting itself from primarily a gas-drilling company to primarily an oil-drilling company. Doug is betting the ranch on oil. Below is an overview of yesterday’s update, a copy of the full update, and some excerpts of interest from the conference call…
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Chesapeake’s $2B Exit from Ohio Utica “Is a Good Thing”

Last week MDN shared the blockbuster news that Chesapeake Energy is exiting the Ohio Utica, selling all of its Ohio assets for $2 billion (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). The buyer is Encino Acquisition Partners, a joint venture between Encino Energy and the Canada Pension Plan Investment Board. At the time we speculated this may be good news for Ohio’s landowners signed with Chesapeake–that perhaps landowners now stand a better chance of seeing new drilling. That was just speculation/hope on our part. Looks like we’re not the only ones thinking that way. A couple of industry experts are saying the same thing. One of them said Chesapeake’s sale and exit “is a good thing” because it means Encino will sink money into new drilling programs in a way that Chesapeake, larded up with debt, could not…
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OH Wayne Natl Forest Landowners Tired of Waiting, Take Fight to DC

Bureaucrats deeply embedded in the federal Bureau of Land Management (BLM) are engaged in denying private property owners with property in the Ohio Wayne National Forest (WNF) their property rights. That’s the very serious (and true) charge being levied by members of the National Association of Royalty Owners (NARO). After “seven years of inaction,” property owners in WNF have taken their case to Washington, D.C.–to elected representatives from Ohio, along with federal agencies–in hopes of getting Utica drilling under way in WNF. After 10 long years, the BLM finally auctioned 719 acres in WNF in December 2016 (see BLM Auction Leases 17 Parcels, 719 Acres in OH Wayne Natl Forest). Since then BLM has held three more auctions. Ultimately there are some 18,000 acres under consideration for leasing by the BLM in WNF, a “patchwork” of public land scattered among private land. Some 60% of the mineral rights below WNF are privately owned! Those mineral rights owners have been denied the use of their property rights for more than a decade. It was thought with the beginning of auctions the situation would be remedied. Not so. Not a single drilling permit has been issued following the auctions. BLM bureaucrats are threatening private landowners that their property, if it belongs to a drilling unit along with BLM auctioned land, will be subject to a full National Environmental Policy Act (NEPA) review. Enough! It’s time to put an end to unelected DC swamp dwellers blocking Utica drilling in WNF…
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Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B

In what is perhaps the second biggest thing to hit Ohio since maybe the plow (the first being the Utica Shale, borrowing a phrase from Aubrey McClendon), Chesapeake Energy announced yesterday it is selling ALL of its 933,000 Ohio acres (including 320,000 net Utica acres) and 920 operated and non-operated Ohio Utica wells to Encino Acquisition Partners for $2 billion. This is truly big news! Encino Energy is a young company, founded in 2011, headquartered in Houston, TX. Last year Encino formed a partnership with Canada Pension Plan Investment Board to form Encino Acquisition Partners. It is the Encino subsidiary that is buying Chessy’s Ohio Utica assets. The burning question is, Will Encino drill more wells? Or just sit on its new acquisition? Based on how they describe themselves, we think Encino is going to pursue an active drilling program in the Ohio Utica. According to their own boilerplate, the company’s mission is to, “focus on driving long-term investor returns by acquiring and developing high-quality assets with an established base of production and a large, low-cost development inventory across the lower 48 states of the United States.” They’ve certainly acquired a high-quality asset with an established base of production and it has a large, low-cost development inventory. All the boxes are checked in buying Chesapeake’s Utica assets. So we’ll hold Encino to their word that they will “develop” it–meaning drill new wells. Chesapeake plans to use the $2 billion to pay down some of their ginormous debt…
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Ohio EPA Takes One More Swipe at Rover Pipe with FERC Notice

Craig Butler (aka Captain Ahab) has risen up with the Ohio EPA (aka harpoon) one last time to see if he can skewer his great white whale, the Rover Pipeline (aka Moby Dick). According to Energy Transfer Partners, builder of Rover, the Ohio EPA, which Butler heads, has filed a Notice of Violation with the Federal Energy Regulatory Commission as a backdoor attempt to prevent the final segments of the pipeline from going online. ET says the NOV is baseless. An ongoing delay in blocking several Rover lateral segments from going into service is causing economic harm to ET’s customers (and to ET). This isn’t the first, nor even second time Butler and OEPA have gone after Rover. It’s the upteenth time (see our Butler/Rover stories here). What’s the baseless charge this time? OEPA says Rover disposed of “spent” drilling mud containing low levels of the chemical solvent tetrachloroethene (PCE) without approval. Rover has fired back at OEPA in a letter to FERC, accusing OPEA of recycling the PCE issue after it had already been investigated and addressed…
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Top 25 Producing Gas & Oil Wells in Ohio Utica for 1Q18

The Ohio Dept. of Natural Resources (ODNR) issued production numbers yesterday for the first quarter of 2018. Natural gas production was up an astounding 43% over the same period last year. In fact, Utica natgas production hit a new all-time high of 531.3 billion cubic feet (Bcf) in 1Q18. However, Utica oil production was down 3.6% over the same period last year. Ohio’s oil production has seesawed over the past few years. It increased last quarter and the quarter before. But prior to 3Q17, oil production was mostly down. Once again Ascent Resources, founded by the late Aubrey McClendon, dominated the top 25 highest-producing gas wells (17 of the top 25). However, Eclipse Resources grabbed the top slot in 1Q18 with a well in Monroe County that produced an amazing 2.9 Bcf all by itself! Eclipse also (as in the previous quarterly report) grabbed a majority of the top 25 most-producing oil wells, with 13 of 25 wells on the list. The top 4 oil wells were Eclipse wells, all located in Guernsey County. Below we have the ODNR’s high level overview of the numbers, along with MDN’s own exclusive analysis showing: the top 25 producing gas wells, the top 25 producing oil wells, and then the top 25 gas and oil wells as ranked by average production per day. There is a difference. The longer an oil or gas well is online, the less it produces. Newer wells produce more. We show you which wells are not just producing the most quantity overall, but which wells are producing at the fastest (most productive) rates–even if those wells haven’t yet been online a full three months. We also include a link to the complete list (Google Spreadsheet) of 1,949 wells included in the 1Q18 ODNR report, in a more useful format than that provided by ODNR…
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Where is Production Increasing (& Decreasing) in Marcellus/Utica?

Natural gas production in the U.S. has rocketed skyward in just the past few weeks. According to the experts at RBN Energy, “the abruptness and sheer strength with which production has surged” has “taken the market by surprise.” Gas production rose in every region of the country, but it rocketed in one region in particular. Yep, in the Marcellus/Utica. When you look at how much our region was producing on June 7, and then again on June 28, the difference in just those three weeks is astonishing. Production of natgas soared and was 600 million cubic feet per day higher on June 28 than three weeks prior. Amazing! But production did not increase in every area of the Marcellus/Utica region. In one area, production decreased. Below you’ll find out where production went up, and where it went down in the M-U in June…
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Utica Fracking May Help Locate Evidence of Life on Mars

In 2016 MDN brought you the story of researchers who found microbes (bacteria) living nearly two miles down in Utica Shale wells. They dubbed one of the never-before-seen bacterial “lifeforms” in the well Frackibacter. We immediately labeled it a different name: Frackenstein (see Frackenstein! Researchers Find New Life Form in Fracked Utica Wells). One of the Ohio State researchers who helped discover Frackenstein continued the work. Last July he published a study titled, “Sulfide Generation by Dominant Halanaerobium Microorganisms in Hydraulically Fractured Shales” (see Ohio State Research Finds Microbes in Utica Well May be Corrosive). The researcher said a different bacteria he studied, that appeared in multiple Utica wells (called Halanaerobium) may be a cause for concern, possibly corrosive to pipes and cement and toxic for workers. Bear in mind the study was theoretical and based on observations at a single Utica well. The intrepid researchers at Ohio State have kept at it and have now published a third study. This new study, titled “Coupled laboratory and field investigations resolve microbial interactions that underpin persistence in hydraulically fractured shales” (full copy below), may “hold clues to extraterrestrial life” and assist in our efforts to search for life on the planet Mars. Far out! ET phone home–we’re about to frack Mars…
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Rover Pressuring FERC to Approve Final 2 Laterals ASAP

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In a respectful, but strongly worded letter to the Federal Energy Regulatory Commission (FERC), Energy Transfer Partners’ Rover Pipeline asks FERC to (our words) get off its rear-end and approve the Burgettstown and Majorsville laterals. The two laterals, or off-shoots of the pipeline system, both reach into western Pennsylvania and are (from what we can tell) the final two pieces of the Rover pipeline that are not yet online. Rover asked FERC to approve the two laterals, along with other portions of the pipeline, by June 1st, in a letter dated May 24th. FERC did approve some items on the list, but not the two laterals (see M-U Gas Now Travels to Dawn Hub in Canada via Rover Pipeline). In a June 21 letter (read it below) Rover then asked FERC to approve the two laterals by June 25, this past Monday. That date came and went with no approvals. Rover said in its letter: “significant volumes of natural gas have been unable to flow on pipeline facilities that have been completed for nearly a month.” You can feel the frustration when reading the letter. So what, exactly, is the holdup anyway?…
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Shell Says Falcon Ethane Pipeline to Get Built in 2019

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Shell delivered some good news at the Northeast U.S. Petrochemical conference held earlier this week in Pittsburgh: The Falcon ethane pipeline will get built next year. It won’t actually flow ethane to the Shell cracker in Monaca until 2020 at the earliest–because the cracker plant itself won’t go online until 2020 at the earliest. The Falcon pipeline project is interesting for a number of reasons, the chief reason (for us) being: Shell didn’t use eminent domain for a single foot of the 97-mile, two-legged pipeline system. Shell negotiated with every landowner and got them to sign on the dotted line. Judging by the articles we’ve highlighted in the past, Shell paid landowners between $40-$75 per linear foot for a permanent easement (see Landowners Who Negotiate with Shell Ethane Pipeline Get More $). The Pennsylvania Dept. of Environmental Protection conducted three public hearings on the project earlier this year, in preparation for issuing permits. Antis came out in force and behaved badly, as they typically do (see More of the Same at Final DEP Hearing for Shell Ethane Pipeline). Using no eminent domain, and in the face of Big Green opposition, the big news is that Shell says they will build the pipeline next year, right on schedule, which is good news indeed…
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Federal Court Upholds Ohio Forced Pooling Law in Chesapeake Case

In 2015, landowners in Harrison County, OH who own 127 acres (the Kerns) filed a lawsuit alleging their property rights were about to be violated because Chesapeake Energy had filed a pooling request with the Ohio Dept. of Natural Resources (ODNR) to pool (combine) the Kerns property with surrounding properties for shale drilling. The Kerns had not signed and do not want drilling under their land. Their neighbors do. Ohio has a law on the books that allows for “forced pooling” in cases when a majority of the surrounding land is leased but landowners with small positions refuse to sign. The Kerns resisted and fought the case all the way to Ohio Supreme Court, which rejected their claims. Chesapeake drilled and fracked three wells (on a neighboring property), which included drilling under the Kerns’ property. So the Kerns filed a new lawsuit in 2016, in federal court, claiming a “taking” of their property had occurred. The federal court has just ruled–against the Kerns. This was the first time a court case dealt directly with the constitutionality of Ohio’s unitization (forced pooling) law. The upshot: Ohio’s forced pooling law remains intact and in force…
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2 Bills Affecting Utica Shale Head to Gov Kasich for Signature

OH Gov. John Kasich

A pair of bills recently passed the Ohio State legislature and have gone to Gov. John Kasich’s desk for his signature. Both bills affect companies in the oil and gas space, in particular those drilling in the Utica Shale. One bill, House Bill (HB) 430, tightens up the tax code, what is and what is not allowed as deductions for drilling companies. Ohio state auditors have taken advantage of unclear language to aggressively go after oil and gas companies over legitimate tax breaks they receive under Ohio law (to not pay taxes on equipment used directly in producing oil and gas). Lawmakers want to end the tax witch hunts by clearing up language. They did so back in 2016, but Kasich and Democrats successfully spun the issue as a “tax break” under which up to $264 million would have to be refunded to Big Oil. Total lie. But Kasich vetoed that bill and it died (see OH Gov Kasich Vetoed Misnamed ‘Tax Relief’ for Utica Drillers). The bill is back, in a different form, and sent to Kasich for a signature. Will he sign it this time? The second bill, House Bill (HB) 225, addresses the issue of plugging some of the estimated 600 orphan wells in the Buckeye State. HB 225 triples the amount of money set aside to cap orphan wells (money which comes from Ohio’s severance tax, paid for by oil and gas producers). The bill also “creates a more streamlined and efficient process for identifying and plugging” orphan wells. The amazing thing about HB 225 is that both Big Green groups and the drilling industry support it! We predict a quick signature on this one…
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M-U Gas Now Travels to Dawn Hub in Canada via Rover Pipeline

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Last Thursday, May 24, Energy Transfer Partners requested (frankly, begged) the Federal Energy Regulatory Commission (FERC) to approve final startup for the rest of Rover Pipeline not yet flowing–by June 1st. ET has contracts to honor and they promised shippers the full pipeline would be up and running by June 1st. ET requested permission to start up the “Majorsville Lateral, Supply Connector Line B, and Mainline B between CS1 and CS2 and between CS3 and the terminus,” along with a request to begin flowing on the “Burgettstown Lateral.” Note that some of the project has two pipelines, side by side (the Mainline and Supply Connector). ET asked that the second pipes in both cases be allowed to start up, along with the Majorsville and Burgettstown Laterals (see the map). ET got some of what it wanted–everything but permission to start up the laterals–yesterday from FERC. With the startup of Mainline B and Supply Connector B, ET says the Rover Pipeline project is now capable of flowing the full 3.25 billion cubic feet per day of natgas all the way to the Dawn Hub in Ontario, Canada. The only “problem” remaining is to find enough gas to flow the full 3.25 Bcf/d. They won’t be flowing the full 3.25 Bcf/d until all of the laterals are brought online…
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Ohio Antis Suffer Big Election Defeats in Youngstown, Statewide

On Tuesday the voters in Ohio once again roared their disapproval of anti-fracking candidates, and anti-fracking ballot measures. For the seventh time in a row, a radical anti-fossil fuel ballot measure was voted down in Youngstown, OH–by an overwhelming majority (56%). Even so, the hardened radicals behind the ballot measure promise to keep bringing it back until Hades freezes over. These radicals have already cost the taxpayers of Youngstown $188,000 to run the ballot measure. And yet they keep coming back. They fit Einstein’s definition of insanity. Statewide voters shot down the candidacy of anti-fossil fueler Dennis Kucinich, the man who pledged that if elected governor he would institute a total ban on fracking statewide (see Ohio Democrat Candidate for Governor Says He’ll Ban Utica Drilling). Ohioans saw right through that nonsense. Only 23% of Ohio’s Democrats voted for Kucinich in Tuesday’s primary–a total humiliation…
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