Energy Transfer’s Rover, ME2 Pipes Rack Up 800+ Violations

Reuters has published a “hit piece” against Energy Transfer (ET) and two of its recent big pipeline projects–Rover Pipeline (in Ohio & Michigan), and Mariner East 2 Pipeline (in Ohio and Pennsylvania). Reuters is usually more balanced than, say, Bloomberg with these types of articles. Reuters usually doesn’t go out of its way to denigrate the industry. The article evaluates the number of permit violations issued for both projects. Together that number exceeds 800. Is that a lot? Reuters says they’ve analyzed “four comparable pipeline projects” and found an average of 19 violations per project (or 38 for two projects). So yeah, 800 vs. 38 sure sounds like a lot to us.
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Ohio EPA Floats Plan for New Air Emissions Rules on Shale

regulations

Director of Ohio EPA, Craig Butler, doesn’t intend to let another Rover Pipeline project slip by his heavy hand of regulatory oversight (see Ohio EPA’s Craig Butler Goes Nuts, Demands $2.3M from Rover Pipe). Nor does Butler intend to let Utica Shale drillers ignore him either–even though the Ohio Dept. of Natural Resources (ODNR) is the agency responsible for regulating oil and gas in the state. Ohio EPA has zero regulatory oversight with respect to federally approved projects like Rover. It has some oversight of Utica Shale projects–as they impact certain aspects of the environment. Ohio EPA is now floating the idea of exceeding U.S. EPA air emissions standards for pipeline projects and for equipment used at drill pads, and they want feedback.
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Encino Plans to Continue Expanding in OH Utica

Earlier this month Encino Acquisition Partners (i.e. Encino Energy) completed its purchase of all of Chesapeake Energy’s Ohio Utica Shale assets for $2 billion, originally announced in July (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). The deal includes all of Chesapeake’s 933,000 Ohio acres–with 320,000 net Utica acres–and 920 operated and non-operated Ohio Utica wells. With the deal now done, Encino is signaling good things are ahead. Encino President and CEO Hardy Murchison recently spoke with S&P Global Platts about the company’s plans for the future. You’ll be interested to know that Encino is already evaluating more acreage they want to buy in the Ohio Utica, to further expand their already-massive new operation.
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NEXUS Pipe Won’t Complete Restoration Work Until Spring

NEXUS Pipeline, a $2.6 billion, 255-mile interstate pipeline that runs from Ohio into Michigan, began a partial startup in October, and is now fully online. Although there was early opposition to the project, and some complaints from landowners along the route of construction, the project is noteworthy for the just how little complaining there actually was. Not all of the restoration work–things like reseeding and landscaping–is done. Most of it is done, but not all. A few landowners still have some scattered complaints related to unfinished work. Massive amounts of rain in the region have prevented final restoration work, which NEXUS now says will have to wait until spring 2019. In the meantime, local school districts and municipalities are rubbing their hands, anticipating tax payments that will begin to flow into their coffers.
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Ohio State Study Looks at 2 New Microbes in Shale Wells

Marinobacter

Over the past several years MDN has highlighted important research performed by Ohio State University with respect microbes (bacteria) living in shale wells. In a 2016 study, researchers dubbed a never-before-seen bacterial “lifeform” found in a Utica Shale well, Frackibacter. Having some fun, we labeled it a different name: Frackenstein (see Frackenstein! Researchers Find New Life Form in Fracked Utica Wells). The researchers kept at it and published another study along the same lines in 2017 (see Ohio State Research Finds Microbes in Utica Well May be Corrosive). Researchers said a different bacteria 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. OSU researchers have kept at it and we now have a brand new study, titled “Members of Marinobacter and Arcobacter Influence System Biogeochemistry During Early Production of Hydraulically Fractured Natural Gas Wells in the Appalachian Basin” (full copy below). This time, several Utica and Marcellus wells were studied. What’s the upshot of this latest study?
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Encino Takes Over from Chesapeake in Ohio Utica; Big Plans

The deal is done. On Monday, Encino Acquisition Partners completed its purchase of all of Chesapeake Energy’s Ohio Utica Shale assets for $2 billion, originally announced in July (see Stop Press: Chesapeake Sells ALL of its Ohio Utica Assets for $2B). The deal includes all of Chesapeake’s 933,000 Ohio acres (with 320,000 net Utica acres) and 920 operated and non-operated Ohio Utica wells. With the deal now done, Encino is signaling good things are ahead. The company will keep its Utica regional headquarters in Louisville, OH–right where Chesapeake had it. Encino has and will continue to operate two active drilling rigs in the Utica this year, and add a third rig next year. Encino CEO Hardy Murchison recently spoke about the company’s Utica plans moving forward. It has folks in Ohio excited!
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Williams Withholds Payment Forcing Pipeline Builder into Bankruptcy

On Monday Welded Construction, a pipeline construction contractor headquartered in Perrysburg, OH, filed for Chapter 11 bankruptcy protection because, they say, Williams is refusing to pay them $23.5 million for work completed, and that refusal/dispute leaked out into the marketplace and created a “liquidity crisis” (crisis of confidence) with other Welded customers and their projects. By filing for bankruptcy protection, Welded hopes to create “breathing room” and settle folks down and reassure them their projects are OK.
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Gulfport 3Q18 Operations Update: 11 New Utica Wells

Gulfport Energy, an independent oil and gas driller with significant acreage positions in the Utica Shale of eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma, issued its third quarter operational (not financial) update yesterday. Gulfport is one of those companies that delivers its operational news first, and a few weeks later issues its financial news. Gulfport reports production continued to climb to new highs, averaging 1,427.5 million cubic feet equivalent (MMcfe) per day, a 7% increase over 2Q18 and 19% increase over 3Q17. Said another way, 1.43 Bcf/d.
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Who’s the Biggest NatGas Producer in the Ohio Utica?

The Ohio Oil and Gas Association (OOGA) and St. Clairsville Area Chamber of Commerce sponsored an update on the Utica Shale and its impacts in southeastern Ohio at a one-day event held yesterday at Belmont College. The upshot of the day seemed to be this: The Utica is still creating thousands of jobs, and still attracting millions of dollars in investment. Among the speakers were reps from both EQT and Ascent, who had some interesting comments about their respective operations. Question: Who do you think is the largest natural gas producer in Ohio today? One of the speakers made the surprise claim that her company is now the top producer in Ohio.
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Yes! NEXUS Pipeline OK’d by FERC to Begin Service

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NEXUS, a $2 billion, 255-mile interstate pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada, was the first major pipeline project to gain Federal Energy Regulatory Commission (FERC) approval shortly after a quorum of voting members was reestablished in summer 2017 (see New FERC Quorum Votes Final Approval for NEXUS Pipeline). It didn’t take long for NEXUS partners DTE Energy and Enbridge to get it built. The pipeline has essentially been done since mid-September (about a year to construct), when they asked for permission to start up (see NEXUS Pipeline Asks FERC for Sept 28 Startup to Flow 967 MMcf/d). Yesterday FERC granted that permission.
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Tetco TEAL Pipe Partial Start Up, Feeding NEXUS Pipe

On Tuesday, Enbridge, owner of the Texas Eastern Transmission Company (Tetco) Pipeline, announced it has put part of its Texas Eastern Appalachian Lease (TEAL) natural gas pipeline project in Ohio into service. TEAL boosts capacity along Tetco by 950 million cubic feet per day (MMcf/d), to flow Marcellus/Utica gas to the recently-completed-but-not-yet-online NEXUS pipeline (see FERC Authorizes Tetco TEAL Phase II – Connecting to NEXUS Pipe).
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List of 29 Marcellus/Utica Gas-Fired Elec Plants Planned or Built

Each large (over 475 megawatts) gas-fired electric power plant is an economic bonanza. The plants cost hundreds of millions of dollars to build–over a billion dollars for the largest plants. They provide hundreds of jobs during construction, jobs that last several years. They provide millions in tax revenue to local municipalities and schools. And best of all, each one of these plants uses an enormous amount of Marcellus and Utica Shale gas. There are 29 of these incredible projects already built or in various stages of planning and construction in PA, OH and WV. We have the list below.
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Get an “Unfair” Advantage for 2019 Northeast Oil & Gas Awards

Each year MDN partners with the Oil & Gas Awards to promote their Northeast Awards–a way for companies in the oil and gas industry that operate with distinction to get recognized by their peers. In March 2019 the Northeast Oil & Gas Awards will celebrate their 7th year! We hope that you and your colleagues will be able to share *your* successes and participate in the greatest celebration of our industry at the Oil & Gas Awards in Pittsburgh in March 2019. The deadline to enter is Dec. 12. MDN has what we consider a way you and your company can gain an “unfair” advantage–stacking the deck in favor of your company winning.
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OH Supreme Court Rules Independent Landmen Need Real Estate License

Sometimes the law, and justice, is mysterious to us. Last November we told you about an Ohio Supreme Court case with profound implications for both landmen and for the drillers who employ and use them (see OH Supreme Crt Considers Whether Landmen Need Real Estate License). The case, Dundics v. Eric Petroleum Corp., was appealed to the Ohio Supreme Court by Dundics who was not happy with the outcome in lower courts that ruled landmen must have a real estate license in order to get paid for their valuable services. Even more to the point, if you don’t have a real estate licence, the company hiring you (like Eric Petroleum) can decide to not pay you–and it’s OK! The Supremes ruled at the end of August to uphold that principle. That is, if a landman is compensated via a commission and/or royalties for the deals he or she brokers, that person needs to have a real estate license. And if they don’t have such a license, they are considered (under the law) to be committing fraud. (It is our understanding that if the landman is paid a “day rate,” that is, paid a flat rate by the day, or if the landman is an employee of the drilling company, someone whose compensation is not directly tied to the number and value of deals, that landman does not need a real estate license. Please verify that!) The Ohio Supremes decided, in essence, that when you accept a commission or are paid a percentage of each deal, you must have a real estate license. In the case of Dundics v. Eric Petroleum, Mr. Dundics was repeatedly assured (according to the court documents we read) by Eric Petroleum that he (Dundics) would be compensated according to an agreed-on formula. But Dundics didn’t have a real estate license, so Eric Petroleum abrogated the agreement–with the court’s blessing…
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Mystery Seller of Ohio Utica Acreage to Ascent Finally Identified

At the end of June, Ascent Resources, a company founded by Aubrey McClendon after he left Chesapeake Energy, announced it is buying 113,400 Utica Shale acres along with 93 operating wells located in eastern Ohio for $1.5 billion (see Ascent Resources Spends $1.5 Billion to Buy OH Utica Acreage, Wells). The new acreage tips Ascent over the 300,000 Utica acre line and catapults the company into one of the largest privately owned drillers (exploration and production) in the U.S. The companies selling their Utica assets are CNX Resources and Hess (selling a joint venture they co-owned, each selling their share for $400 million each, for a total of $800 million), Utica Minerals Development (a subsidiary of First Reserve, a private equity firm headquartered in Greenwich, CT, and EMG), and a fourth, unnamed mystery seller. Now that all of the deals have closed, the mystery seller has been revealed…
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