Pennsylvania Continues to Hit a Home Run re Landowner Royalties
Back in 2018 MDN analyzed the economic impact from just one driller (Cabot Oil & Gas) in one county (Susquehanna County, PA) and discovered Cabot had put $1.5 billion into the pockets of private landowners through signing bonuses and royalties, and had spent another $3.5 billion on drilling (over $5 billion total spent) over a 10-year period–all in Susquehanna County (see Broome County, NY Substitutes Solar Crumbs for NatGas Feast). The Allegheny Institute for Public Policy has done a similar analysis looking at several counties in southwestern and northeastern PA to tabulate the revenue flowing to landowners from royalties and bonus payments. The numbers are staggering!
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All three M-U states received permits to drill new shale wells last week. Pennsylvania received a big 18 new permits (after receiving no new permits the previous week). More than half of those 18 permits were for wells on two pads in southwestern PA. Ohio received 7 new permits last week all in one county (Jefferson), split between Encino Energy and Ascent Resources. And West Virginia received 10 new permits with 7 of them for a single pad in Lewis County.
In July 2020, PA Gov. Tom Wolf signed into law House Bill (HB) 732, a bill that grants tax breaks to companies willing to build brand new petrochemical plants in the Keystone State–plants that use huge quantities of Marcellus Shale gas (see 
Yesterday MDN reported comments by Energy Transfer (ET) that the company plans to finally (after years of delays) complete the final pieces of the Mariner East 2 pipeline project by the third quarter of this year (see 
There are still a few select pipeline projects under construction in the Marcellus/Utica, even during the anti-fossil fuel Joe Biden regime. One such project of keen interest for us is the Mariner East 2 (ME2) NGL pipeline that runs from eastern Ohio through Pennsylvania to the Marcus Hook refinery near Philadelphia. The builder and owner of ME2 project, Energy Transfer, issued its quarterly update last week. As part of that update we found a reference from top management that ME2 will be completely finished (“done done”) sometime in the third quarter of this year.
Epsilon Energy concentrates most of its effort on the Marcellus in Susquehanna County, PA. Epsilon doesn’t typically do its own drilling. The company joint venture partners with (gives money to) other companies, like Chesapeake Energy, and the other company typically does the drilling. Epsilon issued its first-quarter update last Thursday. The company’s Marcellus net gas production averaged 27.4 million cubic feet per day (MMcf/d) in 1Q21, compared to 30.3 MMcf/d of net gas production in 1Q20 (a 10% decrease). However, revenues were up a big 31% in 1Q21 vs. 1Q20.
We are sick and tired of the Chicken Little scaremongering that comes from so-called “independent consultants” and the reports they issue for states like Pennsylvania claiming (falsely) that average temperatures in the state are set to rise by 6 degrees Fahrenheit by 2050. It is a demonstrably false claim. Yet that’s what is now being reported as fact.
Jim Snell, Business Manager at Steamfitters Local 420 (Philadelphia area) has written a powerful editorial appearing in the Delaware Valley Journal. Snell begins his article by saying President Biden’s “build back better” proposal overlooks the backbone of America’s energy system: pipelines. Snell goes on to make an irrefutable case for how Marcellus Shale drilling in northeastern and southwestern PA benefits Philadelphia and southeastern PA.
Anecdotally it seems as though there has been less drilling activity in the Marcellus/Utica over the past year. Some say it’s due to the coronavirus pandemic. Others say there’s more to it than that. If you’ve tracked public announcements by drilling companies, they claim to have pulled back on drilling and won’t increase current levels of drilling even when/if the price of natural gas increases. Why? They must turn a profit, or investors leaving for greener pastures (pun intended). But is there really less drilling happening in the M-U today than say one year ago?
An important issue we don’t often think about is pipeline maintenance. Natural gas pipelines have to be inspected and sometimes repaired. When that happens, it takes a portion of the pipeline out of service. When pipelines are taken out of service, natural gas doesn’t have a way to get to the same markets it was flowing to, meaning it begins to pile up in the location where it’s extracted. Further meaning too much supply in a given location, which leads to lower prices. That’s what appears to be happening in northeastern Pennsylvania right now.
A new so-called study has appeared sponsored by the radicals at Heinz Endowments. It is bought-and-paid-for “research” that claims the Act 13 law passed in Pennsylvania in 2012 hasn’t done a darned thing to prevent shale wells from being drilled closer than 500 feet from houses and schools. Duke University, Harvard University, and Boston Children’s Hospital took money from Heinz and prostituted themselves, putting their names to this filthy propaganda. Heinz then instructed one of their own, StateImpact Pennsylvania (which Heinz also funds) to publish a “news story” about the study, hoping to catch the interest of leftist, lazy “reporters” (like those at Bloomberg, AP, etc.) to pick up the story and repeat it. This is how news gets manufactured in today’s world.
Cabot Oil & Gas is and has been (for years) one of the premier drillers in the Marcellus Shale. Cabot concentrates their drilling in one location in northeastern Pennsylvania: Susquehanna County. Cabot has lower costs to drill than almost any other driller. They also turn a profit year after year, unlike many other drillers. During 1Q21 Cabot made $126 million in net income, versus $54 million in 1Q20. Yet the company’s stock price continues to languish, something that has CEO Dan Dinges “hacked off.”