Pennsylvania

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    ME1 Pipeline Shutdown in M-U Causing Propane Prices in TX to Drop

    Propane is one of the NGLs (natural gas liquids) that come out of the ground along with natural gas and oil–especially in “wet gas” areas like southwestern PA, eastern OH, and the northern panhandle area of WV. Ethane and propane have been flowing through the converted Mariner East 1 (ME1) pipeline for more than year–hauling propane (and ethane) from southwest PA all the way to the Marcus Hook refinery near Philadelphia. At Marcus Hook, the propane is loaded onto ships and sent around the world. The world is an important market for our propane. However, ME1 was suddenly switched off on March 3 by order of the Pennsylvania Public Utility Commission (PUC) after a sinkhole opened up under the pipeline, exposing some of the bare steel to the open air (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). Sunoco Logistics Partners, the owner of ME1, is building a new set of pipelines called Mariner East 2 (ME2) close to the existing ME1. ME2 will also haul ethane and propane to Marcus Hook, greatly expanding capacity. As part of their construction work in Chester County, several sinkholes developed leading to the shutdown of ME1. You might think if the supply of propane suddenly stops, prices would go up. But that’s not what happened. Because the propane ME1 was hauling to Marcus Hook was exported, that supply is now staying here at home. The effect has been to drive DOWN the cost of propane–in Texas!…
    Read More “ME1 Pipeline Shutdown in M-U Causing Propane Prices in TX to Drop”

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    Exposing PA Gov. Wolf’s Lies – He is No Friend of the Marcellus

    The gloves have finally come off. Typically the Marcellus industry, as represented by the Marcellus Shale Coalition, has used restrained language when talking about Pennsylvania Gov. Tom Wolf. Hey, the industry has to work with the guy because the state Dept. of Environmental Protection (DEP)–the agency that regulates shale drilling–is part of the executive branch (under Wolf’s thumb). The industry often can’t say what it really thinks. No more. Wolf, who pretends to be a friend of the Marcellus industry and mouths words of support, recently launched a vicious, lying attack against the industry over the severance tax issue (as part of his re-election campaign). The gloves are now off and the MSC is punching back. MSC president Dave Spigelmyer published an editorial in today’s Philadelphia Inquirer pointing out the difference between Wolf’s words and his deeds. In a bout of political schizophrenia (some would say hypocrisy), Wolf says shale gas in PA represents “enormous economic opportunity.” He then turns around and claims high-paid Marcellus lobbyists have spread money around Harrisburg like candy, bribing legislators to block a severance tax. What Wolf doesn’t tell you is that he himself has received millions of dollars from the teacher’s unions he’s promised to give severance tax money to…
    Read More “Exposing PA Gov. Wolf’s Lies – He is No Friend of the Marcellus”

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    Report: The State of Natural Gas in Pennsylvania

    The Commonwealth Foundation is Pennsylvania’s premier free-market think tank. The aim of the Foundation is to “transform free-market ideas into public policies so all Pennsylvanians can flourish.” We’ve highlighted their excellent work over the years. They’ve just done it again. The Commonwealth Foundation has just published a report called “The State of Natural Gas in Pennsylvania” (full copy below). The opening begins this way: “Pennsylvania’s regulatory and tax environment is stunting job growth and deterring investment. A decade after the Marcellus Shale boom, lawmakers are still debating how to tax the industry instead of fixing the policies contributing to Pennsylvania’s increasingly uncompetitive energy market.” At the end of the report the Foundation shows a severance tax comparison of existing severance taxes in other states that PA competes against, like Ohio, West Virginia, Texas, Colorado, and Oklahoma. The chart shows that the existing impact fee (in essence a severance tax) runs around 1.1%. The severance tax in Ohio is running around 0.7%, and in West Virginia 3.5%. In places like Texas, which increasingly competes against PA with prodigious quantities of natural gas production, the severance tax is 4.2%. However, Gov. Wolf’s proposed severance tax would be 5%–the highest in the nation except for New Mexico’s 7.9% (which doesn’t compete with PA). The report shows how PA is restricting Marcellus activity with over-regulation and a high corporate income tax…
    Read More “Report: The State of Natural Gas in Pennsylvania”

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    PA “Rule of Capture” Case has Power to Limit Marcellus Drilling

    As we indicated in our post yesterday, the Pennsylvania Superior Court has handed down a decision that has the power to greatly restrict, even stop, Marcellus drilling in PA (see PA Superior Court Overturns “Rule of Capture” for Marcellus Well). This is a legal issue–and MDN is not written by a lawyer. Hence our earlier misreading of the importance and facts in the Superior Court decision. The issue, in brief, is that Monday’s court decision disallows using an age-old principle called the rule of capture, which we previously described. The rule of capture works for conventional drilling where underground deposits of oil and gas are in pools and the pool may exist underneath multiple surface property owners. Whoever gets there first and sucks the oil/gas out, wins. That’s the rule of capture in a nutshell. And it makes sense. You can’t be held responsible for oil and gas moving from one place to another as it’s extracted. And who knows how much of the pool is located under your property, or your neighbor’s property? The Superior Court justices ruled that the rule of capture doesn’t work for hydraulic fracturing because gas (and oil) trapped in shale rock does not freely move from one place to another as it does in a pool. The judges say the gas would “stay forever” where it is without fracking. In the case of Briggs v. Southwestern Energy, the Briggs family (in Susquehanna County, PA) alleges that when Southwestern drilled and fracked on the Briggs’ neighbor, the fracking was done close enough to their property that some of the gas located under their property (unleased) was released and extracted through the Southwestern well–a “trepass.” Southwestern countered that IF such a “trespass” took place, it falls under the rule of capture. The ultimate issue boils down to this: How far do fractures extend from a lateral well? An expert energy attorney told MDN off the record that Monday’s decision “could change the entire Pennsylvania shale industry” in two important ways…
    Read More “PA “Rule of Capture” Case has Power to Limit Marcellus Drilling”

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    Shell Ethane Pipeline Hearing Draws Few Supporters, Many Antis

    Click for larger version

    Last night the first of three public hearings held by the Pennsylvania Dept. of Environmental Protection for the planned Shell Falcon Ethane Pipeline project was held in Monaca (Beaver County), PA. About 100 people turned up for the hearing, which lasted an hour and a half. No signs allowed. The only people who could speak had to register first. Of the 23 who did speak, 16 of them (including out-of-town movement antis) spoke against the project, while 7 people spoke in favor. The 97-mile Falcon Ethane Pipeline system has two “legs” that will feed Shell’s mighty ethane cracker plant. Shell is not using eminent domain for any of its leases for the pipeline. Every lease is negotiated and signed with individual landowners. Antis, in large part being organized and agitated by radical groups like FracTracker Alliance, are making a concerted effort to block the pipeline, hoping they can in turn stop the multi-billion dollar cracker plant currently under construction by blocking the pipeline that feeds it…
    Read More “Shell Ethane Pipeline Hearing Draws Few Supporters, Many Antis”

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    Meaningless Poll Questions Yield Meaningless Results re PA Fracking

    This is how it works in biased, fake news land: You make up unspecific, wide-open questions that nobody really understands, and then biased, liberal media outlets interpret the “data” the way they want–to fit the predetermined media narrative. That’s what has just happened with meaningless poll questions from Franklin & Marshall College with respect to natural gas drilling in PA. We read through the questions they asked and thought, “What do some of these questions even mean?” The average citizen being asked these questions will assume and “read into” the questions what they *think* (but aren’t sure) is being asked, and answer the questions accordingly. In the end, it’s nonsensical. Meaningless. Fake. Then the lib machine kicks in to “report” that PA citizens, while still supporting drilling by a razor thin margin, actually think Marcellus drilling is bad for the environment. The latest media narrative is born: PA citizens are turning against gas drilling…
    Read More “Meaningless Poll Questions Yield Meaningless Results re PA Fracking”

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    PA Superior Court Overturns “Rule of Capture” for Marcellus Well

    STOP PRESS: Shortly after this post was published, a MDN reader (an energy attorney) called us to alert us that our initial take on this case is not right. The case is NOT about a company stretching a lateral too far so that it trespasses under an adjoining property. Instead, the case is about the “zone of fracking”–that is, that fracking, by its nature, creates cracks that may open up and drain some of the gas under a neighboring property–even though the fracking was done properly within the boundaries of the leased property. The case (ominously) says that fracking itself can cause a trespass. Our attorney friend said this case has the potential to negatively affect Marcellus drilling in PA–in a BIG way. We will write another post on this issue tomorrow. In the meantime, just be aware that our initial take below is not correct. – Jim Willis, Editor

    The Pennsylvania Superior Court handed down an important decision yesterday that impacts both Marcellus landowners and drillers. The decision removes “rule of capture” as a way for shale drillers to drill under adjoining neighbors who haven’t specifically leased their property for drilling. The rule of capture came about with conventional (vertical only) drilling, cases in which a pool of oil or natural gas exists that runs underneath the property owned by multiple surface owners (see the image to the left). The rule of capture principle says “the first person to capture a natural resource owns that resource.” If you put a well or two or three on your property to extract the oil/gas, if it flows from the neighbor’s side to your side and up the well, it’s yours. Same for your neighbor. He/she can grab the oil and gas under your property if the pool exists under both. The principle originated in England (it’s a very old principle). However, Southwestern Energy tried to use the rule of capture principle to drill under property not leased for drilling that sits next to property that is leased–claiming the rule of capture. The molecules in shale are a whole other story than molecules sitting in a common pool. That’s what the Superiors ruled. Southwestern (and by extension, other Marcellus drillers) can’t simply extend a lateral well a few hundred feet under an un-leased neighbor, which certainly makes sense to us…
    Read More “PA Superior Court Overturns “Rule of Capture” for Marcellus Well”

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    Offer to Relocate Families Near ME2 Sinkholes; ME1 Down Until May?

    Sinkhole in Chester County, PA

    Sunoco Logistics Partners (aka Energy Transfer Parnters) has had its challenges in constructing the twin Mariner East 2 (ME2) pipelines across Pennsylvania. In March, MDN told you that underground horizontal directional drilling (HDD) work in Chester County had led to a third sinkhole developing in that area (see 3rd Sinkhole Appears Near ME2 Construction in Chester County, PA). For most of its length, ME2 is being built next to the existing ME1 (Mariner East 1), a liquids pipeline originally built in 1931. The third sinkhole in Chester County exposed a portion of ME1, leading to the state Public Utility Commission “temporarily” shutting down ME1 on March 7 (see PA PUC Shuts Down Mariner 1 Pipeline Due to Mariner 2 Sinkhole). ME1 would be, according to Sunoco, out of commission for “10 to 14 days.” Nearly a month later it’s still not running and until the state Dept. of Environmental Protection gets solid answers about the sinkholes, it won’t restart. It now looks like ME1 won’t be operational again until May. ME1’s closure has put several shippers, primarily Range Resources, in a bind (see Range, CNX Look for Alternatives to ME1 Pipe Following Shutdown). Sunoco needs to conduct geotechnical studies near the sinkholes to get answers that will allow it to resume work. So, Sunoco has offered to temporarily relocate five families living near the three sinkholes–for up to six weeks–while it conducts tests of the area…
    Read More “Offer to Relocate Families Near ME2 Sinkholes; ME1 Down Until May?”

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    PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak

    EQT had to take their case all the way to the Pennsylvania Supreme Court, but in the end, the company was victorious over a wildly overinflated $4.53 million fine levied by the state Dept. of Environmental Protection (DEP) for a leaky wastewater impoundment in Tioga County dating back to 2014 (see PA DEP Levies Biggest Fine Ever, $4.5M Against EQT). While EQT did not say there wasn’t a problem with leaks at the site, they did say the way the DEP calculated the fine was unreasonable and arbitrary. In fact, EQT says the DEP levied the fine and took EQT to court because a few weeks prior EQT had sued the DEP over a different, unrelated matter (i.e., sour grapes on the part of the DEP). EQT appealed the fine and the case all the way to the PA Supreme Court, which heard oral arguments last November (see PA Supreme Court Hears Arguments in EQT Wastewater Leak Case). Last Wednesday the PA Supremes ruled (5-2) in favor of EQT, saying that the DEP’s levied fine was excessive and that the DEP misinterpreted language in the 1937 Clean Streams Law…
    Read More “PA Supreme Court Axes DEP $4.5M Fine in EQT Tioga Wastewater Leak”

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    Marcellus-Fired Panda Hummel Electric Plant Roars to Life in PA

    It takes a long time to build a natural gas-fired electric power plant–especially a big one. We began writing about one of the largest coal-to-gas conversion projects in the country, happening in the heart of PA Marcellus country, back in February 2014 (see Panda Power Building 3rd Marcellus-Fired Electric Plant in PA). Panda Power Funds, a private equity firm located in Dallas, TX announced a partnership with Sunbury Generation to build a whopping 1,124-megawatt Marcellus gas-fired electric plant on the site of a retired coal-fired plant near Shamokin Dam in Snyder County, PA. Final testing is now underway at the facility, which was supposed to go online in February but is now scheduled to begin operations in May. Here’s an inside look at the complicated process of bringing a new power plant online…
    Read More “Marcellus-Fired Panda Hummel Electric Plant Roars to Life in PA”

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    PA DEP Releases Draft Final GP-5 & 5A Methane Regulations

    Last December the Pennsylvania Dept. of Environmental Protection (DEP) issued “draft final language” for the proposed General Permit 5A (GP-5A) and the revised General Permit 5 (GP-5)–regulations that supposedly will cut down on fugitive methane from escaping from drill pads and pipelines (see PA DEP Signals Onerous New GP-5 & 5A Methane Regs Coming 1Q18). The onerous regulations, which for now only apply to *new* sources (not existing) were originally prompted by bullying from the Obama Environmental Protection Agency. Even though EPA pressure has disappeared under President Trump, PA Gov. Wolf is still pushing these onerous new regs. GP-5 applies to pipelines and compressor stations, while GP-5A applies to well pads and drilling. Following a flood of new comments, the DEP tweaked the onerous regs once again (for maybe the third or fourth time) and last Friday afternoon, when nobody was working or looking or caring, the DEP published yet another revised final final final final final version of the regs (below). Are they any better than previous versions?…
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    Opponents Slandering Potter Co. Wastewater Facility Legally Warned

    Is it free speech to make “false, destructive and defamatory statements” about a company and the project it proposes to build? Is it OK to pretend to be a news organization when you’re really just a shill for Big Green groups, and is your “speech” protected–when it’s false? Members of the Seneca Indian tribe and faux news outlet Public Herald have been put on notice, legally, by lawyers representing the proposed Epiphany shale wastewater recycling facility in Coudersport (Potter County, PA) and driller JKLM to “cease and desist” from their slandering, smearing false statements about the Epiphany project–statements that are misleading the public. Those served the legal notice say it’s an attempt to silence their free speech rights. What do you think?…
    Read More “Opponents Slandering Potter Co. Wastewater Facility Legally Warned”

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    Free Pipeline Training Course in April in SWPA & Eastern OH

    The Gas Technology Institute (GTI) has previously offered a 100% free training program for those interested in a career building pipelines in the Marcellus/Utica region (see 4-Wk FREE Training Program Helps Unemployed Get M-U Pipeline Jobs and Still a Few Openings for Free Training for M-U Pipeline Jobs in SWPA). GTI is offering the same training program once again in April, at two locations: Armstrong County Industrial Development Council in Freeport, PA, and Belmont College in St. Clairsville, OH. Each location is limited to 20 students. If you are interested and live somewhere within driving distance of either location, what are you waiting for? Sign up before all slots are taken! Starting salaries for graduates “often exceed $50,000” and can lead to careers with salaries in the six-figure range (hey, where do we sign up?!). We have the details of how to enroll for FREE in this valuable training course–a course worth $3,500…
    Read More “Free Pipeline Training Course in April in SWPA & Eastern OH”

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    A (Very) Rough Method for Calculating Royalties on Cabot Wells

    Cabot Oil & Gas, one of our favorite Marcellus drillers, has just published a new PowerPoint slide deck presentation as part of an investor’s conference they attended earlier this week (the Scotia Howard Weil Energy Conference). Normally a new slide deck isn’t all that big a deal. However, thanks to MDN friend Chris Acker who pointed it out to us, there is some new information in the deck worthy of note. Back in December MDN brought you the news that Cabot had signed a deal to sell off their Texas Eagle Ford Shale assets in order to concentrate solely on the Marcellus (see Cabot O&G Sells Texas Eagle Ford Assets for $765M, Focus on Marc.). The slide deck notes that the Eagle Ford divestiture closed on Feb. 28th (slide #3). Also in the slide deck is a mention that Cabot plans to experiment with drilling “upper Marcellus” wells in the second half of 2018 (slide #11). Most (all?) of the wells they’ve drilled to date are “lower Marcellus.” A successful program of drilling upper Marcellus certainly bodes well for existing landowners with existing lower Marcellus wells–perhaps Cabot will revisit those pads to drill new wells? Slide #11 has some great information on it. We’ve used it to create a (very) rough royalty estimation calculator for Cabot landowners…
    Read More “A (Very) Rough Method for Calculating Royalties on Cabot Wells”

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    PA DEP Stops ME2 Drilling in Huntingdon County for < 1 Gal. Spill

    Sunoco Logistics Partners has had its share of problems in building the Mariner East 2 (ME2) twin NGL pipelines that run from eastern Ohio all the way to Marcus Hook, near Philadelphia. The main issue with construction of the pipeline has been underground horizontal directional drilling (HDD)–drilling under things like roads and bridges and streams and rivers–places where you can’t just dig a trench to lay pipeline. Some early problems with HDD caused the Pennsylvania Dept. of Environmental Protection (DEP) to shut down all ME2 HDD work (indeed all work period) for an extended period in January (see PA DEP Caves to Big Green Pressure, Stops All Work on ME2 Pipeline). After Sunoco agreed to pay the DEP a whopping $12.6 million “fine” (i.e. shakedown money), the DEP allowed work to resume in February (see Sunoco LP Pays PA DEP $12.6M to Resume ME2 Pipeline Construction). While doing ME2 HDD work in Huntingdon County last week, Sunoco contractors reported less than one gallon of non-toxic drilling mud (bentonite) went missing–it came back out of a hole it didn’t go down. And because of that, the DEP has shut down all work at the site…
    Read More “PA DEP Stops ME2 Drilling in Huntingdon County for < 1 Gal. Spill"

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    PA Court Tells SWPA Town Can’t Restrict MarkWest Compressor Stn

    Cecil Township

    Cecil Township (Washington County, PA) is one of the original seven selfish towns that sued Pennsylvania over the 2012 Act 13 oil and gas law, a law that replaced a mishmash of local zoning ordinances governing oil and gas activity with one uniform, and fair, set of state regulations. Cecil and the other selfish towns won their case on appeal with the PA Supreme Court (see PA Supreme Court Rules Against State/Drillers in Act 13 Case). Although Cecil (and other towns) have been zealous in using their authority to zone out drilling and pipeline activity, sometimes they go too far, as Cecil has done. The PA Commonwealth Court ruled last Friday that Cecil exceeded their authority by “imposing a slew of conditions” (26 conditions!) on a proposed MarkWest Energy compressor station planned for the municipality, a plant first proposed back in 2010…
    Read More “PA Court Tells SWPA Town Can’t Restrict MarkWest Compressor Stn”