3 PA Senate Bills Would Fundamentally Change Pipeline Economics
Pennsylvania State Senator Andy Dinniman (Democrat from Chester County, PA, near Philadelphia) is an anti-driller and anti-pipeliner. Dinniman recently introduced three bills that would, if passed, fundamentally change the economics and likelihood of whether or not pipelines are built in the Keystone State. The first bill Dinniman sponsored would create an “impact fee” on pipelines: 50% of the fee raised would go to the counties where the pipeline crosses, 40% would go to the local municipality where the pipeline is located, and 10% would go to the PA Public Utility Commission. The next bill would allow local municipalities and school districts to slap a big tax on pipelines–on top of the impact fee previously referenced. The final bill requires pipeline land agents to be registered with the Pennsylvania Real Estate Commission. There are elements in each of the bills that, under other circumstances, are interesting and we might even be able to support. SOME elements–not all. But coming from Dinniman the purpose is clear–he aims to shut down natural gas pipelines in PA…
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Chesapeake Energy reported second quarter 2017 results last week. As is typical, the company hosted a conference call with analysts to discuss those results. However, Chesapeake CEO Doug “the ax” Lawler had some rather exciting news about the Marcellus to report–late breaking news. In recent weeks Chesapeake has brought online an experimental well drilled in Wyoming County, PA (northeastern part of the state) with an initial production of 61 million cubic feet equivalent per day (MMcfe/d). This is a MONSTER Marcellus well! The most productive onshore shale well we know of is EQT’s Utica well in Greene County, PA, with a 72.9 MMcfe/d IP rate, drilled in July 2015 (see 
On July 25th, a Pennsylvania state environmental judge issued an order blocking all underground horizontal directional drilling (HDD) work being done across the state to install the Mariner East 2 (ME2) pipeline (see 
We’ve noticed a meme, largely started by an Associated Press article endlessly repeated and published in dozens of news outlets across Pennsylvania, that the recent budget deal (with a severance tax) passed by the traitorous Republican-controlled PA Senate “jams a shale tax and industry permits into unhappy package” that now sits before a House that essentially has no choice but to adopt it. Here’s the establishment “received wisdom” in a nutshell: Drillers don’t get what they want (a severance tax), but they do get what environmentalist wackos don’t want (streamlined approvals for permits). And guess what? “That’s politics.” And if you don’t like it, on either side of the equation, you’re an unrealistic dope who doesn’t know anything about politics. We manifestly reject that assertion. Here’s why this deal is one sided–a severance tax only deal. Big Green groups with endless pockets to fund litigation factories are already talking about how if this budget is passed with what they want (a high severance tax) but also with what they don’t want (streamlined approvals for permits), no problem. They’ll just sue to remove the streamlined permits part, leaving drillers with the high severance tax. That’s how “fairness” works for Democrats and antis. Get part of what you want, then litigate the rest–force it on people who don’t want it. That’s the strategy laid out in the AP article claiming both sides are unhappy, implying it’s a good deal because both sides are getting something they want and something they don’t want. The clear signal being sent by environmentalists is that they’ll litigate their way to happiness. Meanwhile the Marcellus industry will get the shaft, which is why the House MUST reject this budget as written…
It’s not often these days we get to announce a new driller in the Marcellus/Utica. Today is one of those days. Actually, this company has been around since early 2015, but we’re only now becoming aware of them. Pin Oak Energy Partners, headquartered in Akron, OH, is an exploration and production company engaged in both conventional and unconventional oil and natural gas wells and the operation of associated assets (like pipelines). Pin Oak currently operates 363 wells producing nearly 5.7 MMcfe/d (32% liquids) across more than 32,000 acres in the Marcellus/Utica region. The company is also involved in midstream, field services and operations through its affiliate companies. Pin Oak is on an aggressive acquisition binge of shale AND midstream assets, as well as leasing new acreage. Who is Pin Oak? According to CEO Chris Halvorson, Pin Oak is comprised of folks who were formerly with AB Resources. You may recall that AB Resources built a position in the southwestern “core” of the Marcellus and sold out to Chevron several years ago. Pin Oak is “what’s next” for for the former AB folks. Their target: the Appalachian basin. In July, Pin Oak bought 9,300 acres of leases and 8 Utica wells from EQT in Guernsey, Muskingum, and Columbiana counties (Ohio). Earlier this week Pin Oak announced they’ve purchased another 7,700 acres of leases and 10 Utica wells from an undisclosed seller in Trumbull, Tuscarawas and Mahoning counties (in Ohio) and Mercer, Crawford and Venango counties (in Pennsylvania). Below are two recent announcements. Pin Oak can be summed up in one word: aggressive. Keep a close eye on this company in the coming months and years…
Just when you thought we’d heard the last of “Dimock” and “fracking poisons water” nonsense, the storyline as pushed by mainstream fake news has come roaring back to life–thanks to the Trump Administration. Dimock, Pennsylvania was made famous in Josh Fox’s faux documentary Gasland, which aired on HBO a bizillion times. It was Fox’s 15 minutes of fame. He lied about fracking, painting it as an evil practice that polluted water wells around Dimock. His lies were later exposed by a real documentary called 
What’s this? The Pennsylvania State Senate, which is controlled by the Republican Party, has added insult to injury. We’ve already told you about Republican traitors in the Senate who sold out their House counterparts by voting for a disastrous severance tax to raise money to give away to teachers’ unions (see 
We suspect Pennsylvania Gov. Tom Wolf (a Democrat) may be smoking some of the state’s medical marijuana–sampling the goods, just to be sure it’s safe, ya know. During an interview with a PA public radio station yesterday, commenting on the horrible budget bill passed by traitorous Senate Republicans, Wolf said, “I believe that the House will support the Marcellus Shale tax as well.” Notice the Freudian slip? Wolf WANTS to target the Marcellus industry. He called it a “Marcellus Shale tax” as opposed to a severance tax. The Dems are attempting to conflate a “Marcellus Shale tax” with things like a “cigarette tax.” Nasty, vile stuff–but if people want it, tax ’em to hell and back. RINOs in the Senate fell for the severance tax trap sprung by Wolf and the Dems. We predict the House will NOT pass the Marcellus tax, Mr. Wolf. We don’t smoke weed–so we have a clear head about these things…
Shell officials held the fourth (so far) public meeting in Beaver, PA to talk with local residents about the mammoth, $6 billion ethane cracker plant the company is building in their midst. For the most part, the event was uneventful. More than 150 people came out to hear what the petrochemical giant had to say. A table at the event held polyethylene pellets–the stuff that will be manufactured by the plant. Also on the table were a variety of products made from those pellets, including bottles, food packaging and more. One local resident opposed to the plant told a reporter she had to restrain her potty mouth because Shell officials would not answer her questions from the floor–in front of the crowd. Shell (and others in the o&g industry) have wised up. They post representatives at tables who are happy to answer private questions privately, but they don’t throw open the floor to antis who want to bleat and blat in front of an audience. We think it’s a wise precaution. The woman could get her questions answered, and express her unhappiness–but she wanted to do it in front of a crowd and in front of cameras and microphones. No thanks. Organize your own meeting if you want to do that…
Good news if you’re a welder, or interested in a welding career, and you live in southwestern Pennsylvania. Shell needs you. Shell is in the process of building a massive, $6 billion ethane cracker plant in Beaver County, PA (northwest of Pittsburgh). Cracker plants have lots of pipes that need to be welded as the plant goes up. While these jobs are not long-term, as in “the rest of you career,” they’re long enough, likely lasting several years. Steamfitters Local 449 is right now recruiting new apprentices, offering a free 17-week apprentice training program. Local 449 is holding an open house this Saturday…
In March, MDN told you about a small group of radical protesters who established a protest “camp” on a private farm along the path of the Williams $3 billion, 198-mile Atlantic Sunrise Pipeline in Lancaster County, PA (see 
There’s an app for that! Williams is launching an app (for smartphones) latter this month to connect Williams contractors with local businesses–to ensure as much of the work (and supplies) as possible is sourced from local businesses for the Atlantic Sunrise Pipeline project. This is a great sign that Williams believes they are about to receive final permits from the foot-dragging Pennsylvania Dept. of Environmental Protection (DEP) to begin work. In August, Williams will launch WillShop Local, a digital application designed to connect local businesses with contractors and construction crews working in the project area. The app is not for local businesses but for the contractors and workers working on the pipeline to locate local suppliers. So how do you, as a local business, get listed on the app? Glad you asked! Just 
Yesterday the American Petroleum Institute (API) released a new study showing that the natural gas and oil industry supported 10.3 million U.S. jobs and added $1.3 trillion to the nation’s economy in 2015. The study, “Impacts of the Natural Gas and Oil Industry on the US Economy in 2015” (full copy below) found that jobs supported by the o&g industry increased by half a million since 2011, and showed that all 50 states, whether producing or non-producing, continued to benefit from the o&g industry. The study was conducted by PricewaterhouseCoopers (PwC) and commissioned by API. Yes, it’s an industry-funded study. But hey, if we don’t do the research and toot our own horn, you can be sure anti-fossil fuelers won’t do it for us! This is solid, no-nonsense (and real) economic research. We thought it would be interesting to look at the impact of the o&g industry in Pennsylvania, Ohio and West Virginia–the only three states producing Marcellus and Utica Shale gas and oil. Yes, each of those states still has a thriving conventional o&g industry as well and conventional numbers are part of the study–but let’s be honest. The unconventional (shale) sector dwarfs production of the conventional sector. When you look at o&g’s impact in our region, you find that it created 322,600 jobs in PA, 262,800 jobs in OH, and 70,900 jobs in WV. Value added (economic impact) for each state was: $44.4 billion in PA, $37.9 billion in OH, and $8 billion in WV. Add them all together and you get roughly 656,000 jobs and $90 billion of economic contribution in 2015. From one industry–oil and gas. WE LOVE FOSSIL FUELS!…
When a state produces more energy than it consumes, that state is a net energy “supplier” (or exporter). States consume energy in the form of oil, gas, coal and electricity, primarily. They produce energy in the same way. Our favorite government agency, the U.S. Energy Information Administration, recently released State Energy Data System estimates for net energy supply, state by state, from 1960-2015. Their analysis found that currently, for the year 2015, some 12 states produced more primary energy than they consumed, while 38 states and the District of Columbia were net recipients of energy. Among the state producing more than they consume, two of the top five are Marcellus Shale states: Pennsylvania and West Virginia. PA’s net supplier status is due mostly to the rise of the Marcellus. In the case of WV, the state still is a big coal producer, but it is the Marcellus that lifts the state into the column of net energy supplier…
Late last week Cabot Oil & Gas, one of our favorite big Marcellus drillers, released their second quarter 2017 update. And man oh man, was it full of interesting items! Daily natural gas production was up 14% over the same period last year. During 2Q17, Cabot averaged 1.77 billion cubic feet (Bcf) per day of net Marcellus production (2.1 Bcf/d gross operated production). Also during 2Q17, Cabot drilled 13.7 net Marcellus wells, completed 8.0 net wells and placed 6.0 net wells on production. Financially, the company continues to be a cash-making machine, generating positive free cash flow for the fifth consecutive quarter. During the first half of this year, it cost Cabot an average of $2.01 per thousand cubic feet (Mcf) to extract and sell the gas. That’s all expenses. And Cabot made an average of $2.51/Mcf selling that gas. That’s a profit of $0.50/Mcf (or 20% profit). If we could invest $1 and get back $1.20 for every dollar invested, we’d be happy to do that all day long! Cabot is currently operating two drilling rigs and one completion crew in the Marcellus. One of the most interesting (and underreported) parts of the Cabot conference call last Friday is CEO Dan Dinges’ comments on the long-delayed Constitution Pipeline. He said, “we feel more optimistic about this project coming online in the next few years than we did say a year ago.” It seems Cabot (and Williams, the builder of the Constitution) are closely watching what happens with the Millennium Pipeline and Millennium’s request to FERC to override the New York Dept. of Environmental Conservation (DEC), which is blocking the Millennium(and the Constitution). Although the Constitution awaits a court decision from the U.S. Second Circuit Court, they are planning other strategies. Dinges also addressed the PennEast Pipeline project, now stalled in New Jersey. Below is last week’s update, excerpts from the conference call, and the Cabot slide deck full of good information…