WVU Researcher Says Marcellus/Utica Needs an Ethane Storage Hub
Forget about a cracker plant in West Virginia. Well, not really–just put it on the back burner for the moment. A researcher from West Virginia University says what the Mountain State and indeed all of Appalachia really needs is ethane storage. Specifically, an ethane storage hub. According to Brian Anderson, director of West Virginia University’s Energy Institute, without ethane storage (and pipelines) the Marcellus/Utica region risks seeing its abundant ethane leave the area, mostly heading to the Gulf Coast. Why is that bad? Because if we can keep ethane in the area, we will attract manufacturers to the region who want to use the results of that ethane–ethylene, the raw material in plastics. Our region can realize a bonanza in manufacturing jobs and investments–if we can store and use the ethane here, at home…
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We love it when we spot a company adopting a contrarian strategy. Received wisdom and prevailing thought says that the oil and gas industry–especially in the Marcellus/Utica–is contracting. Drillers aren’t drilling, and that affects the supply chain (those companies supplying goods and services to the industry) in a big and negative way. Yep–true enough. But the received wisdom also says companies should diversity–look for business outside of the oil and gas industry. What’s contrary is to take advantage of this downturn to expand capacity–to get ready for when the downturn turns again into an upturn. That’s just what Watco Transportation Services is doing with their Kanawha River Railroad short line subsidiary. Kanawha River Railroad has just cut a deal to lease 309 miles of rail lines from Norfolk Southern in Ohio and West Virginia. One of the customers on these short haul lines will be, yep, Marcellus and Utica drillers and sand suppliers and chemical suppliers and equipment suppliers. Nope, there’s not all that much shipping right now, which makes this a step of faith. But the company believes that the future will be here soon and things will turn and the Kanawha River Railroad will be ready to take full advantage of it. We love a railroad story, and we love a contrarian story. This is both…
States often send trade delegations to foreign countries looking for investors to set up shop in their states–a sad but necessary activity that’s been going on for years. Just look at the ethane cracker plants announced for the Marcellus/Utica: Shell (headquartered in the Netherlands) wants to build a plant in PA; PTT Global Chemical (Thailand) wants to build a plant in OH; and Odebrecht (Brazil) once wanted to build a plant in WV, a plan that seems to now be dead. Speaking of WV, a new trade delegation is heading back to Japan, seeking more investment in the Mountain State. Among those going is Pat Ford, representing the Northern Panhandle area. One of Ford’s main reasons for going is “discussions on West Virginia’s energy growth, in particular ongoing development of the Marcellus and Utica shale plays for the natural gas industry.” Hmmm. That’s interesting. Makes us wonder if Gov. Earl Ray Tomblin is looking for another cracker investor–this time from the Land of the Rising Sun…
It’s good to know that “research” can still be purchased at the once-great Duke University. For years now the radical Park Park Foundation has been buying its research from a few select professors at a few select universities. One of the scientists for sale is Avner Vengosh, professor of geochemistry and water quality at Duke University’s Nicholas School of the Environment (see 
EQT, a major Marcellus (and Utica) driller based in Pittsburgh, announced yesterday it has cut a deal to purchase all of Norwegian Statoil’s Marcellus assets in West Virginia. The deal will give EQT another 62,500 net acres and 50 million cubic feet per day (50 Mcf/d) of natgas production for $407 million. The acreage is located in Wetzel, Tyler and Harrison counties in WV. The deal includes 31 Marcellus wells and ~500 drilling locations. It bumps up EQT’s available drilling locations by a big 29% and shows the company’s continued commitment to the mighty Marcellus Shale. How will they finance it? EQT released another announcement yesterday that says they are floating 10.5 million shares of new stock, hoping to get $67 per share for a total of $700 million for this deal and for “other potential acquisitions and for general corporate purposes.” Statoil is retaining ownership of its shale assets in Ohio and (for now) it’s non-operated Marcellus assets–i.e. joint venture deals where Statoil owns a portion of the lease but doesn’t do the drilling…
A circuit court judge recently ruled on a case in West Virginia with implications for unitization or pooling. No, NOT forced pooling–or forcing landowners who haven’t signed a lease into a drilling unit, forcing drilling under their land. That’s not what this case was about. This case was about landowners with an already-signed lease for vertical wells now being used to allow that land to be pooled with other land and a horizontal well allowed to be drilled under it. The landowners, who wanted a new lease for horizontal drilling (and more money, which is reasonable in our opinion) said because the lease was silent on the matter of pooling or unitizing, it should not be allowed. The judge disagreed and found in favor of the energy company, in this case American Energy…
In a bit of encouraging “this too shall pass,” we spotted an article that says Southwestern Energy Company is actively renewing leases expiring in West Virginia. You may recall that in the fall of 2014 Southwestern purchased 413,000 Marcellus/Utica acres, most of it in West Virginia (see 
Schlumberger is the largest oilfield services company in the world. Based in Houston, the company doesn’t do all that much work in the Marcellus/Utica region. The company issued it’s first quarter 2016 update yesterday. We typically don’t cover it here on MDN because they’re not heavily involved in our neck of the woods, but we did spot a reference to the Marcellus Shale in the update, which we’ve extracted for you below…
On May 18, the Ben Franklin Shale Gas Innovation & Commercialization Center (SGICC) will announce four $20,000 winners of this year’s Shale Gas Innovation Contest. In addition to showcasing the 12 finalists, this year’s event will also feature a Poster Contest highlighting research underway related to the oil and gas sector–from four major regional research universities. Below we have the list of all 12 finalists with a description of their qualifying technologies. Among the list is one of our favorite companies, HalenHardy, a previous winner of another SGICC award for Shale Gas Environmental, Health, & Safety (see 
West Virginia’s largest natural gas LDC (local distribution company) is Mountaineer Gas–with 220,000 customers, 450 employees and servicing 49 of WV’s 55 counties. Mountaineer Gas maintains close to 6,000 miles of pipeline. They’d like to add another 56 miles of pipelines to that number. Mountaineer has filed an application with the WV Public Service Commission to build a $45 million expansion of their distribution network in Berkeley, Jefferson and Morgan counties (the eastern panhandle of WV). Why? To deliver more Marcellus Shale gas to industrial customers who want to build manufacturing plants in the region. There is some natural gas in the area now–but not nearly enough. The new lines, which are not high pressure transmission lines but low pressure distribution lines, would bump up the volume of gas and deliver it to locations where new plants want to build. Local economic development people are excited as this provides a foundation for long-term growth in the region. Below are the details of Mountaineer’s application, along with a copy of the official paperwork they’ve filed with the WV PSC…
Earlier this week (March 30th) the 2016 Northeast Oil & Gas Awards and Industry Summit was held in Pittsburgh. Once again the Awards and the Summit were a smashing success. Congratulations to all of the finalists and winners! Each year the Oil & Gas Awards recognize organizations operating responsibly and supporting the communities they operate within. Now in their 4th year, the Oil & Gas Awards are judged by over 100 senior industry professionals. Partners in the Northeast Awards are The US Chamber of Commerce, The Pennsylvania Chamber of Business and Industry, The Washington County Chamber of Commerce and the Western Virginia Oil and Natural Gas Association. Here is a complete list of the winners, by category…