West Virginia

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    Unions in WV Hiring Workers as Pipeline Construction Begins

    Tree clearing for Dominion’s $5 billion Atlantic Coast Pipeline (ACP) has already begun in West Virginia (see Atlantic Coast Pipeline Begins Cutting Trees in WV & VA (Not NC)). Construction for ACP in WV will begin this spring. Tree clearing for EQT’s $3.5 billion Mountain Valley Pipeline (MVP), along with construction of access roads and construction yards, has not yet begun but soon will in WV (see Mountain Valley Pipe Gets FERC Approval to Begin WV Construction). What it all means is that a lot of workers will be needed in a hurry as construction gets underway. Enter trade unions. Union workers will perform the bulk of construction–everything from driving trucks to delivery of supplies (and people), to operating heavy equipment, to digging trenches, to welding–even cutting down the trees, an activity happening now. Unions in WV are currently recruiting new members who want a good-paying, hard-working jobs in the pipeline industry in the Mountain State…
    Read More “Unions in WV Hiring Workers as Pipeline Construction Begins”

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    Ascent Resources Marcellus Plans to Exit Bankruptcy in Record Time

    On Wednesday MDN brought you the news that Ascent Resources Marcellus, a company founded by Aubrey McClendon after he left Chesapeake Energy, has filed for Chapter 11 bankruptcy (see Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy). Ascent Marcellus is one of several companies using the Ascent name. The Ascent Marcellus piece of the pie owns 43,000 of leases and has drilled some 547 wells in West Virginia. Big operation. The good news is that, according to Ascent, 75% of the shareholders in the company are already on board with a plan to hand over ownership to existing debtholders. Ascent worked hard to put all of their ducks in a row and presented a “prepackaged” bankruptcy plan to the court–a plan that should make things go fast. In fact, Ascent Marcellus expects to exit bankruptcy by March 31st. Below we details about who Ascent owes money to, and how they plan to order “one prepackaged bankruptcy to go” at the bankruptcy court drive-thru window…
    Read More “Ascent Resources Marcellus Plans to Exit Bankruptcy in Record Time”

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    WV DEP Issues Permit for Mountaineer Gas Pipeline in Eastern WV

    In 2017 Mountaineer Gas launched the Eastern Panhandle Expansion pipeline project–a project to deliver natural gas via local distribution channels to a new industrial facility in Berkeley County, WV, and to provide gas to other local businesses and residents in the Tri-State area. There are three phases to the Eastern Panhandle Expansion project: Phase One runs a 22.5-mile, 10-inch-diameter steel pipeline from Morgan County to Martinsburg; Phase Two includes a loop to Charles Town; and Phase Three will build a four mile segment of pipeline into Martinsburg. The West Virginia Dept. of Environmental Protection held a hearing on Phase One in January, at the Berkeley Springs High School (see Old Hippies Turn Out at WV DEP Hearing to Oppose Mountaineer Pipe). All of the people who spoke at the hearing, some 33 of the 80 people present, spoke against the project. Even though local residents object, on Wednesday the WV DEP issued a permit for the project…
    Read More “WV DEP Issues Permit for Mountaineer Gas Pipeline in Eastern WV”

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    CNX Sells WV Gathering System to Former CONE Midstream for $265M

    CNX Resources, in addition to issuing an announcement about proved reserves yesterday (see today’s companion story), also issued an announcement about CNX the drilling company selling its Shirley-Pennsboro gathering system in West Virginia to CNX the pipeline company (CNX Midstream) for $265 million. Yes, in a sense it is moving assets around on paper. However, this seemingly innocuous announcement is interesting to MDN for a couple of reasons. First, there is a trend of splitting companies apart–to spin out the pipeline/midstream stuff into its own standalone company, separate from the drilling part of the company. EQT, a major CNX competitor, is going through the process of evaluating whether or not to spin off their pipeline subsidiary into its own company (see EQT Begins Process of Separating Midstream…into New Company?). When we see moves like this from CNX, we wonder if they too are also preparing for such a split. We have no evidence that such a move is in the cards–just idle speculation on our part. However, the fact that CNX is moving pipeline assets into the midstream subsidiary certainly sets up the possibility that the pipeline subsidiary may (one day) become a standalone company. Second, the pipeline subsidiary is called CNX Midstream. That’s a new name. As of early January you would have known it as CONE Midstream. CNX bought out its joint venture partner in CONE (Noble Energy) late last year and now owns all of CONE. CNX renamed CONE as CNX Midstream in early January (see CONE Midstream Gets a New Name: CNX Midstream Partners). We’ve not seen anyone else point out the fact that the former CONE is the buyer of this asset. For those two reasons–the trend of splitting drilling and pipelines into different companies, and the fact that CONE was the buyer–our interest was piqued in CNX’s seemingly innocuous announcement yesterday…
    Read More “CNX Sells WV Gathering System to Former CONE Midstream for $265M”

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    Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy

    Please see comments from Ascent Resources below in the 2/7/18 update…

    We have to confess, we did not see this one coming. Ascent Resources Marcellus, a company founded by Aubrey McClendon after he left Chesapeake Energy, has filed for Chapter 11 bankruptcy. Note that Ascent, which was spun off from the McClendon company American Energy Partners, has a split corporate structure. On paper there are a number of “Ascent Resources” companies: Ascent Resources, LLC; Ascent Resources Utica Holdings, LLC; Ascent Resources – Utica, LLC; Ascent Resources Management Services, LLC; and, Ascent Resources Marcellus Holdings, LLC. Same management team for all and frankly, as a practical matter, they are all one company. But it is the last one in the list, Ascent Marcellus, that is seeking bankruptcy protection. According to the company website, Ascent Marcellus focuses its drilling activity on 43,000 leased acres in West Virginia. Ascent Marcellus has a couple of loans it can’t repay, so it’s taking the bankruptcy route which will transfer ownership of that portion of the company from existing shareholder to debtholders. We’ve seen this movie before. Nobody gets screwed except existing shareholders–at least, that’s the theory. According to an announcement by Ascent, the “restructuring” as it’s called, will not affect landowners or vendors. This is “an operational restructuring and is not intended to restructure or compromise any vendor, service provider, contractor, lessor, working interest owner or royalty owner obligations.” Of course “intent” and reality are sometimes two different things. We’ll keep a close eye out as this develops…

    2/7/18 Update: Ascent Resources sent clarifications to our statements and assumptions above. Below are Ascent’s comments as provided, verbatim. We thank Ascent for taking the time to comment.

    Regarding the comment that they are basically the same company:

    It isn’t all the same company. This is a very important distinction. There are several different companies with similar names that are managed by another separate company that also has a similar name. The Marcellus company always had separate assets in West Virginia, a separate capital structure and separate debt that was collateralized solely by the West Virginia assets. It’s not all the same company.

    Regarding the comment that “Nobody gets screwed except existing shareholders–at least, that’s the theory.”

    You should know that Marcellus private equity owners hold more than 75% of the stock and control the board, so they were integrally involved in determining the most appropriate outcome for shareholders as part of the Chapter 11 discussions. So “in theory” does not apply to the detailed plan of reorganization that has been worked out between the company’s owners and the creditors. Read More “Ascent Resources’ Marcellus Unit Files for Chapter 11 Bankruptcy”

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    Wheeling WV Eyes $2M Signing Bonus for M-U Drilling Under City Land

    Wheeling, West Virginia–known as “the Friendly City”–is about to get an even bigger smile on its face. Wheeling city leaders are about to sign a lease agreement to allow American Petroleum Partners to drill under several “old city landfills” that have been closed for decades. The up-front signing bonus for 336 acres of Wheeling-owned land will be $2 million–which works out to ~$5,952 per acre. Once gas begins flowing, the city will get an 18.5% royalty. The money will be used for “paving, playgrounds, economic development and other city functions.” Does American Petroleum Partners (APP) sound familiar? In December we brought you the news that APP had leased the 66-acre Wheeling Park High School campus for shale drilling–under (not on) the campus–for $6,000 per acre (see Wheeling, WV High School Leased for Shale Drilling, $6K/Acre). We first wrote about the low-key, avoiding-the-limelight APP in March 2016 (see New Marcellus/Utica Driller Quietly Launches w/$800M Investment). APP is headed by Rice Energy alumnus Varun Mishra, who is the founder and CEO. Apollo Global Management invested $411 million in APP with the option to double it up to $800 million. It’s great to see this relatively young company locking up acreage and beginning to drill. Here’s the details on the latest APP lease deal–with the City of Wheeling…
    Read More “Wheeling WV Eyes $2M Signing Bonus for M-U Drilling Under City Land”

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    WV Co-Tenancy, Royalty Transparency Bills Make Progress

    As predicated, a co-tenancy bill has been introduced in this year’s 60-day session of the West Virginia legislature (see Co-Tenancy Front and Center for WV Legislature as Session Nears). What is co-tenancy? It is legislation that will give a majority of rights owners of a property the authority to sign a lease on behalf of all the rights owners. It corrects a situation in which multiple rights owners are listed for a property–sometimes 200 or more rights owners for a single piece of property! It is often difficult, if not impossible, to track them all down and get them to sign on the dotted line. Co-tenancy corrects that situation, opening up more Marcellus and Utica acreage that can be drilled. Last Thursday a co-tenancy bill was introduced in the House Energy Committee–House Bill (HB) 4268–which should see an initial vote this week. Various groups are lobbying for and against the bill. The WV Surface Owners Rights Organization is pushing for two amendments, without which they won’t support the bill. Although co-tenancy is a major emphasis for Marcellus/Utica drillers, a different bill is a major emphasis for landowners–a bill to provide greater transparency of royalty statements (more information provided on statements). House Bill (HB) 4270 already passed in a vote by the House Energy Committee last week. It still has to pass muster with the House Judiciary Committee, but the bill seems to be off to a fast start. Here’s a rundown on these two important bills, with copies of the bills as introduced, with background on the backroom wheeling and dealing over the co-tenancy bill…
    Read More “WV Co-Tenancy, Royalty Transparency Bills Make Progress”

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    WV Farm Bureau Urges Legislature to Tread Carefully re Co-Tenancy

    In another MDN post today, we do a deep dive into West Virginia House Bill (HB) 4268, the “Co-tenancy Modernization and Majority Protection Act” (see WV Co-Tenancy, Royalty Transparency Bills Make Progress). One of the organizations closely watching the progress of that bill is the WV Farm Bureau, which lobbies for the best interests of mineral owners, farmers and rural residents. What does the Farm Bureau think of the bill so far? Last week, on the very day HB 4268 was introduced, Farm Bureau director of Governmental Affairs, Dwayne O’Dell, penned an editorial in which he lends tepid support for the bill, IF there are protections built in for landowners. O’Dell begins his editorial by stating he’s worried that WV legislators are, “allowing oil and gas developers to take private property rights unfettered.” That is, they are literally “giving away the farm.” O’Dell is favor of “providing oil and gas companies with a reasonable platform to succeed.” But not at the expense of his members. Here’s a big, fat caution flag being waved by the WV Farm Bureau with respect to the co-tenancy bill, along with a call for the legislature to revisit the issue of “at the well head” pricing…
    Read More “WV Farm Bureau Urges Legislature to Tread Carefully re Co-Tenancy”

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    WV Senate Bill Allows Counties to Assess “Impact Fees” on O&G

    A newly introduced bill in the West Virginia legislature–Senate Bill (SB) 295–appears to give WV counties the power to impose their own “impact fee” on the oil and gas industry. We say appears because the words “oil” and “gas” never appear in the bill–but those words do appear in a newspaper article discussing the bill. WV counties are in a bind. In PA, counties and towns get a healthy stream of revenue from PA’s “impact fee” (equivalent of a severance tax). When drilling comes to town roads get a lot of heavy truck traffic. Public services of all kinds–police, fire, government buildings–see more use. PA’s impact fee helps with those things. In Ohio, towns sign RUMAs with drillers–Road Use Maintenance Agreements. But in WV, the tax money counties did receive from the oil and gas industry was reduced in 2011 when the state legislature granted discounts to companies spending more than $50 million in the state. Want to fix or build a new road to handle traffic? Good luck! Enter SB 295 which (again) appears to grant counties the ability to assess certain fees, including an “impact fee,” on certain companies in order to assist with things like building and fixing roads. Here’s what we could find about SB 295…
    Read More “WV Senate Bill Allows Counties to Assess “Impact Fees” on O&G”

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    Mountain Valley Pipe Gets FERC Approval to Begin WV Construction

    MVP Map – click for larger version

    Mountain Valley Pipeline (MVP)–a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA, has just received permission from the Federal Energy Regulatory Commission (FERC) to begin tree clearing and construction of access roads and construction yards in five West Virginia counties–Wetzel, Harrison, Doddridge, Lewis and Braxton counties. The work will be allowed only where MVP has already obtained leases from landowners. This is the first actual construction to be authorized for the project, a milestone! MVP was approved last October (see FERC Approves Atlantic Coast, Mountain Valley Pipeline Projects). However, five national anti-fossil fuel groups filed a lawsuit two weeks ago to try and stop the project (see 5 Radical Green Groups Sue to Stop Mountain Valley Pipeline). Let ’em try! Here’s the great news that even as you read this, it’s quite likely the chainsaws are up and running…
    Read More “Mountain Valley Pipe Gets FERC Approval to Begin WV Construction”

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    Atlantic Coast Pipeline Begins Cutting Trees in WV & VA (Not NC)

    In December MDN told you that Dominion’s $5 billion Atlantic Coast Pipeline (ACP) project had asked permission from the Federal Energy Regulatory Commission (FERC) to begin clearing trees along the path of the pipeline in all three states where the pipeline will run: West Virginia, Virginia, and North Carolina (see Atlantic Coast Pipe Asks FERC to Begin Tree Cutting in WV, VA, NC). FERC approved the project last October (see FERC Approves Atlantic Coast, Mountain Valley Pipeline Projects). However, two of the three states–Virginia and North Carolina–have not yet given final water crossing permits for the project (see Atlantic Coast Pipeline Delayed in Virginia by Water Board Vote and NC Plays “Death by a Thousand Questions” with Atlantic Coast Pipe). Lack of water crossing permits isn’t stopping ACP, nor FERC. Last Friday FERC granted ACP permission to begin felling trees, and the chainsaws have been busy over the weekend–at least in WV and VA (not yet in NC). The clock is ticking. Because of cockamamie Obama regulations, clearcutting of trees along the path for a pipeline (or roadway, or whatever) is banned from April 1st through October 31st, in an effort to protect the “endangered” northern long-eared bat (see Marcellus/Utica Drillers Ask for Special Permit to Kill Some Bats). ACP will be busy between now and March 31st cutting down trees to prepare for laying pipe…
    Read More “Atlantic Coast Pipeline Begins Cutting Trees in WV & VA (Not NC)”

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    WV Co-Tenancy Bill Picks Up Support from Landowner Group

    It’s looking more and more like co-tenancy legislation will pass this year in West Virginia (see Co-Tenancy Front and Center for WV Legislature as Session Nears). What is co-tenancy? It is legislation that will give a majority of rights owners of a property the authority to sign a lease on behalf of all the rights owners. It corrects a situation in which multiple rights owners are listed for a property–sometimes 200 or more rights owners for a single piece of property! It is often difficult, if not impossible, to track them all down and get them to sign on the dotted line. Co-tenancy corrects that situation, opening up more Marcellus and Utica acreage that can be drilled. The main oil and gas associations in WV are pushing hard for it. Very importantly, the West Virginia Royalty Owners Association is giving its guarded blessing to the effort. About the only group still outright opposing it is the West Virginia Surface Owners Organization. They risk not having a seat at the table to influence the final version of the bill by their ongoing opposition. The co-tenancy train has already left the station and is picking up steam. The time is now to weigh in if you want to have a say in the bill that (we predict) WILL get passed–as long as legislators keep it “clean” and don’t lard it up with other stuff, like “joint development”…
    Read More “WV Co-Tenancy Bill Picks Up Support from Landowner Group”

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    Mountaineer Xpress Pipe Breaks Ground in WV on $100M Compressor

    Earlier this week TransCanada (i.e. Columbia Pipeline) broke ground for a new $100 million compressor station that will flow gas through the Mountaineer XPress Pipeline. MDN previously told you that at the end of December the Federal Energy Regulatory Commission (FERC) issued a final approval for Mountaineer (see Leach XPress Goes Online; FERC Approves Mountaineer & Gulf XPress). The $2 billion Mountaineer XPress will build ~170 miles of new pipeline to flow 2.7 billion cubic feet (Bcf) per day of natural gas from existing and future points of receipt along or near the Columbia pipeline system–most of it located in West Virginia (see Details on Columbia Pipeline Mountaineer XPress Pipeline Project). At 2.7 Bcf/d, Mountaineer XPress is the second largest (by volume) new pipeline project for the Marcellus/Utica region–second only to Rover’s 3.25 Bcf/d pipeline. It is a big and important project. On Tuesday, even though the temps were frigid and the snow was flying, Calhoun County commissioners along with reps from TransCanada broke ground on an important new compressor station being built to flow gas through Mountaineer XPress. Calhoun has not seen any shale drilling, although neighboring Ritchie County (to the north) and Gilmer County (to the east) have. Mountaineer XPress and this compressor station are helping Calhoun participate economically in the shale miracle, which Calhoun’s commissioners expressed thanks for…
    Read More “Mountaineer Xpress Pipe Breaks Ground in WV on $100M Compressor”

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    WVU Research to Convert Shale Gas into Hydrogen and “Good” Carbon

    It never ceases to amaze us at how an unshakable belief in the myth of man-made global warming drives normally sane people to do insane things. Like using millions in taxpayer dollars (“grants”) to figure out a way to convert shale gas into a more “environmental friendly” form of fuel for energy usage–explosive hydrogen. Methane (i.e. natural gas) has one carbon atom along with four hydrogen atoms–CH4. What do you do with that carbon atom when you split methane into its component parts? We can’t have that carbon atom mating with a couple of oxygen atoms and forming CO2 (carbon dioxide)! Perish the thought!! (Even though CO2 is what you exhale every time you breathe, CO2 has been bastardized into being considered a pollutant by the general population thanks to the efforts of Big Green.) West Virginia University, along with Southern California Gas Company and Pacific Northwest National Laboratory, is launching new research this month that aims to convert “methane to CO2-free hydrogen and solid carbon nanotubes”–that is, into hydrogen and “good” carbon, not “bad” CO2 carbon. Whatever…
    Read More “WVU Research to Convert Shale Gas into Hydrogen and “Good” Carbon”

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    Old Hippies Turn Out at WV DEP Hearing to Oppose Mountaineer Pipe

    In April 2017, MDN brought you the news that Columbia Pipeline (now owned by TransCanada) had filed an application with the Federal Energy Regulatory Commission (FERC) to build a 3.5 mile, 8-inch pipeline that will carry natural gas from Pennsylvania to connect the Mountaineer Gas system in the Eastern Panhandle of West Virginia with the Columbia Gas Pipeline in Pennsylvania (see New 3.5 Mile Pipeline Project to Drill Under the Potomac River). That small section of pipeline is hotly opposed and part of the larger Eastern Panhandle Expansion project–a project to deliver natural gas via local distribution channels (local utility Mountaineer Gas) to a new industrial facility in Berkeley County, WV, and to provide gas to other local businesses and residents in the Tri-State area. There are three phases to the Eastern Panhandle Expansion project: Phase One runs a 22.5-mile, 10-inch-diameter steel pipeline from Morgan County to Martinsburg; Phase Two includes a loop to Charles Town; and Phase Three will build a four mile segment of pipeline into Martinsburg. The WV Dept. of Environmental Protection held a hearing on Phase One on Tuesday, at the Berkeley Springs High School. All of the people who spoke at the hearing, some 33 of the 80 people present, spoke against the project. If you look at a picture of the crowd, you’d swear you were at a ZZ Top look-alike convention. That is, a bunch of old hippies. Here’s a report on the Tuesday hearing…
    Read More “Old Hippies Turn Out at WV DEP Hearing to Oppose Mountaineer Pipe”

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    WV Update on China Investment: “Dirt Could be Flying This Year”

    WV Commerce Sec. Woody Thrasher

    West Virginia State Commerce Secretary Woody Thrasher, the man who brokered an unbelievable deal with China, getting China to agree to spend a mind-blowing $83.7 BILLION in the Mountain State over the next 20 years, gave an update to WV legislators yesterday on the China deal. In early November Thrasher visited China as part of a trade delegation with President Trump. On that trip, China agreed to invest a total of $250 billion in American (mostly energy) projects, $83.7B of which (a full third!) will go to investments in WV (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). One legislator at yesterday’s meeting wanted to know when the state might begin to see actual construction activity. Thrasher, who said he’s already made three visits to China and is leaving for his fourth visit this Saturday, said the Chinese have “a great sense of urgency” about beginning projects in the state, and that “the dirt could be flying this year.” Thrasher cautioned legislators that the state needs to up its regulatory and business game–to make the state more attractive to China and others who will flock to the region following a buildup of the shale/petrochemical industry. Thrasher also hinted that the Chinese may be willing to invest in the much-talked-about $10 billion NGL storage hub, the same project that recently received positive signs it will receive a loan guarantee from the federal government (see Appalachian NGL Storage Hub Gets Serious with DOE Loan Guarantee). Here’s Thrasher’s timely update to WV legislators…
    Read More “WV Update on China Investment: “Dirt Could be Flying This Year””