West Virginia

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    IOGAWV Opposed to Tiered Severance Tax – Proposal Now Dead?

    The West Virginia legislature only meets for 60 calendar days each year and move quickly when the do meet. Unless the governor calls for a special session. Which has happened–to consider and pass a budget for the state. During the regular session earlier this year, newly-minted Gov. Jim Justice wanted and got a bill, Senate Bill (SB) 415 (full copy below) that tiers the severance tax on natural gas and oil. Justice would keep the existing 5% severance tax on oil and gas as the bottom tier–to be assessed if the “annualized gross value of natural gas per MCF” is $3 or lower. When the annualized value goes to $3.01, the tax goes to 5.5%. At $3.51, it goes to 6%. And so on to $9/Mcf when the tax would be 10%. It’s a crazy idea and frankly, we’re surprised a Republican governor that supports the shale industry wants it. Other o&g states are looking at lowering their severance taxes, not raising them. At any rate, the Independent Oil & Gas Association of West Virginia (IOGAWV) is strongly opposed to the plan. From what we can tell, as of a few days ago, the tiered severance tax for natural gas/oil plan has been withdrawn. Which is good news for both drillers and landowners…
    Read More “IOGAWV Opposed to Tiered Severance Tax – Proposal Now Dead?”

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    Exclusive: What’s Going on with Fairmont Brine?

    Last week MDN was contacted by a vendor working in the oil and gas business who is owed money by Fairmont Brine. The vendor’s question to MDN: What have you heard about Fairmont? Are they heading for bankruptcy? We’ve had our eye on Fairmont Brine Processing, headquartered in Fairmont, WV, for a number of years. We originally started writing about the company in 2010 when it was AOP Clearwater (see AOP Clearwater Plant in WV a Big Success in Treating Marcellus Shale Wastewater). New owners expanded the operation in 2014 (see New Brine Processing Plant Coming to Panhandle of WV). In early 2016, Fairmont secured a $90 million line of credit to build a new wastewater processing plant in southwest PA (see Fairmont Brine Gets $90M to Build New Wastewater Recycling Plant). And in November, we spotted the company’s name in a major Bloomberg article about Oklahoma earthquakes and how the company can help solve the problem (see WV Wastewater Co Grabs Nat’l Headlines re OK Earthquakes). We told our inquiring vendor we had not heard anything lately about Fairmont. The vendor said he’s not been paid for many months, and sent us copies of letters from the company stating the company is in a cash flow pinch and could not “fulfill its obligations at this time.” So MDN contacted Fairmont’s law firm, the venerable Babst Calland, to find out what’s going on. Here’s what what we found… Read More “Exclusive: What’s Going on with Fairmont Brine?”

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    Titan Energy Sells Marcellus Assets, Buyer Rapidly Expanding

    In February, MDN told you that Titan Energy, which used to be known as Atlas Energy/Resource Partners, was listing what appeared to be the rest of the acreage they still own on the Appalachian basin–some 494,229 acres–including rights for drilling in the Marcellus (see Titan Energy Puts 494K Appalachian Acres Up for Sale). On Friday, Titan announced it has signed an agreement to sell the acreage, along with 8,400 oil and gas wells across Pennsylvania, Ohio, Tennessee, New York and West Virginia, for $84.2 million to Diversified Gas & Oil (DGO). Yes, the vast majority of those wells are conventional (vertical only) and not shale wells. In fact, we’re not sure any of the wells are shale wells. However, Marcellus assets were part of the sale–so at least some of the acreage will allow for Marcellus drilling, should DGO want to pursue it. Although Titan is keeping its Utica Shale acreage, the company says it use the money from this sale to concentrate efforts on oil drilling in the Texas Eagle Ford Shale play. Titan is moving its headquarters from Pittsburgh to Houston, TX. In addition to the news about Titan selling its conventional assets and moving, the twin story (perhaps even more interesting) is that the buyer, DGO (nominally headquartered in Birmingham, Alabama, although actually a UK company), has been on a buying spree–snapping up 75,250 conventional acres (1,300 wells) in PA & WV earlier this year. All told, DGO now owns 1.6 million acres of leases and 10,000+ conventional oil and gas wells in Appalachia…
    Read More “Titan Energy Sells Marcellus Assets, Buyer Rapidly Expanding”

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    Commerce Secretary: Shale Gas is the Future of West Virginia

    More than 300 people attended the West Virginia Manufacturers Association’s Marcellus and Manufacturing Development Conference in Morgantown yesterday. Among the topics discussed–the need for faster approvals of pipelines, and the positive economic of shale on the Mountain State. Among the speakers was new State Commerce Secretary Woody Thrasher–who spent most of his career in the private sector. According to Thrasher, “shale gas is the future of economic opportunity in West Virginia.” Thrasher said the industry with the biggest potential for growth in WV is shale energy–and it’s “only begun to emerge.” He urged audience members to get involved and make their voices heard–at the local, state and federal level. We think it’s a fair statement to say that Thrasher rallied the troops and is leading the charge to see more shale energy developed in WV… Read More “Commerce Secretary: Shale Gas is the Future of West Virginia”

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    Noble Energy Sells Remaining M-U Assets for $1.2B – Who Bought?

    Yesterday Noble Energy dropped a bombshell that it has sold its 100% interest in 385,000 Marcellus/Utica acres and wells producing 415 million cubic feet equivalent of natural gas in West Virginia and Pennsylvania for $1.225 billion to “an undisclosed buyer.” That works out to be $3,181 per acre. Not included in the sale is Noble’s half operating interest in the CONE Midstream pipeline gathering system. It was just three years ago that Noble announced it would lease 138,000 feet in a new office building in Southpointe, and move in 200 employees (see Noble Energy’s Huge Vote of Confidence in the Marcellus). At the time, Noble’s CEO said the Marcellus is “the premiere gas play in the United States” and that the Marcellus figures prominently in Noble’s future plans. That was then, this is now. Noble will use the money from the sale to pay down essentially all of the debt the company incurred from its recent $2.7 billion purchase of Clayton Williams Energy–a deal that expanded Noble’s “core Delaware Basin position” (i.e. the Permian Shale in Texas, an oil play). All of the above is what you get from other news sources. The reason you read MDN is because we’ve found out who the buyer of the Noble acreage is…
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    WV Supreme Court Post-Production Royalty Case Hinges on 3 Words

    Yesterday the five justices of the West Virginia Supreme Court reheard a case involving post-production deductions from royalty payments. Last week we reported that the court *might* rehear the case this week–if they didn’t grant a late-breaking motion to dismiss the rehearing (see WV Supreme Court to Rehear EQT Post Production Royalty Case, Maybe). In December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). Those who won the case say newly elected Supreme Court Justice Elizabeth D. Walker has conflicts of interest and should not have been allowed to vote to rehear the case in the first place (which she did). On that basis, they tried to avoid the rehearing altogether, but that failed, and yesterday the lawyers were in court arguing. As it turns out, the lawyers mainly argued over the meaning of three short words: “at the wellhead”… Read More “WV Supreme Court Post-Production Royalty Case Hinges on 3 Words”

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    Big Pittsburgh Foundation Funds Education for Shale Industry

    Seems like every time we talk about Big Money foundations, those foundations (which are tax exempt) are far-left in philosophy and when they fund anything to do with the environment or education or business, it’s always with strings attached that said activity will have an anti-drilling bias. Need money for a new “study” to bash shale energy? Take your pick. In Philadelphia, there is the William Penn Foundation. In New York (and North Carolina) there’s the Park Foundation. And in Pittsburgh, the Heinz Foundation–run by Teresa Heinz Kerry (whom we call Mamma Teresa here on MDN). Hard left, all of them. So when we spotted an article about another Pittsburgh-based foundation–the Benedum Foundation–that is donating money to HELP the shale industry, well, we knew that’s a “man bites dog” story worthy of highlighting. The Benedum Foundation does a great deal of its grantmaking for science, technology, medical and engineering (STEM) education. Lately they’ve concentrated on training students who will, after school, land a job at someplace like CONSOL Energy, or the under-construction Shell ethane cracker plant in Beaver County. Although Benedum doesn’t spend nearly as much as the larger Heinz Foundation, we see Benedum as the antidote–a counterbalance–to some of the damage caused by Mamma Teresa and her married-into, huge piles of money that she spends to oppose shale energy…
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    WV Forced Pooling Lite Not Dead Yet – EQT Wants Special Session

    In early April MDN reported that West Virginia’s effort to pass a law dealing with co-tenancy and joint development–what we called forced pooling lite–had gone up in pot smoke (see WV Force Pooling Lite Goes Down in Flames – Lawmakers Blame Pot). Legislators in the House go bogged down debating pot smoking and didn’t have enough time to finish debate and vote on Senate Bill (SB) 576 (for background on what the bill would do, see Analysis of New WV Bill SB 576 re Co-Tenancy & Joint Development). The West Virginia Oil & Natural Gas Association (WVONGA) pulled out all the stops to support the legislation. They organized a bus-in rally at the Capital where nearly 1,000 people showed up to support the legislation (see WVONGA Delivers ~1,000 at Rally to Support Co-Tenancy, Joint Dev.). We thought for sure it was a fait accompli, because WV’s new Governor, Jim Justice, threw his support behind the bill. But at the last minute, the bill failed–as forced pooling bills have failed five times before. However, we did say this back in early April: “So is it curtains for the sixth time on forced pooling? We’re not ready yet to declare it dead during this legislative tenure. The governor in West Virginia has the power to convene a special session. We saw it happen when Earl Ray Tomblin was governor.” It seems our words were prophetic. EQT, one of the biggest drillers in the state, is pushing hard for Gov. Justice to convene a special session and to pass SB 576. EQT is providing some not-so-subtle pressure by indicating they may reallocate some of their drilling budget elsewhere if WV doesn’t pass the law…
    Read More “WV Forced Pooling Lite Not Dead Yet – EQT Wants Special Session”

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    Southwestern Energy Fighting Ohio County, WV Fire Dept. Fee

    Location of Ohio County, WV

    Ohio County, WV, like many rural counties, has a string of volunteer fire departments that respond to calls in their respective localities. When an industrial activity like shale drilling shows up, local volunteers need special (ongoing) training to address the unique circumstances involved with a well pad fire. There’s also all of the extra calls local fire departments get from the sheer volume of vehicle traffic related to workers coming and going, and trucks hauling all manner of materials–from pipes to equipment to water. Those vehicles sometimes get into accidents, requiring a fire truck to respond. So Ohio County passed a $5,000 per well pad fee, per year, to help defray those costs. Southwestern Energy is the only driller active in the county, currently, with some 29 well pads. For Southwestern, the fee equals $145,000 per year, year after year, going to the local fire department effort. When Ohio County sent Southwestern the bill, Southwestern didn’t pay it. Instead, they filed a lawsuit claiming the fee is “arbitrary and excessive”…
    Read More “Southwestern Energy Fighting Ohio County, WV Fire Dept. Fee”

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    WV Supreme Court to Rehear EQT Post Production Royalty Case, Maybe

    More twists and turns to report with respect to an issue we previously reported with the potential to impact every mineral rights owner and driller in West Virginia. In December MDN reported on the huge West Virginia Supreme Court decision against driller EQT that disallows EQT from deducting post-production expenses from royalty checks, even with signed contracts in place (see WV Supreme Court Rules EQT Can’t Deduct P-P Costs from Royalties). The justices, in their ruling, said that drillers can “not deduct from that (royalty) amount any expenses that have been incurred in gathering, transporting or treating the oil or gas after it has been initially extracted, any sums attributable to a loss or beneficial use of volume beyond that initially measured or any other costs that may be characterized as post-production.” A really big deal. Then in February, with a brand new justice on the bench, the WV Supreme Court agreed to rehear the case after an appeal filed by EQT–a rare and unusual step (see EQT Catches Big Break in WV Supreme Court re Royalty Deductions). A member of the West Virginians for Property Rights group said members are “pretty nervous about this.” Those who already won the case say the high court’s decision to rehear is tantamount to playing the fourth quarter of a playoff game all over again–fundamentally unfair. The court will rehear the case next Tuesday–IF they don’t grant a motion to dismiss the rehearing. The mineral rights owners involved filed the motion saying the newest justice who just came on the bench in January should not have voted to rehear a case she previously didn’t hear…
    Read More “WV Supreme Court to Rehear EQT Post Production Royalty Case, Maybe”

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    MarkWest Spending $300M+ This Year in WV Expansion Projects

    Click for larger version

    MarkWest Energy, formerly a standalone company but bought out by MPLX (i.e. Marathon Petroleum) in December 2015, continues its aggressive expansion in the Marcellus/Utica. Particularly in West Virginia. MarkWest owns a number of processing plants in the Mountain State. This year, the company will spend $200 million to expand and upgrade its facilities in Doddridge County (Sherwood facility) to process natural gas and separate out ethane, and $110 million to expand and upgrade facilities in Marshall County (Majorsville facility) to process ethane. Folks, that’s nearly one-third of a BILLION dollars–in just two counties. Talk about economic stimulus! Last year MarkWest spent $120 million on upgrades in Wetzel County. MarkWest’s WV customers include: Antero, EQT, Southwestern, CNX, Chevron, Range Resources, and Eureka Hunter. Here’s more details on what to expect from the mighty MarkWest in WV this year…
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    NETL Researchers Find Tiny Earthquakes Help Marcellus Production

    Broadband seismometer used for surface seismic monitoring

    We hesitated to use the headline that we did, given the way virulent anti-drillers bastardize the issue of fracking and earthquakes. But we used it to make a point. Quick history: The headline-grabbing “fracking causes swarms of earthquakes” in places like Oklahoma is about frack wastewater that is injected in special saltwater injection wells, deep below the surface. There are, literally, hundreds of thousands of such wells across the country. Unfortunately, when such a well is located directly over or very close to an underground fault (large crack), the fluid getting injected acts like grease, allowing rock layers to slip and slide–in some cases causing low level earthquakes–typically earthquakes under 2.0 on the Richter scale (can’t be felt on the surface). Is fracking itself ever the cause? Statistically, no. But it has been documented to happen in a handful of cases–under 10 times in the entire world, out of millions of fracked wells. And again, it only happened because of fracking directly over an underground fault. However, any time you explode charges underground, which is what fracking is, if you have equipment sensitive enough, you can detect it. Is that an “earthquake”? We’d say no. Perhaps it is considered an “earthquake” according to a technical definition, but those extremely low vibrations are brief–typically 30-60 seconds–and they never cause any kind of harm on the surface. In fact, the vibrations can’t be felt at the surface. So our headline referring to “tiny earthquakes” is somewhat tongue-in-cheek, a way to tweak antis. Researchers at the National Energy Technology Laboratory (NETL) have discovered that those vibrations from fracking–what they call “low frequency tremors”–can be measured and used to figure out how to get more production out of Marcellus Shale wells in PA and WV…
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    New 3.5 Mile Pipeline Project to Drill Under the Potomac River

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    Columbia Pipeline, now owned by TransCanada, recently (in March) 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 West Virginia with the Columbia Gas Pipeline in Pennsylvania. The purpose of the Eastern Panhandle Expansion project is to deliver natural gas via local distribution channels to a new industrial facility in Berkeley County, WV (scheduled to open in Fall 2017), and to provide gas to other local businesses and residents in the Tri-State area. Most of the pipeline crosses through a tiny sliver of Washington County, Maryland. The main issue with the project is that the pipeline will be drilled underneath the Potomac River, which serves as the border between WV and MD. That has antis in an uproar. The good news is that FERC has agreed to prepare an environmental assessment (EA) for the project. That is, this is now a real project with a high degree of likelihood it will get built…
    Read More “New 3.5 Mile Pipeline Project to Drill Under the Potomac River”

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    NRDC Study Finds No Groundwater Contamination from Fracking in WV

    MDN has previously chronicled bought-and-paid-for research done by Duke University’s Avner Vengosh, professor of geochemistry and water quality at Duke University’s Nicholas School of the Environment (see Duke Hit Piece on Shale Water Usage from Same Park-Sponsored Prof and Latest Case of Duke U Bought & Paid “Research” by Park Foundation). Here’s how it works: Park funds Dr. Vengosh’s “research,” and he conveniently “discovers” all sorts of nasty things about shale fracking, publishing his “research” in obscure, peer reviewed journals. Mainstream media picks it up and runs it. Readers who only scan headlines get the impression fracking is evil. Mission accomplished for Park (another hit on fracking) and for Vengosh (another buck in his pocket). But last October that pattern changed. Vengosh released new research that found there’s really nothing to worry about after all when it comes to Marcellus Shale wastewater (see Duke U Researcher Tries to Repair Reputation with Wastewater Study). He’s just done it again. Vengosh and researchers from Penn State, Ohio State, and Stanford University published a study on Monday in which they declare fracking “has not contaminated groundwater in northwestern West Virginia.” They did find that on occasion wastewater spills have fouled creeks–something everyone knows. But then, on occasion rail cars overturn with nasty chemicals not related to fracking that foul local water supplies. This is not news. Still, the fact that this study, which contains real research in monitoring water wells over a three-year period, coming from Duke University and Vengosh, marks a turnabout. The really interesting news is that the study was funded, in part, by the virulently anti-drilling National Resources Defense Council (NRDC). The NRDC did not get their money’s worth with this one! We doubt Vengosh can expect any more funding from the NRDC in the future. Below are details about, and from, the study that finds fracking in WV is peachy-keen…
    Read More “NRDC Study Finds No Groundwater Contamination from Fracking in WV”

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    Baker Hughes March Rig Counts: Rocket Ride Continues, U.S. Up 45

    The Baker Hughes rig count in the U.S. continued to rocket skyward in March. In January the average number of U.S. rigs was 683. In February, the count zoomed to 744, up 61 rigs in just a month. And in March, the U.S. rig count zoomed to 789, up another 45 rigs in a month. Each active rig translates into hundreds of jobs, both directly working at the rig and indirectly in services delivered to the rig and its workers. It also means more landowners will soon have royalty payments heading in their direction. When rigs are active, life is good. What about rig counts in the Marcellus/Utica? Disappointingly our region’s rig count lost a rig in March. PA lost two rigs, OH gained a rig, and WV stayed even. What does it all mean? It means that this zooming up in rig counts is happening in other locations–primarily in the Permian Basin in Texas. That is, oil rigs rushing to take advantage of an increase crude prices to a sustained $50+/barrel. While we’re happy the rig count is up, we’re not happy more it is not happening in the northeast. But honestly, without pipelines to take away an increase in production, can you blame our drillers? Once there is more takeaway capacity, you’ll see rig counts begin to climb again in our neck of the woods…
    Read More “Baker Hughes March Rig Counts: Rocket Ride Continues, U.S. Up 45”

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    WV Severance Tax Higher than Projected – But Maybe Not for Long

    There’s some good news and, depending on your perspective, bad news when it comes to severance tax collections from natural gas (and coal) in West Virginia. According to West Virginia Department of Revenue in a report released last week, severance tax collections on oil, gas and coal in the Mountain State exceeded revenue projections by $13 million for the first nine months of the current 2017 fiscal year. The surplus reverses the trend from the previous year when WV lost severance tax money due to the drop in the price of oil and gas. Severance tax revenue, as we’ve pointed out before, floats up and down with the commodity price of oil and gas, unlike impact fee revenues which are much less tied to commodity prices (and one reason why PA drilling flourishes). So WV is seeing higher severance tax revenue–that’s the good news. The “bad” news is that Gov. Jim Justice and the WV Senate plan to cut the severance tax–putting the state back in the position of doing more with less…
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