Statewide 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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    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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    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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    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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    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””

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    Co-Tenancy Front and Center for WV Legislature as Session Nears

    At the beginning of each new year the West Virginia legislature meets for a 60-day session. This year the session runs from Jan. 10 to Mar. 10. For the previous maybe 6-7 years, the shale industry has pushed for some sort of forced pooling legislation. Each year those bills, as close they sometimes got, were defeated. This year the industry is staying well away from saying anything about “forced pooling.” Last time around (in 2017) we came close with something MDN calls forced pooling lite–a bill that would have allowed for co-tenancy and joint development. That bill was eventually defeated (see WV Force Pooling Lite Goes Down in Flames – Lawmakers Blame Pot). For the rest of last year WVONGA (the West Virginia Oil and Natural Gas Association) hyped both co-tenancy and joint development. What are they? Co-tenancy says a majority of rights owners can vote to accept a lease for drilling. 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. Joint development (sometimes called “lease consolidation”) is more nuanced. Currently there are a number of existing old leases, signed before shale drilling began, that prevent drillers from drilling a horizontal well across an individual property boundary line–until a new lease is signed. Joint development says if the driller already owns the leases on all adjoining properties they want to combine into a single drilling unit, they can do so without signing a new lease. WVONGA says it corrects a loophole that prevents more drilling from happening. Rights owners say joint development legislation lets drillers have a freebie–instead of signing a new lease (for more money), the driller gets something never envisioned when the original lease was signed. It is a form of theft. We’re happy to see WVONGA leave joint development behind. This year WVOGNA and legislators are laser-focused on co-tenancy, which we think is a good thing…
    Read More “Co-Tenancy Front and Center for WV Legislature as Session Nears”

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    Finalists Announced for 2018 Northeast & 2018 Texas Oil & Gas Awards

    Once again Marcellus Drilling News is happy to partner with and support the Oil & Gas Awards, for 2018. The Awards boys have just released two lists of finalists–one for the Northeast Awards, being held March 1 in Pittsburgh; and one for the Texas Awards, being held March 7 in Houston. This year six of the entrants for the awards contracted with MDN editor Jim Willis to help them prepare their entries (both Northeast and Texas). It was a blast for Jim to dig in and understand more about the companies submitting an application for the awards–and to help them craft what we hope are winning entries! Jim worked with some true professionals from the companies entering the awards–it was a pleasure. Below is a list of the finalists in each region. Good luck!…
    Read More “Finalists Announced for 2018 Northeast & 2018 Texas Oil & Gas Awards”

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    As MVP Gears Up for Feb 1 Construction, WV Landowners Try to Block

    A relatively small number of landowners in West Virginia is using a novel legal argument to try and stop Mountain Valley Pipeline (MVP) from beginning construction. MVP is a $3.5 billion, 303-mile natural gas pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The Federal Energy Regulatory Commission (FERC) issued a final approval for the project in October (see FERC Approves Atlantic Coast, Mountain Valley Pipeline Projects). In order to keep the project on track for completion by the end of 2018, they need to begin tree clearing no later than Feb. 1st. Problem is, there are landowners in WV (and VA) who won’t negotiate with MVP on leases–so MVP has sued them using eminent domain. Here’s what typically happens in an eminent domain case (knowledge we gained at a session at last year’s Shale Insight event): Since this is a federally regulated project, MVP has the right (under FERC authority) to use eminent domain to “condemn” properties where the landowners won’t play ball. The cases are typically filed in U.S. District Court–in this case for the Southern District of West Virginia. MVP filed that paperwork back in October. What usually happens next is that the judge/court will grant an order allowing the pipeline company to enter the property and do the work–but the details about how much money the landowner gets is not decided, sometimes for a year or more. That’s a separate issue. First the company is allowed in and does the work, later on the court will decide how much money to award the landowner for the work. However, the WV landowners filed a response and motion for partial summary judgment in late December that makes the argument that how much each landowner gets should come first, before MVP is allowed on their property. Frankly, it just doesn’t work that way. Question is, what will the justices do in this case?…
    Read More “As MVP Gears Up for Feb 1 Construction, WV Landowners Try to Block”

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    Appalachian NGL Storage Hub Gets Serious with DOE Loan Guarantee

    Just yesterday MDN told you that Mountaineer NGL Storage wants to be THE main ethane/NGL storage hub for the Marcellus/Utica region (see Mountaineer NGL Wants to be THE Appalachian Storage Hub). There has long been talk of a major, $10 billion regional NGL storage hub. But until know it’s been just that–talk. A major hub is now much more of a possibility. Last June West Virginia’s U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat), introduced Senate Bill 1337–the “Capitalizing American Storage Potential (CASP) Act”–a bill that would make a regional ethane storage hub (hopefully built in WV) eligible for the Department of Energy’s Title XVII loan guarantee program (see WV Sens. Capito & Manchin Introduce 2 More Ethane Storage Hub Bills). The bill didn’t go anywhere, but the intention of the bill certainly did. Yesterday it was announced that the DOE has invited those promoting the regional ethane storage hub to submit “Part II” of the application for a Title XVII loan guarantee of $1.9 billion. There’s a lot to unpack in the announcement below. First, the regional storage hub has an official name: The Appalachia Storage & Trading Hub (first time we’d read of it). Second, the project has an official backer: the Appalachia Development Group, LLC (or “ADG”). Third, ADG previously filed Part I of the application with the DOE, back in September. Fourth, since the DOE has invited ADG to supply Part II of the application, that implies Part I from September was/is approved. Fifth, $1.9 billion is far short of the eventual cost bandied about of $10 billion–but it can certainly get this project off the ground and running. And sixth, this is NOT a loan from the government, it is a guarantee. Someone else would make the loan, but the full faith and credit of the United States would back it up, in case of default. A Title XVII loan guarantee makes it much easier to find a loan…
    Read More “Appalachian NGL Storage Hub Gets Serious with DOE Loan Guarantee”

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    Dominion, MVP File to Dismiss VA-WV Lawsuit Against Pipe Projects

    In September a group of 57 gentry landowners in Virginia and West Virginia, backed by an out-of-state Big Green group, sued the Federal Energy Regulatory Commission (FERC) in an attempt to gut the 80-year old Natural Gas Act that gives FERC the right to grant eminent domain for pipeline projects (see VA, WV Landowners Sue FERC re Pipelines, Seek to Gut Natural Gas Act). Specifically, the colluding landowners oppose Dominion’s $5 billion, 594-mile natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina, and EQT’s $3.5 billion Mountain Valley Pipeline project, a 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The frivolous lawsuit, titled BOLD ALLIANCE, et al. v. FEDERAL ENERGY REGULATORY COMMISSION, et al., was filed in the U.S. District Court for the District of Columbia. It claims the landowners’ property is a “taking” not properly compensated under the U.S. Constitution. Yesterday two important parties to the lawsuit–Dominion (representing Atlantic Coast Pipeline) and Mountain Valley Pipeline–filed a motion to dismiss the case. They have a strong argument. Why dismiss? Because the gentry landowners filing the lawsuit have ignored United State laws, which specifically state that (a) ONLY FERC has jurisdiction over the projects and decisions about whether or not they can get built, (b) if a supposedly aggrieved party disagrees with FERC’s decisions, they must first file for a rehearing, and if FERC still refuses, then (c) the supposedly aggrieved party can file a lawsuit ONLY with the U.S. Court of Appeals for the District of Columbia. The suers (Bold Alliance) did file for a rehearing and FERC has not yet ruled on the rehearing. Bold Alliance tried to sidestep the law by moving forward with a lawsuit prematurely. However, the really big no-no is that they filed in U.S. District Court for DC, NOT the Court of Appeals for DC. Big difference. We see no other choice for the judges in U.S. District Court but to dismiss the case since Bold Alliance should not have brought the case in their court in the first place…
    Read More “Dominion, MVP File to Dismiss VA-WV Lawsuit Against Pipe Projects”

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    Atlantic Coast Pipe Asks FERC to Begin Tree Cutting in WV, VA, NC

    Dominion’s $5 billion Atlantic Coast Pipeline (ACP) project recently asked the Federal Energy Regulatory Commission (FERC) for permission 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. FERC approved the project in 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). ACP isn’t letting state agencies put a damper on the project. Just a few weeks ago ACP announced it had signed contracts with four labor unions to do the construction work, and had filed eminent domain lawsuits against holdout landowners who have refused to negotiate leases (see Atlantic Coast Pipe Gets Ready to Build: Union Help, Eminent Domain). And now ACP is asking FERC for permission to begin clearing trees, giving antis apoplexy…
    Read More “Atlantic Coast Pipe Asks FERC to Begin Tree Cutting in WV, VA, NC”

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    Ridgetop Energy Services Expands Again – in Southern Marcellus

    Ridgetop Energy Services, headquartered in Canonsburg, PA, was started in early 2016 by Ridgetop Capital Partners. Ridgetop Capital is an energy and real estate investment firm. Since 2007, Ridgetop Capital has purchased 30,000 acres in the PA, WV and OH, and has invested $130 million in the region (often partnering with big drillers like EQT, Antero, Chesapeake, Range Resources and others). In addition to investing in acreage, Ridgetop also wanted in on some of the drilling action, so the company formed Ridgetop Energy Services in 2016 to buy up service companies that work in the shale space. In June, Ridgetop Energy bought Keystone Wireline (see Ridgetop Energy Services Buys Keystone Wireline Inc.). Ridgetop Energy is expanding again–by purchasing “two service rigs and a swabbing unit stationed in northern West Virginia” from C&J Energy Services…
    Read More “Ridgetop Energy Services Expands Again – in Southern Marcellus”