Statewide WV

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    Babst Calland Report: Resurgence of M-U Industry & Challenges Ahead

    The legal beagles of top energy law firm Babst Calland recently released their seventh annual energy industry report called, “The 2017 Babst Calland Report – Upstream, Midstream and Downstream: Resurgence of the Appalachian Shale Industry; Legal and Regulatory Perspective for Producers and Midstream Operators.” This latest annual review chronicles the comeback of the Marcellus/Utica and what challenges lie ahead. In an MDN exclusive, we have the first seven pages of the 74-page report (see below), along with details on how you can request a full copy. Worth the read! Here’s an overview…
    Read More “Babst Calland Report: Resurgence of M-U Industry & Challenges Ahead”

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    New Infrastructure Group Makes Gives Shale Industry Helping Hand

    The TriState Infrastructure Council (TSIC) was founded in Pittsburgh in late 2016 to “serve a broad-based business community during the critical next few years by attracting and deploying investments in infrastructure projects in Ohio, Pennsylvania and West Virginia.” With infrastructure upgrades, the region will be able to realize economic growth resulting from petrochemical manufacturing and related industries in the Appalachian basin. One of the driving forces behind TSIC is a name you are likely familiar with: Kathryn Klaber. Katie Klaber founded and until a few years ago led the Marcellus Shale Coalition. She opted to focus on her consulting practice following the MSC and is now managing the TSIC. The TSIC organization was founded with a group of A-list companies located in the region. At this week’s Northeast U.S. Petrochemical Construction conference in Pittsburgh, Katie unveiled an exciting new project to map infrastructure in an 82-county region throughout the Ohio River Valley. The aim is to identify missing/key/critical infrastructure components and then work to set up public-private partnerships to get those components built. The TSIC is looking at “electric transmission and distribution, pipelines, natural gas and natural gas liquid storage capacity, reliable locks and dams, rail networks, roads and bridges, water and sewer, building sites, barge loading/unloading facilities, broadband, fiber optics, and air service, among others.” And yes, the Marcellus/Utica shale is the linchpin that holds it all together–makes it all possible–and the raison d’être for the TSIC. Here’s more on the new infrastructure database, the TSIC, and how they are giving the shale industry a big assist…
    Read More “New Infrastructure Group Makes Gives Shale Industry Helping Hand”

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    WV Leads 11-State Group Supporting EPA’s Move to Delay Obama Rule

    Kudos to West Virginia and its Attorney General, Patrick Morrisey, for leading the charge (along with 10 other states) to stop the Environmental Protection Agency’s implementation of the Obama methane rule. Earlier this month the Trump EPA filed paperwork to stop implementation of the egregious and illegal rule (see Beginning of the End: EPA Issues 90-Day Stay for Methane Rule). The federal government cannot regulate oil and gas, that’s left up to the states under the Constitution. However, the Obamadroids found a way around that legal limitation by using lawsuits and naked power grabs. The Trump EPA is reversing it. Of course Big Green groups with deep pockets immediately sued to keep the rule going (see Liberal DC Court Asks EPA to Respond to Lawsuit by Radical Enviros). The EPA is defending its right to undo a rule it did, and Morrisey and the other AGs filed a motion to intervene in the case, to help out the Trump EPA…
    Read More “WV Leads 11-State Group Supporting EPA’s Move to Delay Obama Rule”

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    US Methanol Figures Out How to “Ride the Marcellus Wave”

    Earlier this week the Appalachian Storage Hub Conference was held in Canonsburg, PA, near Pittsburgh, to discuss a joint effort in building a massive new ethane storage hub somewhere in our region, likely in West Virginia (see M-U’s Next Mega Project: $10B Appalachian Storage Hub). Such an effort will take the combined effort of West Virginia, Pennsylvania and Ohio, with a price tag of $10 billion. However, it’s a crucial part of the puzzle if Appalachia wants to be the next Gulf Coast for the petrochemical industry. Interestingly, one of the speakers was Richard Wofli, CEO of US Methanol. Last August MDN was the first to share the news that US Methanol is building at least two, rumored up to five, methanol plants in the Mountain State (see Rumor: US Methanol Building 5 Methanol Plants in WV). MDN shared a rumor (based on a source) that until we disclosed it, was not public knowledge: The first methanol plant they will build will be in Institute, WV, and the second in Belle, WV–both in the Charleston region. We later confirmed the rumor via several news accounts (see US Methanol Confirms MDN Rumor – 2 (or More) Plants Coming to WV). Kallanish ace reporter Rick Stouffer spoke to Wofli at the conference and got some new (to us) background on how and why Wofli and his business partner decided to buy mothballed methanol plants in other countries and move them to WV. The reason? It was the best way they could figure to ride the Marcellus wave…
    Read More “US Methanol Figures Out How to “Ride the Marcellus Wave””

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    Showdown: Comparing PA Impact Fee to WV Severance Tax

    Yesterday the Pennsylvania Public Utility Commission (PUC), the agency charged with keeping tabs on impact fee revenue from shale drillers (PA’s version of a severance tax), released the final numbers for impact fee revenues and disbursements in 2016 (see PA PUC Impact Fee Report: Revenue Down Again in 2016). Revenues were from the impact fee were down for the third straight year. And since politicians in Harrisburg are in the midst of budget negotiations and attempting to close a perennial gap in the budget, we have no doubt the hew and cry will go out, yet again, to enact a severance tax on shale gas and oil–either in addition to or on top of the impact fee. We’ve written about PA Gov. Wolf’s (and his fellow Democrats’) manifestly dumb idea of implementing a severance tax (see our numerous stories on the topic here). The new argument that will be used in Harrisburg is this: If we only had a severance tax, we wouldn’t experience as much of a decrease in revenue as we have with an impact fee. This post aims to debunk that claim. In fact, an impact is far superior to a severance tax (the tax “everyone has but us here in PA”). Why so? Because, as the numbers below show, PA’s decrease in revenue from an impact fee has been far less than the drop in severance taxes in other states, like West Virginia…
    Read More “Showdown: Comparing PA Impact Fee to WV Severance Tax”

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    WV Sens. Capito & Manchin Introduce 2 More Ethane Storage Hub Bills

    Senator Shelly Moore Capito

    In May, both West Virginia U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat), along with Ohio Sen. Rob Portman, introduced and co-sponsored a bill to study if and how an ethane storage hub can be constructed in the Marcellus/Utica region (see WV/OH Senators Intro Bill to Study Appalachian Ethane Storage Hub). Apparently the issue is more important that just a single bill. Yesterday Sens. Capito and Manchin introduced/sponsored another new bill. Called the “Capitalizing American Storage Potential (CASP) Act,” this new bill would make a regional ethane storage hub (the one envisioned for West Virginia) eligible for the Department of Energy’s Title XVII loan guarantee program. According to the Dept. of Energy website, Title XVII “provides broad authority for the Department to guarantee loans that support early commercial use of advanced technologies, if there is reasonable prospect of repayment by the borrower.” In other words, if the federal government guarantees a loan, lenders are more likely to make said loans at more favorable interest rates. Such a loan is “another tool that the Department will use to promote commercial use of innovative technologies” and is targeted for commercial operations only–not for use in energy research. If the bill passes, it will make building the ethane storage hub that much more attractive. In addition to the Title XVII bill, Sen. Capito also introduced a bill to hack through the red tape and streamline an approval process for the storage hub…
    Read More “WV Sens. Capito & Manchin Introduce 2 More Ethane Storage Hub Bills”

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    Radicals File Lawsuit Against WV DEP for Approving MV Pipeline

    A group of profoundly radical “environmental” organizations filed a lawsuit in the U.S. Court of Appeals for the Fourth Circuit last Friday against the West Virginia Dept. of Environmental Protection–for doing their job. Sierra Club, West Virginia Rivers Coalition, Indian Creek Watershed Association, Appalachian Voices and Chesapeake Climate Action Network has sued the DEP because the department had the audacity to conduct a very thorough review, and then issue a stream and water-crossing permit (demanded under federal law) for the Mountain Valley Pipeline (MVP). MVP is a $3.5 billion, 301-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. The project, which filed an official application with the Federal Energy Regulatory Commission in October 2015, is being built by EQT, NextEra Energy and several other partners. This is now SOP–standard operating procedure–for Big Green groups with deep pockets. Sue and keep suing in an attempt to slow and eventually kill off any project that remotely involves fossil fuels. Yes, they are RADICAL, they are EXTREME, waaaaaay outside the mainstream of American society. And they MUST BE STOPPED. When will someone launch weekly lawsuits against these Big Green organizations? Here’s the latest maddening development…
    Read More “Radicals File Lawsuit Against WV DEP for Approving MV Pipeline”

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    WV Drillers & Landowners Want New Law re Post-Production Issue

    Earlier this week MDN reported on the recent West Virginia Supreme Court decision to reverse it’s earlier decision and allow EQT (and by extension, other drillers) to deduct some post-production expenses from royalties paid to landowners (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). The Leggett v. EQT case turned on the meaning of three short words: “at the wellhead” (see WV Supreme Court Post-Production Royalty Case Hinges on 3 Words). This latest final final decision must be the…well…final decision, right? Not so fast. There is another Supreme Court case from 2006, Tawney v. Columbia Natural Resources, which also dealt with post-production expenses and found drillers do not have the right to deduct them from royalties. But there are differences. “Leggett deals with the statute on royalties, while Tawney is about lease contracts.” It’s a pretty safe bet that a new case will be filed challenging Tawney in light of the Leggett decision. All of this back and forth in the courts is unsettling for both drillers and landowners. Both sides are in agreement about one thing: They both want the WV legislature to pass a new law clarifying the issue of post-production deductions…
    Read More “WV Drillers & Landowners Want New Law re Post-Production Issue”

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    Alpha Natural Resources Sells 120 Gas Wells in WV

    On Tuesday Alpha Natural Resources (ANR) announced it was divesting “substantially all of the assets” in two different operations in West Virginia, one of those being a natural gas operation with “120 producing natural gas wells in five counties.” Which got us digging. We recalled that ANR went bankrupt last year and ended up selling 27,400 acres of Marcellus/Utica Shale leases to Vantage Energy for $339.5 million (see Vantage Outbids Rice For Bankrupt Alpha Natural’s 27K Marcellus Acres). That was all of ANR’s Marcellus assets. So what’s with this new deal to sell 120 gas wells in the Mountain State? And which five counties are the wells located in? The announcement didn’t say. So we reached out to ANR and got you some answers…
    Read More “Alpha Natural Resources Sells 120 Gas Wells in WV”

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    WV Supreme Court: Non-Participating Rights Owner Can’t Stop Lease

    Just yesterday we told you about an important court case that had gone to the West Virginia Supreme Court of Appeals (see WV Rights/Pooling Case May have Big Impact on Shale Industry). In brief, the case was appealed from a lower court where a judge found that a “non-participating” mineral rights owner, someone who owned a quarter of the rights for a property in Marshall County, had the power to object and stop a lease of the property for oil and gas drilling. We thought it strange that the lower court judge would make such a decision, which threatens to up-end thousands of leases in WV that are similar. Little did we know that as we were publishing that story, the WV Supreme Court was rendering its decision. All five justices voted to overturn the lower court ruling and preserve sanity for leases in the Mountain State… Read More “WV Supreme Court: Non-Participating Rights Owner Can’t Stop Lease”

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    WV Rights/Pooling Case May have Big Impact on Shale Industry

    A court case from Marshall County, WV decided in April 2016 is heading to the WV Supreme Court of Appeals (the state’s highest court). The stakes in Contraguerro v Gastar Exploration could not be higher for the Marcellus industry in the Mountain State. In brief, 70 years ago a 106-acre track of property was sold. The sellers retained a one-quarter “non-participating interest” in the oil and gas rights. That means the buyer got to decide when/if to lease the property for drilling, and if so, has the right to negotiate the price, etc. The remaining one-quarter non-participating interest holders would get royalties, but nothing else. Fast forward several generations and the heirs of the original sellers didn’t even know they owned an interest in the land until contacted by Gastar, which needed a signature in order to send them checks for royalties. The heirs decided to sue to stop the deal, either in a bid to negotiate a better deal or perhaps because they don’t like fossil fuels. Who knows? The case went to the Circuit Court of Marshall County and a judge there found in favor of the heirs–giving them, and by extension any minority rights owner, the power to stop lease deals. An unmitigated mess that threatens many lease deals because divided rights ownership is common in WV. Perhaps this case was part of the motivation to pass a new law this year addressing “co-tenancy” (see Analysis of New WV Bill SB 576 re Co-Tenancy & Joint Development). The co-tenancy law, if passed, means if there are multiple owners for the mineral rights under a property, you would only need a simple majority of those owners to approve a drilling lease. Currently, if one person with a teeny tiny share objects, it stops the process. In the Contraguerro case, although the heirs are owners, they are “non-participating”–so they should not have had a say anyway. However, a lower court judge found otherwise. So the case was appealed and is now before to the WV Supreme Court… Read More “WV Rights/Pooling Case May have Big Impact on Shale Industry”

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    WV Supreme Court Justice: EQT Royalty Ruling “Legal Sophistry”

    Last December the West Virginia Supreme Court ruled in a case to disallow Marcellus driller 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.” Last week, just five months later, four of five justices (including a newly elected judge) reversed their December decision (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). The lone judge voting against the decision was Robin Jean Davis. Yesterday she released her dissenting opinion. In very strong language, Judge Davis said the court’s other four members “used legal sophistry” to prop up their decision, and that “the majority opinion is simply wrong.” Here’s what else Judge Davis had to say… Read More “WV Supreme Court Justice: EQT Royalty Ruling “Legal Sophistry””

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    WV Supreme Court Reverses Itself, Post-Production Deductions OK

    In a decision that will thrill drillers, but anger landowners, the West Virginia Supreme Court decided last week to overturn its own previous decision (from just last December) and allow driller EQT to deduct post-production expenses from royalty payments. Last 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 lawyers were in court arguing the case earlier this month. As it turns out, the lawyers mainly argued over the meaning of three short words: “at the wellhead” (see WV Supreme Court Post-Production Royalty Case Hinges on 3 Words). On Friday, the justices reversed their earlier decision, voting 4-1 in favor of allowing EQT to deduct “reasonable” post-production expenses (copy of the decision below). Newly elected Justice Beth Walker, with (according to the other side) conflicts of interest, voted in favor of EQT. This has BIG implications for landowners and drillers in the Mountain State… Read More “WV Supreme Court Reverses Itself, Post-Production Deductions OK”

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    Fake Harvard Study Generates Fake News re NatGas Storage in M-U

    Here we go again. A new “study” published today by Harvard University researchers supposedly indicates that Pennsylvania, Ohio, and West Virginia are loaded with underground natural gas storage sites that may leak like the Aliso Canyon debacle in California. The new study published in the journal Environmental Research Letters, titled “A national assessment of underground natural gas storage: identifying wells with designs likely vulnerable to a single-point-of-failure” (full copy below), says there are 14,138 active underground storage (UGS) wells in 317 locations/facilities in the U.S. The study identifies 2,715 active UGS wells across 160 facilities that, like the failed well at Aliso Canyon, were not originally designed for gas storage. (Gasp) Even worse: The majority (88%) of these repurposed wells are located in OH, MI, PA, NY, and WV. (Double gasp) Here’s the thing: Aliso Canyon was one facility that had a catastrophic failure (a failure which, by the way, hurt no one–it just released some extra methane into the air). While it may be interesting and useful to know (for accident prevention) that there are other facilities constructed years ago, like Aliso Canyon, that were later repurposed to be used for underground storage–each and every location is different, with unique characteristics. No two storage sites are the same geologically. It does not follow, as implied in the report, that because Aliso Canyon leaked, that these other “similar” facilities will eventually fail and leak. However, our main objection to this research–and why we call it fake research–is that the researchers never bothered to go into the field and take air samples to see if there is any ACTUAL leaking going on at any of these thousands of other sites! Fake mainstream news sources are just now picking up on the story and running it. Nothing sells newspapers (or grabs online eyeballs) like fear. And hey, it serves the mainstream narrative that fossil fuels are the ultimate evil. Here’s the kicker: This latest “research” was funded, in large part, by the virulent anti-fossil fuel Heinz Foundation and The Nature Conservancy. That tells you all you need to know about this latest bought-and-paid-for “research” study with a Harvard label slapped on it…
    Read More “Fake Harvard Study Generates Fake News re NatGas Storage in M-U”

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    Marcellus DUCs Lay Golden Eggs for Northeast Drillers

    We’ve written a number of times about DUCs–otherwise known as drilled-but-uncompleted wells. When a shale driller drills a new well, it doesn’t always happen all in one go. You first drill the hole down, and then curve the drillbit and drill the horizontal portion–called the lateral. Then you pull the drill bit out of the ground and (at some point) the fracking process begins. Fracking doesn’t always happen right away. Sometimes wells are initially drilled but not fracked–essentially putting them in inventory to be fracked later. Those wells are DUCs. Since a lot of the cost to develop the well has already been spent in preparing the site and drilling the hole, to come along at a later time and frack is much “cheaper” if you (as a driller) want to bump up your production. Price of gas low right now? Drill the initial hole, mothball the project, and come back later when the price of gas goes up and finish it off and hook it up to production. The DUC inventory is a closely watched number. Analysts at Platts have been watching and have noticed something interesting. In most shale plays–particularly oil plays like the Permian in Texas–drillers are sinking initial holes as fast as they can and the DUC inventory numbers are going up up up. The Permian has seen 476 new DUCs added since January! But in the Marcellus, only 3 new DUCs have been added since last December. Which is “puzzling.” What does it mean?…
    Read More “Marcellus DUCs Lay Golden Eggs for Northeast Drillers”

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    Poll: Majority of Voters in VA, WV, NC Support Atlantic Coast Pipe

    Leftist anti-fossil fuelers are only too happy to poll anything and everything–except for what really matters. How do the VOTERS in Virginia, West Virginia and North Carolina feel about the Atlantic Coast Pipeline (ACP)? ACP is Dominion Energy’s $5 billion, 594-mile natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina. The Consumer Energy Alliance (CEA), the “voice of the energy consumer,” set out to answer the question: How do voters feel about ACP? In a poll commissioned by ACP, a majority of voters in all three states support the project–by an overwhelming majority. ACP hired Hickman Analytics Inc., a “Democratic-leaning,” Maryland-based firm to do the polling. Harrison Hickman, founder of the firm, said, “By any measure, whether it’s a policy matter or a voting matter, the pipeline has widespread support.” That’s something you won’t read in most news outlets. Here’s the results of the poll… Read More “Poll: Majority of Voters in VA, WV, NC Support Atlantic Coast Pipe”