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Details on Diversified Deal to Plug More Wells in WV, OH, PA
One month ago, we brought you the news that Diversified Energy and EQT Corporation had settled a class action lawsuit originally brought by several West Virginia landowners (see EQT, Diversified Settle WV Class Action Lawsuit re Old Wells). There is the money aspect of the lawsuit, a payout of up to $6.5 million (subject to attorneys grabbing one-third of that). But then there is (in our opinion) the more important aspect of the settlement that requires Diversified to dramatically increase the number of wells it plugs over the next 10 years. Read More “Details on Diversified Deal to Plug More Wells in WV, OH, PA”
The Baker Hughes national rig count dramatically increased last week, adding seven rigs for a national count of 589. Note that the national count continues to be rangebound between 581 and 589 since June (except for Sep. 13, when it hit 590 for a single week). Will we break out of the rut and go higher? Stay tuned. Meanwhile, the Ohio Utica lost one rig last week, but the Pennsylvania Marcellus picked it up, keeping the combined M-U count at 35. 
According to an extensive report appearing on the World Oil website (and in the November issue of the magazine), multiple possible futures lie ahead for the Marcellus and Utica shales. So, which future will come to pass? Today, both industry and government see the Marcellus and Utica formations as tremendous opportunities for companies and state governments, with domestically produced energy, jobs, and a huge economic impact. 
There is an important development for landowners AND drillers in a class action case that began some seven years ago. A civil suit was brought by Harrison County oil and gas owners against Antero Resources Corp., claiming the company had deducted post-production costs from royalties not allowed under the leases they had signed. In 2022, the U.S. District Court for the Northern District of West Virginia ruled mostly in favor of the landowners. The District Court sent two certified questions to the state Supreme Court. The Supremes ruled on both issues in November. The court ruled that energy companies cannot deduct post-production costs without explicit lease language, favoring royalty owners over drillers. 
The Baker Hughes national rig count dropped another rig last week and now sits at 582. The national count continues to be rangebound between 581 and 589 since June. Slicing the national count slightly differently—by oil-focused vs. gas-focused rigs—oil rigs fell by two to 477 last week, their lowest since July, while gas rigs rose by one to 100. Last week, all three Marcellus/Utica states maintained the same count for the third week in a row, with PA operating 15 active rigs and Ohio and West Virginia operating 10 rigs each, for a combined 35 rigs. That’s the third week in a row the M-U has operated 35 rigs. It feels like the doom and gloom is finally starting to lift. 
A key issue has come about with the rapid increase in carbon capture and sequestration (CCS) projects around the country, including right here in the Marcellus/Utica region. Where does one store (sequester) all that carbon dioxide (CO2)? The answer is underground in a Class VI injection well. Class VI wells are a relatively new classification for injection wells, created by the federal EPA in 2010. Who regulates Class VI wells is a flashpoint of controversy. Right now, the EPA is the primary regulator (has “primacy”) in regulating Class VI wells in all but three states (North Dakota, Wyoming, and Louisiana). According to a notice coming in tomorrow’s Federal Register by the EPA, a fourth state is about to be added to the list: West Virginia. 
Environmental wackos have made building a new natural gas pipeline anywhere in the northeast (or southeast) such a heinously nasty experience with multiple and repeated regulatory challenges and a blizzard of lawsuits that nobody has ventured to propose a new “greenfield” (brand new from scratch) pipeline since Mountain Valley Pipeline, which took a decade to complete at double the original budget. We’re hopeful the situation will change under the new Trump administration. The Marcellus/Utica industry recognizes we need another new pipeline to move more of our molecules to other regions. What would be the “driving force” to prompt a company to be willing to try once again? 
Three weeks ago, Pennsylvania’s rig count dropped to just 12 rigs, the lowest that state has operated in the last 17 years (see 
In August, MDN brought you up to speed on a lawsuit filed by several West Virginia landowners (turned into a class action) against Diversified Energy and EQT over EQT’s sale of 11,350 conventional wells and 2.5 million acres of leases spread across several states, including West Virginia (see 
DT Midstream (DTM), headquartered in Detroit, owns major assets in the Marcellus/Utica region and other regions like the Haynesville. DTM issued its third quarter 2024 update last week. Of high interest to us was the announcement that DTM is upsizing a previously announced project to connect its Stonewall Gathering System to Equitrans Midstream’s (now EQT) Mountain Valley Pipeline in West Virginia, giving DTM customers the ability to reach Mid-Atlantic markets with their molecules. 
The realignment 