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…
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Last week one of our favorite Marcellus drillers, Cabot Oil & Gas, issued its first quarter 2017 update. There’s lots to see and to discuss. First up, Cabot’s production was up 7% from the same quarter a year earlier. And while Cabot lost $51 million in 1Q16, the company profited $106 million in 1Q17. So production went up a little, but profits went up a lot. Perhaps the main reason why Cabot made more money in 1Q17 is that the price they got for their natural gas went up 77% over the same period last year. Two items in particular caught our attention about the update: (1) Cabot predicts Williams’ Atlantic Sunrise Pipeline will be fully permitted “by early July” and construction will begin in the third quarter. They are jazzed about shipping an extra 1 billion cubic feet (Bcf) per day on the pipeline when its fully operational in 2018. (2) Other shale plays are now catching Cabot’s eye and CEO Dan Dinges is spending $125 million THIS YEAR on buying leases and drilling test wells–in plays they aren’t yet ready to disclose. The only hint we have is “that our focus is going to be oil.” Hmmmm. We don’t much like the sound of that. Cabot has developed a wandering eye for other plays. Make no mistake, Cabot will continue to drill aggressively in the Marcellus–but they will no longer be laser focused on the Marcellus. To be fair, the company has previously fiddled around in the Eagle Ford (an oil play in Texas). But apparently the Eagle Ford is not where “the next big thing” will be found. Cabot is looking elsewhere for the next miracle, like the one they found in Susquehanna County, PA with the Marcellus. Except this time it’s in oil and not gas…
Southwestern Energy turned in its first quarter 2017 update last week. Not widely reported is that production for the company slipped by 14% during 1Q17 over 1Q16. Why? The company shut down new drilling for a good part of last year, when prices were low. However, the company got a lot healthier last year, financially. After losing $1.1 billion in 1Q16, Southwestern made $351 million in profit in 1Q17–almost a $1.5 billion swing from red to black. Southwestern also reported a new high for their proved reserves–now over 10 trillion cubic feet. CEO Bill Way said on an earnings call that Southwestern is investing 85% of their budget in the Marcellus/Utica this year. They are, without a doubt, one of the largest (if not THE largest) active driller in the Marcellus/Utica today. Here’s more about Southwestern’s 1Q17 performance…
Whenever a big, important project like the Shell ethane cracker, reported to be a $6 billion investment, goes forward, a whole lotta people were involved before the decision was made. However, if there is one universal truth in business it is this: There is always a champion at the center of any important project. The one person who’s responsibility it is to propel that project forward. The person who, we like to say, has their “butt in a sling.” It is on their shoulders to ensure the projects success. When you dig down into the story of the multi-billion dollar Shell cracker plant now being built in Beaver County, PA, you will find that one person. His name is Brent Vernon. He worked for more than five years to lure Shell to the Keystone State. Vernon was senior project manager for energy for the state when he began working, full time, on the Shell project in 2011. Since then he was promoted, first to deputy director and eventually director of the Governor’s Action Team, a role he continues. Vernon is key–one of the linchpins without whom the Shell deal would not have happened…
Dominion CEO Diane Leopold held a conference call last Thursday to provide an update on progress for the company’s $5 billion, 594-mile Atlantic Coast Pipeline–a natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina. Leopold said on the call that Dominion has procured 85% of the land, materials, and services it needs to build the pipeline. Nearly all of the land surveying is now done (98%)–and the company now has signed agreements with 60% of the landowners along the proposed route. Leopold expects the Federal Energy Regulatory Commission (FERC) will grant a final approval for the project this fall. In other words, it’s full speed ahead for the Atlantic Coast Pipeline, irregardless of opposition from anti-fossil fuel fanatics, a relative few who continue to vociferously oppose the project…
More fake “research” is on the way courtesy of the anti-drilling Southwest Pennsylvania Environmental Health Project. The Project is launching a so-called public health registry. Log in to the website and if you live within five miles of a drilling site, you can report your latest headache in an attempt to link it to (and smear) shale development. Yep, just blame everything on drilling. Got allergies? Blame drilling. Headache? Blame drilling. Earache? Blame drilling. Er, a “performance issues?” Blame drilling. (Maybe they’ll give you some free Viagra.) That’s the purpose of this latest sham initiative by the same group that has brought us such glittering examples of “research” as “The List of the Harmed”…
An important breakthrough in our long struggle to overthrow the odious and misnamed Obama Clean Power Plan–a plan that assassinates coal and mortally wounds natural gas (see 
Talk about a waste of taxpayer time and money. The so-called leaders of Newtown Township in Bucks County (Philadelphia orbit) took time out to compose, debate, and pass a resolution opposing the PennEast Pipeline. Even though the pipeline isn’t coming anywhere near Newtown Township. What the vote reveals is that Newtown is led by far-left anti-fossil fuelers with nothing better to do than get on their soapbox and prance around discussing issues that don’t affect the residents of the town. Typical leftist politicians that believe they know better than you what’s best for you–even if it doesn’t even affect you…
Events related (or of interest) to the Marcellus and Utica Shale, primarily pro-drilling events.
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Mariner East 2 constructions begins in Cumberland County, PA; Atlantic Sunrise Pipe pays grants for pool upgrades, fire equipment; Cecil Twp holding public hearing on Range Resources well pad plan; one year after pipeline explosion in Salem Township; WV property owners meet ahead of Supreme Court case re post-production expenses; Trump signs order to allow offshore drilling; Alliance pipeline wants to expand from Western Canada to Chicago; and more!
It’s finally come to this. There is one anti-fossil fueler who sent a letter to the editor of a Colorado newspaper–the Boulder Daily Camera–that says antis “have a moral responsibility to blow up wells and eliminate fracking and workers.” In a followup interview, the same anti said, “I wouldn’t have a problem with a sniper shooting one of the workers” at a drilling site. Have we not warned you that anti-fossil fuel lunacy has finally tipped over into violence? Did we not point out the mob in North Dakota that destroyed millions of dollars in equipment, burned tires, and shot at police–is planning to spread their sedition to places like the Marcellus/Utica (see 
Truly maddening. A Pennsylvania farming family has had to put up with Chesapeake Energy’s lame justifications for not paying them a dime in royalties over the past two years, even though Chesapeake continues to extract gas from their property. Chesapeake claims that since 2015, their costs to extract/sell gas from Russ Forba’s land exceeded any revenue generated–by $112,000. Chesapeake promised Forba that the company would not try to recoup those “costs” from future royalties. The company just broke its promise. On Monday, Forba received a statement from Chesapeake revising the price of the gas sold (down), and revising the post-production costs claimed (up) for the month of April 2015. Chesapeake then deducted the extra $5,700 “loss” from current royalty payments to cover the difference–something they PROMISED would never happen. This is why PA landowners are incensed and calling for legislation. We don’t blame them…
In January, MDN highlighted a developing issue in Ohio that potentially impacts Utica/Marcellus shale in the region (see 
As of today, the nameplate on the door that says “Sunoco Logistics Partners” is getting changed to “Energy Transfer Partners” (ETP). On paper (and for investors) Sunoco LP & ETP have been different companies, but functionally both companies have co-existed under the Energy Transfer Equity (ETE) umbrella for years–essentially as different divisions of the same company. Sunoco LP is (currently) best known for its Mariner East pipeline projects–along with the Marcus Hook refinery/terminal. ETP is (currently) best known for the recently completed Dakota Access Pipeline. Sunoco LP’s headquarters will move from Newtown Square, PA to combine with ETP’s HQ in Dallas, TX. For investors, Sunoco LP will stop trading at close of business today and become part of the ETP ticker symbol as of Monday. Shareholders for both companies approved the paper merger on Wednesday…