Williams Considers Selling its Gulf Coast Ethane Cracker Plant
Williams, because of evil corporate raiders like Keith “Mini-Me” Meister, continues to be in a fight for its very existence (see Corvex Raider Launches Hostile Takeover Attempt of Williams). In an effort to shore up the company–make it stronger AND produce cash that can be used for various purposes–Williams announced in August they are selling their Canadian assets for $1 billion (see Bold Move – Williams Selling Canadian Assets). Yesterday the company announced another potential asset sale–the company’s 88.5% ownership interest in the Geismar, Louisiana olefins petrochemical plant…
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We scored a copy of a refreshingly honest (blunt) assessment of the Marcellus industry in Pennsylvania. The letter was written by the Marcellus Shale Coalition’s vice president of government affairs, James Welty. It’s dated August 29 and was written and sent to all Pennsylvania legislators in both the House and Senate. The legislators have been enjoying themselves on summer holiday break and are now returning to work, with just a couple of weeks left in the legislative session. The PA House is in session for 2 1/2 more weeks and the Senate for 1 1/2 weeks (final day is Nov. 15 for each). There’s not much time left to handle the people’s business in 2016. Welty’s letter to the legislators is a frank assessment of the current down market faced by PA’s shale drillers. Welty tells lawmakers that recently adopted Article 78a rules will mean drillers spend an additional $2 million per well to drill–a budget buster for many drillers. He also says PA has the highest effective tax rate on drilling in the country at 12.3%. Although PA doesn’t call it a severance tax, it essentially is a severance tax and costs more than any other oil and gas state, contrary to the lies by Democrats who lust for more money to give away. Give this frank assessment of our beloved industry a read–it’s worth your time to see how the industry characterizes the current landscape in PA…
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: MSC donates $1.1M to Junior Achievement; Gov Wolf donates $2M grant for Pitt-Johnstown engineering facilities; NH needs new pipelines; Rep Smith statement on Obama’s buried/sneaky climate agreement; Carnival adds 3 new LNG-powered cruise ships; Brazil kills shale with regulations; and more!
In the past we’ve been pretty critical of the Pennsylvania Independent Fiscal Office (IFO). It claims to provide revenue projections for use in the state budget process along with “impartial and timely analysis of fiscal, economic and budgetary issues to assist Commonwealth residents and the General Assembly in their evaluation of policy decisions.” It’s been our observation the IFO is populated with partisan Democrats. However, we have to acknowledge lately their analysis work, at least with regard to the Marcellus industry, has been pretty accurate (see 
This story is almost too good to be true. Researchers from Ohio State University have been analyzing the genomes of microorganisms (i.e. bacteria) that live in Utica Shale wells. (Who would think to do something like that?) The researchers “have found evidence of sustainable ecosystems taking hold there–populated in part by a never-before-seen genus of bacteria they have dubbed ‘Frackibacter.'” Translation: There’s little communities of microscopic critters that live in those shale wells, including a brand new critter that lives only in fracked Utica Shale wells. The hypothesis is that fracking itself created this new mutated life form. The researchers are calling it Frackibacter (we think it’s pronounced frack-uh-back-tor). We have a better name: Frackenstein! Yes ladies and gentlemen, step right up to witness this fracking freak of nature–a bacteria created from fracking itself. Who knew fracking didn’t destroy life, but actually creates it?! Below is an article about the discovery, along with a copy of the peer reviewed paper published in the journal Nature Microbiology announcing the discovery of this new fracked life form…
This is an update to a story MDN ran last week observing that Utica drillers have slowed (or stopped) their wet gas drilling work and instead have shifted to drilling Utica wells, in Ohio, in the dry gas areas (see 
In July MDN reported that Atlas Resource Partners (ARP), a publicly-traded exploration and production master limited partnership (“MLP”) with operations in basins across the United States including the Marcellus and Utica Shale plays, filed for a bankruptcy (see 
We’ve long bemoaned the fact that the first tactic used by oil and gas companies to stay in business during this severe downturn has been to layoff large numbers of employees. We understand all the arguments: better to cut some rather than go bankrupt and out of business, putting everyone at the company in the unemployment line. We also understand many of these same companies added large numbers of people over the past half decade in the rapid scale-up to handle all of the new shale drilling–so this is simply a “correction” or rebalancing. But tell that to someone who has lost his or her job and the families affected by it. “Hey, you’ve been made redundant” (as our British friends call it). Or, “You’re just a correction.” No, our sympathies are with the men and women who have been laid off and suffer. Some of the biggest layoffs have come from oilfield services companies, like Halliburton and Baker Hughes–both with major operations in the Marcellus/Utica. Tens of thousands have been laid off at each company over the past two years or so. In July Baker Hughes laid off another 3,000 in fell swoop (see 
A great article in Investor’s Business Daily explores the link between shale gas and the “explosive expansion” of the U.S. petrochemical industry. Part of the petchem supply chain is finding a cheap source of ethylene, the raw material used in making all sorts of plastics products. Manufacturers get ethylene from ethane cracker plants. The article discusses that link, and the reasons why Shell chose to locate their new multi-billion dollar ethane cracker plant near Pittsburgh. As you can guess, economics play a major role in such a decision. Here are the specific economics that convinced Shell that PA is a good bet…
Two weeks ago MDN provided an update on the new Antero state-of-the-art frack wastewater treatment plant and landfill being built in West Virginia (see 
Events related to drilling in the Marcellus and Utica Shale, primarily pro-drilling.
The Ohio Dept. of Natural Resources (ODNR) has just issued production numbers for the second quarter of 2016. Compared with second quarter 2015, production numbers in 2Q16 were a mixed bag. Oil production in 2Q16 dropped by 19%–that’s the bad news. But natural gas production from shale is up 51% year over year–that’s the good news. CONSOL Energy’s CNX Gas division had the #1 producing gas well in Monroe County, the Brewster well, producing 1.6 billion cubic feet of natgas during 2Q16. Eclipse Resources had the #1 producing oil well in Guernsey County, the monster Purple Hayes, which produced an astonishing 71,072 barrels of oil in 2Q16. Below we have the ODNR’s high level overview of the numbers, along with MDN’s own exclusive analysis showing: the top 25 producing gas wells, the top 25 producing oil wells, and then the top 25 gas and oil wells as ranked by average production per day. There is a difference!…
One of the lowest cost producers that gets some of the highest prices for its natural gas in the Marcellus/Utica is Rice Energy. The difference between what it costs Rice to produce gas ($0.90/thousand cubic feet, or Mcf) verses what they sell it for (an average $3.12/Mcf) means Rice makes a whopping 247% internal rate of return, or IRR–which is THE most profitable driller among 10 of the largest Marcellus/Utica drillers surveyed (see today’s companion post on Hedging Gas Prices in the Marcellus/Utica). The Rice boys’ stellar performance has not gone unnoticed by analysts at investment and research firms. In fact, one such analyst, from Wolfe Research, says Rice “could be” a target for takeover/buyout by a larger competitor. Which competitor? Let’s name names…