Marcellus Drilling News

Electrical Generation | Industrywide Issues | Statewide VA | Virginia

New NatGas-Fired Electric Plant Proposed for Chesapeake, VA
September 12, 2016September 12, 2016

Macquarie Infrastructure has filed an application to build a new natural gas-fired electric generating plant in Chesapeake, Virginia, the state’s third most populous city, located near Norfolk. The facility, called Matex Virginia Power, would produce 1,400 megawatts of electricity by using three gas combustion turbines and one steam turbine. It’s not (yet) known how the new plant will get its gas, although Dominion’s planned $5 billion, 550-mile long Atlantic Coast Pipeline (ACP) project is scheduled to have a branch going to Chesapeake. It’s not much of a stretch to think that ACP will feed this new plant, bringing Marcellus/Utica gas from the north to the plant. Here’s the good news, followed by reaction from environmental Nazis that oppose it…
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Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | PennEast Pipeline | Pipelines

NJ Sierra Club Game Plan – Kill Pipelines by Slowing Approvals
September 12, 2016September 12, 2016

PennEast in NJ – click for larger version

An Associated Press article tackles the issue of the dozen plus natural gas pipelines planned to carry new supplies of Marcellus/Utica gas into New Jersey, and how/why those projects are moving along so slowly. Today is the final day for public comment on the much-needed PennEast Pipeline from the Wilkes-Barre, PA region southeast to the Trenton, NJ area. The next step is an environment study, to be done by the Federal Energy Regulatory Commission (FERC). THE Delaware Riverkeeper (aka Maya van Rossum) along with other virulent anti-fossil fuel nutters, like the NJ Sierra Club, are vigorously opposed–throwing as much horse manure and legal roadblocks at the project as they can. In other areas of the country it would take a project like PennEast about seven months to get approved. So far it’s been over two years for PennEast, with an end now in sight IF construction begins next year. The article is an update on the PennEast, with comments mostly against (a few for). The interesting part of the article is, for us, the very last sentence. We’ve told you for years that the game plan from antis is to delay and slow down approvals in hopes of getting projects canceled. We’ve had a front row seat of that (very effective) strategy here in New York State. The interesting final sentence in the AP article is an admission by the NJ Sierra Club that delay of PennEast is indeed their game plan, with the intent to “kill the pipeline”…
Read More “NJ Sierra Club Game Plan – Kill Pipelines by Slowing Approvals”
Energy Services | Ethane | Industrywide Issues | Kinder Morgan | Lease & Royalty Payments | Litigation | NGLs | Ohio | Pipelines | Statewide OH

UTOPIA Pipeline Still Battling OH Landowners with Eminent Domain
September 12, 2016September 12, 2016

UTOPIA Pipeline Project map – click for larger version

Kinder Morgan’s UTOPIA (Utica To Ontario Pipeline Access) pipeline is a 12-inch ethane pipeline that will run 240 miles and will only be built in Ohio–therefore the Federal Energy Regulatory Commission (FERC) won’t be involved in permitting the project. In April we asked the question, Why is UTOPIA Pipeline Less “Controversial” than NEXUS in Ohio?. Perhaps that question was premature, because not long after we ran a story that Kinder Morgan was suing holdout landowners using eminent domain to allow the pipeline (see UTOPIA Pipeline Sues Holdout OH Landowners Using Eminent Domain). The real eye-popper was reading just how much Kinder Morgan was offering for easements to property owners. Of course what a landowner is offered depends on how many feet of land the pipeline will cross. Some landowners were offered up to $63,300 for an easement. In some cases, the offers were “more than 10 times the appraised value of the easement.” It’s certainly in a landowner’s best interest to settle before being forced to settle (for far less) via eminent domain. So how is the process going? The lawyer for one group of landowners says KM’s offers are low, not high. Here’s an update on the legal battles in the Buckeye State over UTOPIA…
Read More “UTOPIA Pipeline Still Battling OH Landowners with Eminent Domain”
Air Quality | Energy Services | Industrywide Issues | NEXUS Pipeline | Ohio | Pipelines | Regulation | Spectra Energy | Statewide OH

OH EPA Grants Permits for 5 NEXUS Pipeline Compressor Stations
September 12, 2016September 12, 2016

NEXUS Pipeline – click for larger version

An important milestone in advancing the NEXUS Pipeline in Ohio. The Ohio Environmental Protection Agency (EPA) last week issued air permits to NEXUS to build five compressor stations. NEXUS is a $2 billion, 255-mile interstate pipeline that will run from Ohio through Michigan and eventually to the Dawn Hub in Ontario, Canada (see Spectra Energy Files Formal FERC Application for NEXUS Pipeline). It is a critically needed pipeline to move Utica and Marcellus Shale gas from an over-saturated market in the northeast to markets in the Midwest and Canada. The Federal Energy Regulatory Commission (FERC) is charged with evaluating and approving (or not) the project. However, as often happens, various state agencies are also involved in the project. In this case the Ohio EPA can’t approve or disapprove of the pipeline itself, but granting air emissions permits for the compressor stations that will move the gas through the pipeline is important. So we celebrate one more positive sign that NEXUS will get built…
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Anti-Drilling/Fossil Fuel | Industrywide Issues | Pennsylvania | Regulation | Statewide PA

DCNR Blocks New Marcellus Drilling on PA State Lands
September 12, 2016September 12, 2016

What happens when you put a virulent anti-driller in charge of a state’s forestry service, a state that previously had a small, safe, healthy program to allow some shale drilling, giving taxpayers a break with a source of new revenue? Of course the anti-driller immediately tries to quash any more new drilling efforts. And that’s just what has happened with former PennFuture president and current Secretary of the PA Dept. of Conservation and Natural Resources (DCNR), Cindy Dunn. We called for her firing back in June when she was caught using–we’d say misappropriating–taxpayer money to send her staff to Big Green reeducation events (see Time to Fire Cindy Dunn, Last of Wolf Admin’s PennFuture Radicals). But no. She remains at her post, obstructing drilling in any way she can. The latest in her efforts is an updated plan from the DCNR’s Bureau of Forestry, which manages 2.2 million acres of state lands, in which the DCNR pledges to block any new Marcellus drilling on state lands and outlines their plans to begin hassling those who own mineral rights under state lands (and can legally extract shale gas) by requiring “definitive proof” that they own the mineral rights. In other words, they’re going to try and tie rights owners and drillers up in so much red tape, they’ll never even think about drilling a new well on state land…
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Energy Companies | Halcon Resources

Halcon Resources Exits Bankruptcy in Just 1.5 Months
September 12, 2016September 12, 2016

Getting a pre-packaged bankruptcy today is like ordering a McDonalds Happy Meal–just order and drive up to the window and pick it up. Simple. In July Halcon Resources, a Utica Shale driller that “guessed wrong” by leasing 140,000 Utica Shale acres in the northern part of the play (in Ohio) and currently doesn’t drill on any of that acreage, filed for a pre-packaged bankruptcy (see Halcon Resources Files for “Pre-Packaged” Bankruptcy). Less than a month and a half after first filing, Halcon has emerged from bankruptcy court with $1.8 billion worth of debt magically erased. When Halcon filed back in July, they listed $3.12 billion in debt and $2.85 billion in assets. In August the company’s market capitalization, calculated as the number of outstanding shares of stock times the per share price, otherwise know as the company’s “worth” or “value”–was under $50 million (see Halcon’s Market Cap Falls Below $50M, NYSE Threatens to De-List). When debtors have no other choice than to accept a plan turning their debt into equity (shares of stock), it doesn’t take long to file the paperwork and be on your way. Here’s Halcon’s news that they now live again to fight another day–just not in the Utica…
Read More “Halcon Resources Exits Bankruptcy in Just 1.5 Months”
Electrical Generation | Industrywide Issues | Luzerne County | Pennsylvania

Moxie Chooses EthosEnergy to Run NEPA NatGas Electric Plant
September 12, 2016September 12, 2016

In June 2014 MDN broke the news that Moxie Energy was in the hunt to begin a third new Marcellus gas-powered electric plant project in Pennsylvania, near Wilkes-Barre (see Moxie Energy in Hunt for Third Marcellus-Powered Electric Plant?). Indeed, our suspicions were borne out. In November 2015 Moxie selected Gemma Power to build the plant, and construction began a month later (see Moxie Marcellus-Powered Electric Plant Breaks Ground in NEPA). The 850-megawatt plant will use local Marcellus Shale gas to power it. Last week came the news that Moxie has contracted with EthosEnergy to run and maintain the plant. EthosEnergy announced it will 20 full-time employees from the area to run the plant. This is great news, signaling the project nears completion and start-up…
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Antero Resources | Energy Companies

Antero Midstream Floats $650M in New IOUs
September 12, 2016September 12, 2016

Last Thursday Antero Midstream, the wholly-owned midstream subsidiary of powerhouse Marcellus/Utica driller Antero Resources, announced it is floating a round of “senior notes” (otherwise known as IOUs) to help the company pay off older debt. New debt for old debt. Not a game we enjoy playing, but Wall Streeters dig it. Antero Midstream first said they hoped to get $500 million for the notes, but later issued a second announcement “upsizing” the offering (like supersizing your fries at McDonalds) to $650 million. Such upsizing is typical (we’ve seen it dozens of times before). Here’s the announcements from Antero from last week…
Read More “Antero Midstream Floats $650M in New IOUs”
About MDN | Calendar

Calendar of Events for Sep 12 – Dec 11 (90 Days)
September 12, 2016September 16, 2016

Events related to drilling in the Marcellus and Utica Shale, primarily pro-drilling.

To have your event included (or if you are aware of a worthy event you believe should be on this page), please send the details and/or a link to have it included to the calendar@marcellusdrilling.com email address. Thank you!
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Best of the Rest

Marcellus & Utica Shale Story Links: Mon, Sep 12, 2016
September 12, 2016September 12, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: PA county turns against industry over royalties; driller paying for road repairs in Ritchie County, WV; Halliburton & Baker Hughes say we’re on the road to recovery; how shale crippled offshore drilling; battle brewing in Toronto; and more!
Read More “Marcellus & Utica Shale Story Links: Mon, Sep 12, 2016”
Energy Services | Enterprise Products Partners | Industrywide Issues | M&A | Williams

Drama: Enterprise Bails on Williams Merger, No Longer Interested
September 9, 2016September 9, 2016

The drama surrounding Williams and whether or not the company will sell itself continues. Energy Transfer Equity’s (ETE) billionaire CEO Kelsy Warren propositioned Williams for over six months before going public with his overtures last year (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). Williams resisted, but eventually they caved and agreed to the deal, although the deal price went down by $10 billion (see Williams Accepts ETE’s “Indecent Proposal” – Price Went Down $10B). Warren claims he got snookered and got cold feet, eventually bailing (see Dead as a Doornail: ETE Terminates Merger with Williams). The ink on the flurry of lawsuits filed hadn’t even dried and Enterprise Products Partners, another huge midstream company, began making overtures to Williams (see Here We Go Again: Enterprise Products Wants to Buy Williams). That was last month. Yesterday Enterprise released a statement saying they’re finished with Williams, throwing in the towel, no longer interested. To which Williams (incredibly) replied they were “surprised” at the Enterprise announcement. Frankly, we’re surprised that Williams was surprised…
Read More “Drama: Enterprise Bails on Williams Merger, No Longer Interested”
Chesapeake Energy | Energy Companies | Utica Shale

Chesapeake Energy CFO Says Co. Will Mostly Ignore Utica in 2017
September 9, 2016September 9, 2016

Domenic Dell’Osso

Chesapeake Energy’s Chief Financial Officer, Domenic Dell’Osso, filled in for his boss CEO Doug “the ax” Lawler by addressing analysts at the Barclays 2016 Global CEO Energy-Power Conference held earlier this week in New York City. Dom, you may recall, was one of Aubrey McClendon’s closest allies at Chesapeake, someone who had no problem standing by while McClendon was unceremoniously fired from the company he founded by corporate raiders in 2013 (see McClendon Exits Chesapeake, Well-Bonused “Friends” Replace Him). Dell’Osso remains in his post to this day. He drew the short straw to take a short vacation in NYC and talk about Chesapeake at the Barclays event. Although Dom’s talk focused on how rosy the picture is for Chesapeake now that they’ve fired thousands and sold nearly everything but the kitchen sink, it was his off-hand comment about the Utica Shale that caught our attention. Chesapeake is the #1 driller and producer in the Ohio Utica Shale, having drilled 588 wells in 2015 and producing an average of 847 million cubic feet per day equivalent of natural gas (see Which 5 Drillers Dominate in the Utica Shale?). What did Dom say about the Utica in 2017?…
Read More “Chesapeake Energy CFO Says Co. Will Mostly Ignore Utica in 2017”
Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

Deep Dive: PA Royalties Civil War Between Landowners & Drillers
September 9, 2016September 9, 2016

For the past few days MDN has chronicled what we’ve named a royalties civil war happening between Pennsylvania landowners and the Marcellus drilling industry in the state–two groups usually on the same side. The war revolves around royalty checks–and how meager they are (see Righteous Royalty Anger: PA Town Votes to Block Gas Production and Civil War: Bradford PA Escalates Fight with MSC re Royalty Bill). As we’ve previously explained, an oversimplification is landowners maintain that a 1979 PA law guarantees landowners a 12.5% royalty regardless of expenses involved in extracting the gas, and drillers say no, landowners must abide by the contracts they’ve signed and if those contracts allow post-production costs to be deducted before calculating a royalty, the rate may go lower than 12.5%–sometimes to zero and below. Chesapeake Energy is the primary offender, according to landowners. The issue is complex, but at its core is (according to landowners) about fairness. We’ve located two excellent bits of information, one an article, another an email, that explains both sides. The article is from the Houston Harbaugh law firm and does a great job explaining the landowners’ view of the issue, and their desire to pass House Bill (HB) 1391. The email was from the Marcellus Shale Coalition to members of the PA legislature, sent to them last June to explain why, in the opinion of the drilling industry, HB 1391 is unconstitutional and a bad choice. These two views clearly lay out the issues involved so everyone can understand why we are facing a civil war among the ranks…
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Bradford County | Industrywide Issues | Lease & Royalty Payments | Pennsylvania | Regulation | Statewide PA

Bradford Votes to Hire PR Firm, Targets PA Lawmakers re Royalties
September 9, 2016September 9, 2016

Doug McLinko – Bradford County Commissioner

As we predicted yesterday, Bradford County, PA commissioners have voted to hire a public relations firm to create a video to force the issue of passing House Bill (HB) 1391, a bill ensuring PA’s landowners will receive a 12.5% royalty check regardless of post-production costs (see Civil War: Bradford PA Escalates Fight with MSC re Royalty Bill). The commissioners did indeed vote yesterday, budgeting $15,000 for the project–money that will ironically come from royalty payments received by the town. The commissioners explained a bit more about their proposed publicity campaign to force Harrisburg to take notice of their plight…
Read More “Bradford Votes to Hire PR Firm, Targets PA Lawmakers re Royalties”
Baker Hughes | Energy Services

BH Rig Counts for August – US Count Up by 32, M/U Up by 2
September 9, 2016September 9, 2016

Two months ago when Baker Hughes released their venerable rig count numbers, we cracked a smile that things are beginning to turn around with an increase in U.S. rig counts (see US Rig Count Up by 9 in June, Marcellus/Utica Holds Even at 36). Last we had a full-on smile when the average number of rigs working in the U.S. in July was 449, up 32 from the 417 counted in June 2016 (see US Rig Count Up Against in July, Marc/Utica Steady for 3rd Month). This month we’re popping the champagne cork! For August, the BH average rig count in the U.S. was 481, up 32 from the 449 counted in July. The even better news comes in the Marcellus/Utica. Pennsylvania’s average rig count went up by 3, Ohio’s went up by 2, but West Virginia lost 3 rigs. Overall the combined Marcellus/Utica rig count, after being stead at 36 rigs for three months in a row, went up to 38 rigs in August…
Read More “BH Rig Counts for August – US Count Up by 32, M/U Up by 2”
Commodity Price | Crude Oil | Guernsey County | Industrywide Issues | Ohio | Statewide OH

When Will More Oil Drilling Return to Eastern OH?
September 9, 2016September 9, 2016

David Hill is a geologist and a driller located in Ohio (David R. Hill Inc.). At a recent Coffee and Commerce meeting sponsored by the Cambridge Area Chamber of Commerce, Hill offered his insights into when oil drilling may return to Guernsey County and eastern Ohio. As MDN recently reported, much of the focus on drilling in the Utica has lately turned to dry gas, or methane only (see Why Utica Drillers are Moving from Wet Gas to Dry Gas). Oil drilling, which was the original focus of the Utica and why Aubrey McClendon was so excited with his discovery of the Utica, has never developed to the extent hoped for–largely because of low pressure to force the oil out of the ground. There is oil drilling and production in the Utica to be sure, but not nearly as much oil drilling as there is drilling for dry gas and NGLs (wet gas). Hill and others are working on new technologies to unlock the abundant oil supplies in the Utica. So when will oil drilling return to Guernsey and other locations? According to Hill, when oil prices hit $70-$80/barrel. He may be waiting a long time…
Read More “When Will More Oil Drilling Return to Eastern OH?”