Short Line Railroad Leases Tracks from Norfolk Southern in OH, WV
We love it when we spot a company adopting a contrarian strategy. Received wisdom and prevailing thought says that the oil and gas industry–especially in the Marcellus/Utica–is contracting. Drillers aren’t drilling, and that affects the supply chain (those companies supplying goods and services to the industry) in a big and negative way. Yep–true enough. But the received wisdom also says companies should diversity–look for business outside of the oil and gas industry. What’s contrary is to take advantage of this downturn to expand capacity–to get ready for when the downturn turns again into an upturn. That’s just what Watco Transportation Services is doing with their Kanawha River Railroad short line subsidiary. Kanawha River Railroad has just cut a deal to lease 309 miles of rail lines from Norfolk Southern in Ohio and West Virginia. One of the customers on these short haul lines will be, yep, Marcellus and Utica drillers and sand suppliers and chemical suppliers and equipment suppliers. Nope, there’s not all that much shipping right now, which makes this a step of faith. But the company believes that the future will be here soon and things will turn and the Kanawha River Railroad will be ready to take full advantage of it. We love a railroad story, and we love a contrarian story. This is both…
Read More “Short Line Railroad Leases Tracks from Norfolk Southern in OH, WV”
In the past 12 months, some 27% of all E&Ps (exploration and production companies, what we call “drillers”) have defaulted on some of their bonds–the debt they owe. That’s huge. According to Fitch Ratings, before we turn the corner, they expect that number to grow to 30-35% of E&Ps. Defaulting on bonds doesn’t necessarily mean a company has filed for bankruptcy, but a plethora of bankruptcies have, according to Fitch, driven the bond default number way up. Here’s the latest on bond defaults and the sentiment that “it’s going to get worse before it gets better” from Fitch…
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: NY trains to respond to oil fires; OH pipeline manufacturer loses $326M 1Q16; Range invested outside PA because of PA’s poor business climate; no contamination from Spectra pipeline blast; Shell cracker equals lots of PA jobs; Chesapeake settles royalty case in TX; US rig count hits new record low; and more!
In June 2015 then-Secretary of the Pennsylvania Dept. of Environmental Protection (DEP), John Quigley, slapped Range Resources with an $8.9 million fine–the largest such fine ever levied by the DEP (see 
As we commented in April, there’s no way to sugarcoat the fact that Stone Energy–an independent oil and natural gas exploration and production company (E&P) headquartered in Lafayette, Louisiana that drills mainly in the Gulf of Mexico but also has a presence in the Marcellus/Utica Shale with 75,000 acres of leases–is inching toward a bankruptcy filing (see 
Bloomberg analysts do a deep dive into pipeline projects in the northeast in a recent article. The article contains an update on 17 planned pipeline projects in the northeast (see the full list detailing each project below). The reporter interviews Marty Durbin, executive director of market development at the American Petroleum Institute (API), and MDN friend Scott Kurkoski, chair of the energy group at the Binghamton law firm Levene, Gouldin & Thompson. Here’s what they have to say about the future of pipeline projects in New York State…
It’s not all gloom and doom in the Marcellus/Utica industry–but there’s no doubt we’re in a downturn. Drillers (or energy companies or producers) are having a tough enough time–but they can just stop drilling for a while and hope that the cash holds out long enough to begin again. But what about those who depend on the drillers? The companies that supply goods and services to others in the industry? What we call, the supply chain. How are they doing? And what strategies are supply chain companies using to weather the current downturn? Let’s find out…
Last week the Ohio Manufacturers’ Association (OMA), along with several other trade associations, filed a “friend of the court” brief (called an amicus brief, full copy below) in a case pending before the Ohio Seventh District Court of Appeals (in Youngstown). The OMA wants the Court of Appeals to uphold the ruling of a Harrison County trial court in the eminent domain case of Sunoco Pipeline v. Carol A. Teter, Trustee. OMA says eminent domain should be used in rare circumstances, but when no other choices remain, its use is legitimate and necessary. In particular, OMA is supporting Sunoco’s right to use eminent domain for the Mariner East 2 project–a project that will employ a lot of OMA businesses and their employees…
Events related to drilling in the Marcellus and Utica Shale, primarily pro-drilling.
Perhaps it’s a good thing when one’s children leave the nest. As we’ve been reporting, even prior to Aubrey McClendon’s untimely death, the subsidiary companies he founded as part of his new venture, American Energy Partners, were running away from Aubrey as fast as they could (see 
MDN previously reported on the injustice happening in Bulter County where a handful of anti-drilling parents from the Mars School District, backed by money from Philadelphia from Big Green groups Delaware Riverkeeper and Clean Air Council, filed frivolous lawsuit after frivolous lawsuit–denying landowners in Middlesex Township revenue from legally permitted drilling. The actions by these radicalized parents have cost the taxpayers of Middlesex Township over $80,000 in legal fees. So the landowners got together and sued them, to stop this miscarriage of justice (see