Hess Utica Plans – No More Drilling Until Pipelines Get Built
Yesterday Hess Corporation released their first quarter 2016 update. A few years ago Hess sold off its downstream (refinery and filling station) business to Marathon Petroleum. Did you know the Hess Truck is no longer owned by Hess (see Marathon Petroleum Buys the Hess Truck! What Will We Do for Xmas?). Hess is now a 100% upstream or drilling company. They like to concentrate on oil and have a big presence in the North Dakota Bakken Shale. However, Hess still owns something like 22,000 acres of Utica Shale leases. Earlier this year the company said they would finish up drilling 5 Utica wells and then pull the plug for the rest of 2016 (see Hess Drilling 5 More Utica Wells 1Q16 Then Stopping). What does the latest update have to say? And what did Hess’ top management say on an analyst phone call yesterday about the Utica? We have it below…
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The Pennsylvania Dept. of Environmental Protection (DEP) said yesterday they will launch an “unprecedented expansion” of air monitoring near compressor stations and shale wells in the Marcellus. DEP Sec. John Quigley said the DEP will add 10 new monitoring sites to its existing network of 27 sites. Part of the $1.56 million it will take to install and maintain the sites for five years is coming from taxpayers’ federal government pocket, from a Federal Clean Air Act grant. What does Quigley expect to do with the data they collect from this effort? On a teleconference call he said, “We have no expectations here. The ambition is to get a more comprehensive dataset.” There’s a fine expenditure of taxpayer’s money–spend it with no expectations! Here’s the low down on the latest DEP boondoggle…
Ever hear of a legal doctrine called “estoppel by deed”? No, we hadn’t either. But if you’re an attorney who specializes in oil and gas mineral rights in Pennsylvania, you may have. The Pennsylvania Supreme Court recently decided a case that upholds state laws of estoppel by deed. The case, called Shedden v. Anadarko, revolved around landowners in Tioga County, PA who thought they owned all of the mineral rights to 62 acres, only to find out half the rights belonged to someone else going all the way back to the 1800s. From there it gets complicated. What we can tell you is that some attorneys were concerned that the newly reconstituted PA Supreme Court would overturn the estoppel by deed law in the state–but that didn’t happen. Estoppel by deed is safe and sound in PA. Here’s the details…
In January MDN told you about a $130 million, 30-mile natural gas pipeline proposed by New Jersey Natural Gas (NJNG) to connect NJNG’s distribution system serving customers in Ocean, Burlington and Monmouth counties (in NJ) and the interstate pipeline system adjacent to the New Jersey Turnpike. The idea came about after Superstorm Sandy. How can NJNG create reliable natgas service in the region, preventing major disruptions like that which happened after Sandy? The “Southern Reliability Link” pipeline project was the result, and in January the NJ Board of Public Utilities (BPU) approved it 5-0 (see 
A Washington County, OH man is not happy with Blue Racer Midstream’s construction work on a new pipeline in the area. Heavy rain washed out gravel used as fill for the project. The man was on his way home (rural area) and ran into a ditch because, he says, the work was not done well and is “destroying” area roadways. Here’s the story of a man, a car, a ditch and a rainy night…
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Viking Global buys up big position in Rice Energy; the fight for the Constitution Pipeline; NY comptroller out of control; new chairman of the board at Marathon Petroleum; “reporter” tells fracking fairy tales; natgas rate hikes in NJ, PA; Stanford keeps fossil fuel stocks; and more!
CONSOL Energy, once up a time a coal company that is now a natural gas driller, issued its first quarter 2016 update yesterday. CONSOL lost $97.6 million in 1Q16, nearly half of it coming from the Bailey Mine coal complex in southwestern PA. Another $29.3 million of the loss came from commodity derivative investments. And $12.6 million of the loss came from the sale of a gathering pipeline. Revenue was $558.5 million in 1Q16, down 30% from 1Q15. Natural gas revenue dropped 19% in 1Q16 while coal revenue fell 40%. On the positive side of the ledger, CONSOL’s natural gas production hit a new record high of 97.5 billion cubic feet equivalent (Bcfe), and CONSOL’s banks reaffirmed the company’s $2 billion borrowing base. Here’s the update…
MDN is certainly not of this opinion, but we spotted a Reuters article that quotes several natural gas market analysts who say recent announcements of pipeline delays may boost natgas prices–and that’s a good thing. Of course being a good thing is in the eye of the beholder. Pipeline delays in the Marcellus/Utica–like the Constitution Pipeline–mean (a) lack of takeaway means natural gas prices in the Marcellus/Utica region will continue to be the lowest in the country, which means (b) drilling in the Marcellus/Utica will continue to slow and won’t restart any time soon, consequently (c) that will lead to less production, and so (d) less supply in the northeast will mean prices for natural gas, and things that natgas produces (i.e. electricity) will go higher in places like New York City and New England. Whether that’s all good news or bad news depends on your point of view…
Just a few years ago Halliburton, the second largest oilfield services company in the world, employed 600 people in its operation center located in Lycoming County, PA. Today? There are 40 working there. Some 200 of Halliburton’s Lycoming employees were laid off last Friday. Lycoming County is relatively rural with the city of Williamsport as its county seat. Losing 560 jobs, 200 of them in one go, is a huge blow to the area. We grieve with those who have lost their jobs–and with their families who depended on those jobs…
Two weeks ago MDN told you that Rice Energy had offered a “stalking horse” bid of $200 million for the shale assets of now-bankrupt coal company Alpha Natural Resources (see 
How do you prove a negative? You can’t. But that’s the (illegal) demand Penn Township (near Pittsburgh) is placing on Apex Energy. Penn Township’s zoning board has denied Apex permits to begin building a well pad for an eventual nine wells–wells that are fully permitted and permissioned by the PA Dept. of Environmental Protection (DEP). The Penn Township ordinance “states that drillers have to prove that the drilling site won’t violate Penn Township citizens’ rights to clean air and water.” Apex provided air and water studies showing possible risks from accidental spills, etc.–along with how they will prevent such things from happening. But the zoning board was tone deaf and rejected it. So what’s next? We’ve seen this movie before. Last year a group of anti-drillers took Apex to court to stop drilling on two wells, with the town backing them. Apex’s lawyers roared that the company was losing $70K per day by not drilling, threatening to sue. The town backed down, and Apex drilled the wells…
In February the natural gas industry in the Lower 48 States made history by hitting record high production (see 
We knew that corporate raider Carl Icahn’s protege, Keith “Mini-Me” Meister, had been meddling in Williams since 2013 (see