Marcellus Drilling News

Commodity Price | Crude Oil | Industrywide Issues

Russia Cuts Deal with Saudi Arabia to Freeze Oil Production
February 17, 2016February 17, 2016

This is not our normal beat, but it has the ability to impact the Marcellus/Utica region. Yesterday Russia cut a deal with Saudi Arabia and several other OPEC members to freeze production at January levels for the foreseeable future. You might immediately think, “Aha, freeze production and oil prices will go up!” But the commodities market had the opposite reaction. Oil traders were hoping that the meeting, which is historic (Russia colluding with OPEC) would result in a CUT in production, not a FREEZE. The world is awash in too much oil right now–companies and countries are pumping more oil than the world can consume, leading to an oversupply and prices continuing to crash. The markets had hoped for a cut, got a freeze at the existing over-production levels–and that led to the price of oil going even lower. The price of oil influences the price of natural gas–and of course many companies that drill for gas also drill for oil, and the price of oil affects their economic health. So, for a variety of reasons, we like to keep an eye on the larger macroeconomic trends that may affect us here in the northeast. This is an important story…
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Best of the Rest

Marcellus & Utica Shale Story Links: Wed, Feb 17, 2016
February 17, 2016February 17, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Antero’s positive report; downturn hits Marcellus industry hard; natgas saves NY during cold snap; OH Supreme Court still mulling Dormant Mineral Act cases; new GTL plant coming in Arkansas; NC antis against pipeline; natgas passes nuclear & renewables in Missouri; Bernie’s disastrous frack ban; o&g companies tapping out lines of credit first; EPA’s lawless land grab; and more!
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Bradford County | Chief Oil & Gas | Energy Companies | EQT Corp | Lease & Royalty Payments | Pennsylvania | Sullivan County | Washington County

PA Game Commission Cuts $15.5M in Deals to Lease State Land for Drilling
February 16, 2016February 16, 2016

This is something you don’t see often these days: The Pennsylvania Game Commission is getting $15.5 million of revenue from new Marcellus leases with Chief Oil & Gas and EQT. The bulk of the money will come from a deal with Chief to lease 5,870 acres in Bradford and Sullivan counties. Terms of the lease? Chief is paying $2,500 per acre as a signing bonus and 20.55% in royalties when/if they drill and the gas and oil begin to flow. It just about floored us to see this deal! We though all deals were done until the price of gas goes up again. We’d not heard of any new deals being cut. As for EQT, they are paying the Game Commission $917,000 for the right to drill under a 306-acre parcel in Washington County, PA. Details on the per acre bonus and royalty for the EQT deal below…
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Industrywide Issues | Statewide WV | Taxation | West Virginia

WV Senate Passes Bill to Eliminate Part of State Severance Tax
February 16, 2016February 16, 2016

Politicians who keep promises? Consider us thunderstruck. It’s actually happened in West Virginia. In January MDN told you that WV Gov. Earl Ray Tomblin had proposed reducing the oil and gas severance tax (see WV Gov. Tomblin Proposes to LOWER Oil & Gas Severance Tax). Here’s the back story: In 2005, before he was Governor, Tomblin was President of the WV Senate. At that time the WV legislature passed an extra fee on top of the existing severance tax–a fee of 4.7 cents per thousand cubic feet of natural gas (along with a fee on coal extraction). The fee was to be used to pay down the state’s old workers’ compensation debts. Tomblin promised that once the debt was paid, the fee would be lifted. “Yeah, right” was the reaction. However, the debt is now nearly paid, and Tomblin has kept his promise. The WV Senate unanimously passed Senate Bill (SB) 419 that will lift the extra fee…
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Energy Services | Ethane | Industrywide Issues | Kinder Morgan | Ohio | Pipelines | Statewide OH

UTOPIA Ethane Pipeline Faces Virtually No Opposition in OH
February 16, 2016February 16, 2016

This is not a story you often hear these days: A natural gas liquids (NGL) pipeline slated to be built in Ohio is facing virtually no opposition. Last month we updated you on Kinder Morgan’s UTOPIA (Utica To Ontario Pipeline Access) ethane pipeline (see Kinder Morgan Ready to Move Forward with UTOPIA East Pipeline). The 12-inch ethane pipeline 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. The pipeline will connect to another pipeline (in Ohio) and that pipeline will carry ethane all the way to Ontario to a cracker plant. Perhaps lack of FERC involvement is the secret to limited opposition? Who knows! Construction won’t begin on the project until 2017 and UTOPIA won’t be online until early 2018. But before that can happen, Kinder Morgan has to secure easements from approximately 900 landowners in Ohio. A full one-third of the deals are ALREADY DONE. Some 98% of landowners granted permission for Kinder Morgan to survey their property. Seems to us like a textbook case of how to build a pipeline! Now if Kinder could only duplicate that success with their Northeast Energy Direct pipeline running through New England (sigh). Here’s an update on UTOPIA’s rapid progress…
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Antero Resources | Doddridge County | Energy Companies | Industrywide Issues | Landfills | Wastewater | West Virginia

Antero Plans Salt Landfill Next to Proposed Wastewater Recycling Plant
February 16, 2016February 16, 2016

In August of last year, MDN told you that one of the biggest drillers in the Marcellus/Utica, Antero Resources, floated the idea of building a $275 million state-of-the-art frack wastewater treatment plant in Doddridge County, WV (see Antero Building New 60K Bbl Wastewater Recycling Facility in WV). The new plant, which will process 60,000 barrels of wastewater per day, will save Antero $150,000 per well in completion costs once it’s up and running. Antero tapped French company Veolia to engineer and build the plant (see French Company Confirms Building $275M Wastewater Plant for Antero). The plant will go online in late 2017. The new news is that last week Antero filed for a permit to build a landfill next to the wastewater plant. The wastewater plant will separate water, salt and radioactive particles. The salt can be sold to municipalities for use as road salt–but frankly there’s not enough of a market to sell it all. And not all of it will be of sufficient quality to be sold that way. So Antero needs a place to dispose of it–hence the $20 million landfill proposal…
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Forced Pooling | Industrywide Issues | Statewide WV | West Virginia

WV Forced Pooling Bill HB 4426 Introduced – Debate Rages
February 16, 2016February 16, 2016

The forced pooling debate is now raging in West Virginia. As we previously reported, Republican chairman of the WV House Energy Committee, Lynwood “Woody” Ireland believes a new version of the forced pooling bill he recently introduced is as fair as it gets for both landowners and drillers (see Bill Sponsor Says It’s Now or Never for WV Forced Pooling Law). Ireland also believes if the bill doesn’t pass this year, it is likely a dead issue. However, other Republicans in the legislature called forced pooling tantamount to big businesses bullying private property owners. A forced pooling bill has been floated in five of the last six years (2012 was the exception). Will it pass this time? On Feb. 5 Ireland introduced House Bill (HB) 4426, called the “Horizontal Well Unitization and Landowner Protection Act of 2016” (full copy embedded below). Here’s an update on the debate now raging in Charleston and beyond…
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Antero Resources | Anti-Drilling/Fossil Fuel | Energy Companies | Industrywide Issues | Litigation | Regulation | Statewide WV | West Virginia

WV Senate Bill Stops Frivolous Nuisance Lawsuits Against Drillers
February 16, 2016February 16, 2016

There’s been an interesting twist in pack of so-called “nuisance” lawsuits filed against Antero Resources in West Virginia (see Scores of “Nuisance” Lawsuits Against WV Drillers Combined). As we reported, more than 200 residents in WV (likely those who don’t own the mineral rights under their land) began filing “scores” of “nuisance” lawsuits over the past couple of years against Antero Resources and Hall Drilling, in places like Doddridge County. The lawsuits claim excessive traffic, odors and noise from nearby drilling make it “impossible” for them to enjoy their homes. The individual lawsuits were rolled up into one mega lawsuit that, at the time, sat before the WV Mass Litigation Panel. More recently it seems the mass lawsuit was transferred to Ohio Circuit Court (see More People Pile on Antero, Seek to Join Mass “Nuisance” Lawsuit). The strategy by anti-drillers is to form a piranha-like school of fish to attack a large mammal and kill it with thousands of tiny bites. But a problem has appeared for the antis. A bill was just introduced in the WV Senate on Feb. 4, Senate Bill (SB 508) that defines what, exactly, a nuisance is for the purposes of such lawsuits. In other words, legislators are about to plug a hole being exploited by antis–and the antis are squealing like stuck pigs…
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Dominion Energy | Energy Services | Industrywide Issues | Pipelines | Randolph County | Regulation | Statewide WV | West Virginia

Atlantic Coast Pipeline Proposes New Route to Save the Salamanders
February 16, 2016February 16, 2016

MDN told you last month that the US Forest Service, drunk on its own power, vetoed a path through a few miles of national forests for the $5 billion Atlantic Coast Pipeline (see US Forest Service Blocks Atlantic Coast Pipeline in National Forests). Using cow nob salamanders and red spruce as their excuse, USFS said “nyet comrade” to Dominion in their quest to build a natural gas pipeline from West Virginia to North Carolina. Dominion had requested a special permit to cross teeny tiny sections of the Monongahela and George Washington national forests in West Virginia and Virginia. So now what? Last week Dominion announced an alternate route for the pipeline (see map below) that avoids most of (not all of) the forests–adding another 30 miles to the 564-mile pipeline, and disrupting 249 landowners in Pocahontas and Randolph counties who will now need to sign easements to allow the pipeline across their land. All to avoid a few miles of forestland. Here’s the latest on the mighty Atlantic Coast Pipeline, re-routed because of a salamander…
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Industrywide Issues | Pennsylvania | Pipelines | Regulation | Statewide PA

PA Lawmaker Wants Turnpike to Allow Pipelines, Charge Ongoing Fee
February 16, 2016February 16, 2016

A RINO member of the Pennsylvania House (from the Philadelphia area) has introduced a new bill that he believes is totally brilliant. Rep. Scott Petri, R-Richboro, introduced a bill to give the PA turnpike commission authority to allow use of its right of way for natural gas pipelines–and charge a fee for it (of course). Rep. Petri, you may recall, LOVES severance taxes (see PA Republicans Commit Adultery with Severance Tax – Again). But a severance tax would generate small potatoes compared with a “fee” assessed on gas flowing through pipelines. Instead of calling his proposal to allow pipelines along turnpike corridors a tax, Petri calls it a fee. Same thing. He’s proposing that the turnpike commission (i.e. the State of Pennsylvania) should all natgas pipelines and receive an ongoing fee for the amount of gas flowing through the pipeline. When NOBODY rushes to sign up for such a plan (should it ever pass), the next step would be to force pipeline companies to use said corridors–banning pipelines from being built on private property. That’s our prediction…
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Energy Services | FTS International | Industrywide Issues | Jobs | Pennsylvania | Statewide PA

FTS International Lays off PA Workers – Won’t Say How Many
February 16, 2016February 16, 2016

More job causalities from the slowdown in Marcellus/Utica drilling to report. FTS International, the largest private well-completion company in North America with offices and employees in the Marcellus/Utica, has laid off workers. But they’re not saying how many. There were reports FTS had closed their offices in Eighty Four and Venetia–but FTS says that’s not true. Here’s what’s known (which isn’t much)…
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Best of the Rest

Marcellus & Utica Shale Story Links: Tue, Feb 16, 2016
February 16, 2016February 16, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Why David Einhorn still loves CONSOL Energy; coldest place in NY keeps warm with natgas; CT’s last coal plant converting to natgas; rigs last year 350, this year 100, is it “just enough”?; ratings agencies downgrade oil companies; LNG imports up last year–in US!; would Chessy bankruptcy boost the price of natgas?; Zombie oil companies, again; why OPEC likely won’t cut production; and more!
Read More “Marcellus & Utica Shale Story Links: Tue, Feb 16, 2016”
Alpha Natural Resources | Energy Companies

Bankrupt Alpha Natural Resources Offered $500M for Assets
February 12, 2016February 12, 2016

Last August MDN told you that Alpha Natural Resources, one of the largest metallurgical coal producers in the world, had filed for bankruptcy. We also told you that Alpha is a driller in the Marcellus Shale–drilling on its own land and as part of a joint venture with Rice Energy (see Alpha Natural Resources in Bankruptcy – What about Marcellus?). Alpha owns 30 producing Marcellus Shale gas wells in PA. We mused at the time: What does the Alpha bankruptcy mean for its Marcellus drilling program? Bankruptcy proceedings have proceeded and it appears most of the company’s assets, including the shale wells, are on the auction block. A group of “unspecified lenders” have offered $500 million. Others can now make their bids by March 28…
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CONSOL Energy | Energy Companies

Mirror Mirror on the Wall, Who’s the Best Driller of Them All?
February 12, 2016February 12, 2016

Determining who the best driller is depends on what criteria you use. Biggest driller? Most profitable driller? Driller with the most production? There are a lot of different criteria for ranking the “best driller” in the Marcellus. An accounting professor from Susquehanna University has created a formula to rank PA Marcellus oil and gas companies based on their environmental impact. He uses an interesting formula: Divide the amount of hydrocarbons produced (total fuel output) by the number of violations assessed against the company. Envelope please. The winner of the Best “Environmentally Friendly” Driller award in the Marcellus goes to…
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Anti-Drilling/Fossil Fuel | Energy Services | Industrywide Issues | Litigation | Pennsylvania | Pipelines | Statewide PA | Sunoco Logistics

Philly Judge Says Case Against Mariner East 2 Can Proceed
February 12, 2016February 12, 2016

A Philadelphia judge for the Court of Common Pleas (low-level court in PA) has ruled in favor of the anti-drilling Clean Air Council against Sunoco Logistics Partners and their Mariner East 2 pipeline. The ruling is nothing more than “this case has merits” (in the eyes of the judge) and can proceed. The case itself is challenging the right of Mariner East 2 to use eminent domain against landowners in building the new pipeline. The Clean Air Council’s argument is that since most of the natural gas liquids that will flow through the pipeline will get exported or otherwise not used in PA itself, that moves Mariner East from being a public utility with eminent domain power to an interstate pipeline more properly reviewed and permitted by federal authorities. It’s a delay tactic, because if Mariner East 2 were to come under the aegis of the Federal Energy Regulatory Commission and eventually permitted, they would also be entitled to use eminent domain. But a FERC review would take years. Which is what the Clean Air Council wants. Here’s the latest minor setback for Sunoco, whose eminent domain has been upheld in other PA courts and who is beginning to clear trees for the Mariner East 2 pipeline right now…
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Economic Impact | Hydraulic Fracturing | Industrywide Issues | Research

Report: Benefits of a Second American Shale Boom
February 12, 2016February 12, 2016

A fascinating new research paper just published by conservative think tank Manhattan Institute says there IS an antidote to being manipulated by America’s enemies, many of them members of OPEC. There IS an antidote to wild price swings in oil and gas prices. There IS an antidote to the poor economic conditions we experience here in the U.S. under Barack Obama. Know what it is? A second shale boom. IF the U.S. were to become the dominant exporter of energy around the world, we reap economic and geopolitical benefits like you can’t believe. In “Expanding America’s Petroleum Power: Geopolitics in the Third Oil Era” (full copy below), the author notes that the number of cars in use worldwide has risen threefold, aviation miles have gone up sevenfold, and maritime shipments increased threefold in the last 40 years. What powers 95% of that transportation? Oil and its derivatives. We need a second American shale boom and we need it soon. Read about it below…
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