Marcellus Drilling News

Industrywide Issues | Pennsylvania | Statewide PA | Taxation

Wolf’s Demented 2nd Budget: Tax PA Marcellus 6.5% Instead of 5%
February 10, 2016February 10, 2016

Someone needs to bring out a straight jacket for PA Gov. Tom Wolf. He’s gone stark…raving…mad. He’s not only a danger to himself, he’s a danger to all of Pennsylvania. The only thing missing from yesterday’s budget address in Harrisburg was frothing at the mouth. In his mean-spirited budget address, Wolf insulted nearly everyone present–blaming everyone but himself for the budget disaster of last year. Wolf is either bipolar (off his meds) or just plain nuts. How else can you explain that after not passing his first budget because he demanded a 5% severance tax on drilling (which was really closer to 15%, see Pittsburgh Economic Leader Says Wolf Severance Tax Really 15% Rate), in the worst oil and gas downturn in 30 years, he’s just proposed a second budget with a 6.5% severance tax? It’s sheer madness…
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Energy Companies | Warren Resources

Warren Resources: Potential Bankruptcy, No Drilling in 2016
February 10, 2016February 10, 2016

Last week MDN told you of a troubling sign at Warren Resources–the company had missed a $7.5 million payment on notes (IOUs) and the clock is now ticking (see Warren Resources Misses $7.5M Debt Payment, 30-Day Clock Ticking). Yesterday Warren released information on 2015 reserve and production figures. As part of that update, they say this: “If Warren cannot come to a workable agreement regarding an out-of-court restructuring, it will have to seek protection from its creditors through a bankruptcy proceeding in order to preserve and maximize value for its stakeholders” (emphasis added). In other words, if the people they owe money to don’t back off, the only choice left is to declare bankruptcy. Warren also said yesterday they won’t spend a penny on drilling in 2016…
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Beaver County | Energy Companies | Ethane | Industrywide Issues | Jobs | Pennsylvania | Processing Plants | Shell

Shell Begins Hiring for Monaca, PA Ethane Cracker Plant
February 10, 2016February 10, 2016

Yesterday a sharp MDN reader called our attention to a job posting on LinkedIn. The posting, by Shell, seeks a “Technical Service Team Lead Polyethylene (Pittsburgh, PA).” When you read the job listing (below) it clearly states it the job is for their Monaca, PA ethane cracker plant complex. Now this is a single job posting–so far–although it’s for a very important position. Still, our point is this: You don’t spend millions building a new bridge over a highway as a new entrance to a piece of property (see Shell Begins Building Bridge to PA Cracker Plant Site), you don’t spend $80 million to clean up that site (see Shell Paying $80M to Clean Up PA Site for Ethane Cracker Plant), you don’t spend $69 million to move a water intake site and build a new water treatment site for the local town because the current water intake is on the site where you want to build (see Shell Paying $69M to Move Water Plant for Cracker Project), you don’t spend money to lease land to build two ethane pipelines to that site (see Exclusive: Shell Leasing Land for 2 Pipelines to PA Cracker Plant), and you don’t begin hiring people to work on/at the plant–unless you’re serious about building it…
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Air Quality | Industrywide Issues | Litigation | Regulation

Supreme Court Shocker – Justices Halt Obama’s Clean Power Plan
February 10, 2016February 10, 2016

On January 26, 2016, 29 states and state agencies, including Ohio and West Virgina, filed an application with the U.S. Supreme Court seeking an immediate stay of President Obama’s EPA Clean Power Plan (see 29 States Ask Supreme Court to Stop Obama Clean Power Plan ASAP). A week before that a D.C. Circuit Court of Appeals denied such a stay, so the states had no alternative but to take their case all the way to the top. Yesterday, in a surprise decision, the High Court granted their request! That is, the U.S. Supreme Court stopped Obama’s draconian EPA regulations dead in their tracks. Now an extended and protracted court case will ensue. What it means is that CPP is dead for this year, and likely dead altogether…
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Industrywide Issues | Ohio | Pennsylvania | Research | Statewide OH | Statewide PA | Statewide WV | West Virginia

EIA Feb DPR: Utica NatGas Output Continues to Increase
February 10, 2016February 10, 2016

Earlier this week our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The February 2016 report shows what the EIA predicts oil and natural gas production will be in March from the seven largest commercial shale plays in the U.S. What does the report (full copy below) show? Very broadly, it shows that the decline in natural gas production is picking up speed, while the decline in oil slowed (reversed, actually). In January’s report, the EIA said for February the combined output of natgas would decline by 405 million cubic feet per day (MMcf/d). In this report, forecasting March production, the EIA says the decline will go down another 451 MMcf/d over the February number. That is, the rate of decline is increasing. There’s only one shale play of the seven with an increase in natgas output from the previous month. Can you guess which one? That’s right–the Utica…
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Pennsylvania | Statewide PA

PA Rig Count Hits 9-Year Low Last Week
February 10, 2016February 10, 2016

Two days ago MDN briefed you on the latest rig counts–worldwide, U.S. and for the Marcellus/Utica (see Rig Counts for World, US & Marcellus/Utica Continue to Tumble). What we didn’t note in that article is last week Baker Hughes showed the number of active rigs in Pennsylvania had fallen to 19. Eeeks! That is the lowest number of active rigs working in PA since before the Marcellus Shale revolution got underway in 2007. How much lower will it go?…
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Industrywide Issues | Jobs | Pennsylvania | Statewide PA

Philly Council President Says Green Jobs Plan to Create 10K Jobs
February 10, 2016February 10, 2016

Philadelphia City Council President Darrell Clarke was one of the chief opponents of a deal that would have sold the city-owned Philadelphia Gas Works (PGW) to Connecticut utility company UIL for $1.86 billion. Clarke, more than anyone, torpedoed the deal (see UIL Makes it Official: $1.86B Deal to Buy Phila. Gas Works is Dead). Clarke is, in our opinion, corrupt and in the pockets of unions and others who benefited from that deal falling through. So it was with some amusement we noticed that Clarke announced on Monday that somehow, somewhere, he’s going to magically put his hands on $1 billion to “invest” in a “green jobs” boondoggle that will, supposedly, create 10,000 jobs over the next 10 years. This would be fall-off-your-seat funny if it weren’t so sad and angering. The city could have had a legitimate infusion of non-taxpayer money–$1.86 billion to be exact–but instead has chosen to continue its corrupt ways of using taxpayer money to line the pockets of political supporters…
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Crude Oil | Industrywide Issues | Taxation

Obama’s Final Disastrous Budget Targets Fossil Fuels
February 10, 2016February 10, 2016

In a final, parting shot at the fossil fuel industry, President Obama yesterday introduced what will be his final budget (thank God!). The plan calls for a new 25 cents per gallon tax on gasoline, cleverly disguised as a $10 per barrel “fee”–to be phased in over five years, long after Obama has retired to the links on some golf course in Hawaii. The fee would go to pay for the highway fund, and (of course) to fund Big Green projects (i.e. line the pockets of his supporters). The man knows no shame. The plan is clearly meant to force America away from using fossil fuels as an energy source, what the American Petroleum Institute calls Obama’s “leave it in the ground” strategy. The thing is, we don’t know of more than half a dozen Republicans on Capitol Hill (who happen to control Congress) who still possess their male equipment. Senate Majority Leader Mitch McConnell is the Emasculated-in-Chief himself. Will McConnell oppose this plan? Probably not. And that’s scary…
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Energy Services | Seventy Seven Energy

Seventy Seven Energy Releases Cherry-Picked Numbers
February 10, 2016February 10, 2016

It must be worse at oilfield services company Seventy Seven Energy (SSE) than we thought. The former Chesapeake Energy Oilfield Operating unit that was spun into its own company a few years ago. In January SSE announced they had hired a turnaround expert (see Seventy Seven Energy Hires Turnaround Expert, Hopes to Stay Afloat). Not long after that, also in January, the New York Stock Exchange threatened the company with delisting (see Seventy Seven Energy’s Stock Threatened with Delisting from NYSE). Although third quarter 2015 results were bloody, it seemed to us the situation was improving at SSE (see Seventy Seven Energy 3Q15: Still Losing Money, But Not as Much). However, SSE has just released a preliminary fourth quarter and full year 2015 update–and the update is nothing more than a few cherry-picked facts and figures. No financials. No updates for their various divisions. No context at all. Just a few facts and figures plucked to make the company look as good as it possibly can–until the other shoe drops when they have to release their financials…
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Electrical Generation | Industrywide Issues

Natural Gas Breaks Another Record in Generating Electricity
February 10, 2016February 10, 2016

One of the ongoing stories over the past year or more has been the tightening relationship between natural gas and electric power. What do they have in common? Last year natgas edged out coal to become the number one fuel source that powers electric generating plants in the U.S. The electric generation market is already a hugely important market for natural gas, and it’s only going to increase in the coming years. Especially now that Obama’s Clean Power Plan has been put on hold by the Supreme Court (see today’s companion story). Our friends at the U.S. Energy Information Administration (EIA) have authored another great story for their Today in Energy series–this one about natgas use in power generation. According to the EIA, “So far this winter, natural gas consumption in the electric power sector (gas burn) has been higher than in any previous winter.” Here’s the full story from the EIA…
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Industrywide Issues | NG Vehicles

New CNG Tanks on the Way for Passenger Vehicles – Game Changer?
February 10, 2016February 21, 2017

There’s been a break through in technology used for compressed natural gas (CNG) fuel tanks used in cars and trucks. Until now, the typical CNG fuel tank must be big and bulky and holds compressed gas at a pressure of 3,600 pounds per square inch (psi). United Technologies Corp. has innovated a new tank that is much smaller, using “activated carbon adsorbents” technology that will allow CNG to be stored at 1,000 psi. United Technologies has licensed their technology to Adsorbed Natural Gas Products, Inc. which will manufacture the new fuel tanks. If this catches on, it has the potential to up-end the passenger vehicle market by making CNG as attractive and convenient as gasoline–which would expand natural gas demand…
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Best of the Rest

Marcellus & Utica Shale Story Links: Wed, Feb 10, 2016
February 10, 2016February 10, 2016

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Kinder Morgan eyes more NY locations for compressor station; permits & rig count weak in OH; world’s largest energy trader thinks oil price low for next 10 years; shifting energy markets end crude by rail reign; different strategies for different boards; UK charity lies about anti-fracking activity; and more!
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Chesapeake Energy | Energy Companies

Chesapeake Energy: We’re Not Filing for Bankruptcy…Yet
February 9, 2016February 9, 2016

Chesapeake Energy’s stock plunged on Monday after a report in Debtwire said the company has retained a restructuring firm to help the company cope with $9.8 billion in debt. “Restructuring” is typically a nice way of saying “bankruptcy protection.” When the market caught wind of “restructuring” that’s just what they thought–and started selling like crazy. A year ago Chesapeake’s stock stood at $22 per share. Yesterday end of day it closed at $2.05 per share–down 33% from Friday and down over 90% in the last year. Chesapeake, in an attempt to get out in front of this latest turn of events, issued a statement yesterday saying the firm they’re using is nothing new–the firm was hired in 2010 and continues to advise the company. (Reuters reported that the firm was recently asked to evaluate restructuring for the company.) Chesapeake, with debt eight times the market value of the company, said in yesterday’s statement: “Chesapeake currently has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders.” Saying you have no plans to do something is also saying at some point you may well do that thing. Publicly traded companies have to be careful with their statements because shareholders may come back to sue them later if they somehow feel mislead. So perhaps we should read Chessy’s statement like this: “We don’t want to declare bankruptcy, we have no intention of doing so, but if that’s the only option left, we will.” Here’s a recap of this still developing story…
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Chesapeake Energy | Columbia Pipeline Group | Energy Companies | Energy Services | Energy Transfer Partners | Industrywide Issues | Marathon Petroleum | Pipelines | Spectra Energy | Williams

Pipeline Companies May Lose Big-Time if Chessy “Restructures”
February 9, 2016February 9, 2016

Yesterday’s free fall of Chesapeake Energy’s stock based on rumors that the company may be considering bankruptcy (see today’s lead story) is not only affecting Chesapeake’s stock price. It’s also affecting the stock price of Energy Transfer Equity and Williams, two huge midstream companies. Why? ETE, you may recall, is in the process of buying Williams for $37.7 billion (see Looks Like a March 2016 Wedding for ETE & Williams). The main reason ETE is buying Williams, with its major presence in the Marcellus/Utica, is because of long-term contracts to use its pipelines in the northeast. One of Williams’ main customers with those long-term contracts is (yes) Chesapeake Energy. What if Chessy is forced to renegotiate or cancel or otherwise can’t honor those contracts? Whoops. There goes one of the big reasons for the deal in the first place. Which may explain why ETE’s stock went from $7.01 on Friday to closing at $4.09 yesterday (down 42%), and why Williams’ stock went from $17.11 on Friday to closing at $11.16 yesterday (down 35%). Here’s how/why Chesapeake’s troubles will not only affect ETE and Williams, but other midstream companies like Spectra Energy, Columbia Pipeline Partners and Marathon Petroleum as well…
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Industrywide Issues | Pennsylvania | Statewide PA | Taxation

PA Republicans Commit Adultery with Severance Tax – Again
February 9, 2016February 9, 2016

What is it with Republicans in Pennsylvania? They’ve just won a major victory by not putting a bullet in the head of the Marcellus Shale industry, i.e. by not implementing Gov. Tom Wolf’s horrible idea of a severance tax. Major victory. But then they return to a severance tax like a cheating spouse who is serially unfaithful. Some Pennsylvania “Republicans” in the state legislature are once again committing adultery with a Marcellus-killing severance tax plan–the day before Wolf re-introduces such a losing plan for a second year in a row. The PA House Environmental Resources and Energy Committee held an informational meeting yesterday to consider two Republican-backed severance tax bills. One bill is being floated by Rep. Kate Harper, RINO-Montgomery County, the other by Rep. Scott Petri, RINO-Bucks County. Notice both RINOs are from the Philly vicinity, which is where most of the nonsense typically comes from. Even House Majority Leader David Reed, R-Indiana County, seems to be going squishy. His mouthpiece said, “It’s just prudent to kind of go through these bills and see what they do.” We disagree. The chairman of the House Environmental Resources and Energy Committee, Rep. John Maher, RINO-Allegheny County, is a sellout too, saying: “I think that there are many people who are open to the idea of a properly crafted severance tax.” With “Republicans” like these, who needs Democrats?…
Read More “PA Republicans Commit Adultery with Severance Tax – Again”
Calhoun County | Columbia Pipeline Group | Doddridge County | Energy Services | Industrywide Issues | Jackson County | Pipelines | Taxation | West Virginia

Mountaineer XPress Pipeline Seeks Tax Break from WV Counties
February 9, 2016February 9, 2016

Columbia Pipeline Group is trying to convince counties in West Virginia where its proposed Mountaineer XPress Pipeline will be built, to reduce the amount of property tax they will have to pay under WV state law. Mountaineer XPress Project (MXP) includes 165 miles of new pipeline from Marshall County, WV to Wayne County, WV with approximately 2.7 billion cubic feet per day (Bcf/d) of transportation capacity from existing and future points of receipt along or near CPG’s system (see Columbia Pipeline’s Mountaineer XPress Project Accepted by FERC). In addition to new pipeline, the $2 billion project also includes constructing three new compressor stations and upgrading three existing stations. Columbia is shopping the concept of a PILOT–a Payment In Lieu Of Taxes. Such a plan essentially means they will pay less money than a county would otherwise collect in regular property taxes on the pipeline. Here’s the strange thing–the counties and school districts affected would end up keeping more of the money collected from PILOT payments than they would from regular property tax payments. It’s actually a win/win–Columbia pays less and more of the money paid stays local. Go figure…
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