Marcellus Drilling News

Industrywide Issues | Research

Deloitte: 35% of Pure Play Drillers Will Go Bankrupt in 2016
February 17, 2016February 17, 2016

A new study just released by powerhouse consulting firm Deloitte delivers some profoundly bad news. The study is titled “The Crude Downturn for E&Ps: One Situation, Diverse Responses” (full copy below) and it reveals that 35% of “pure play” drillers (those who invest and concentrate all of their efforts in a single shale play) are at “high-risk of slipping into bankruptcy in 2016.” That’s a total of some 175 companies worldwide. There are a number of pure play drillers in the Marcellus/Utica. We sincerely hope Deloitte is wrong, but what if they’re not…
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Boardwalk Pipeline Partners | Energy Services | Ethane | Industrywide Issues | Litigation | NGLs | Pipelines | Williams

Bluegrass Pipeline Aborted Before It was Born – RIP
February 17, 2016February 17, 2016

Is it time to declare the Bluegrass Pipeline dead? It certainly appears that way. The Bluegrass, you may recall, was a $1.5 billion joint venture between Williams and Boardwalk Pipeline Partners project that would have piped natural gas liquids (NGLs, mostly ethane) from the Utica/Marcellus all the way to Gulf Coast for processing and sale. Some 200 miles of the pipeline was due to be built through Kentucky–the Bluegrass State. But the wacky libs of Kentucky pushed back, suing Bluegrass over its plan to use eminent domain. In March 2014, Franklin Circuit Judge Phillip Shepherd ruled Bluegrass could not use eminent domain (see Judge Rules Bluegrass Pipeline Cannot Use Eminent Domain in KY). At that point Williams and Boardwalk squabbled over the future of the project (see Williams Stops Work on Bluegrass Pipeline, Boardwalk Says “It’s Not Dead”). The case moved on to the Court of Appeals. In May 2015, a three-judge panel agreed with Franklin Circuit Judge Shepherd that only pipeline companies that are or will be regulated by the state’s Public Service Commission can use eminent domain (see Appeals Court blocks Bluegrass Pipeline eminent domain). The case went all the way to the Kentucky Supreme Court where, last week, the high court ruled the lower court rulings will stand. Case closed…
Read More “Bluegrass Pipeline Aborted Before It was Born – RIP”
CNG/LNG | Dominion Energy | Energy Services | Exporting | Industrywide Issues | Litigation | Maryland | Statewide MD

Radical Enviro Groups Continue Lawsuit Against Cove Point LNG
February 17, 2016February 17, 2016

Big Green groups, including the nutty Sierra Club and left-leaning Chesapeake Climate Action Network and the odious Earthjustice continue to pump money and lawyers and time into an effort to stop progress on Dominion’s construction of an LNG (liquefied natural gas) export facility in Cove Point, Maryland. Last June Earthjustice and its co-conspirators filed a lawsuit against the Federal Energy Regulatory Commission claiming that FERC was wrong to issue a permit for the facility (see Earthjustice Asks Court to Stop Construction at Cove Point LNG). The lawsuit has progressed to the point that oral arguments will be made on April 19 before the Court of Appeals. An update on the shenanigans from fossil fuel haters ahead of this important court date…
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Air Quality | Hydraulic Fracturing | Industrywide Issues | Regulation

EPA Targets Fracking Again, This Time via Air Quality Study
February 17, 2016February 17, 2016

Here we go again. The federal Environmental Protection Agency (EPA) couldn’t, after four years of research, find any evidence that fracking negatively impacts groundwater supplies (see EPA Draft Report Says Fracking Doesn’t Pollute Groundwater Supplies). So this out-of-control agency, filled with radicals, has decided to go fishing once again–this time using air quality. The EPA has requested $1.5 million in next year’s budget to begin a years-long study of fracking’s potential impact on air quality. Since the EPA considers the stuff you breathe out with every breath–carbon dioxide (CO2)–to be a “greenhouse gas” (hilarious if it weren’t so tragic), you can bet they’ll find, oh no!…the stuff drillers extract from the ground is methane!!!! And methane is even MORE potent than CO2 as a greenhouse gas, and oh no!, we’ve got to stop this right now…
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Hydraulic Fracturing | Industrywide Issues | Pennsylvania | Regulation | Statewide PA

PA Senate Democrat Candidates Want to Ban ALL Fracking
February 17, 2016February 17, 2016

Pay attention Pennsylvania voters. You didn’t listen to MDN the last time and elected the disastrous Tom Wolf as your governor–a decision you no doubt kick yourselves for each day. Yes, we told you so. Now listen up–you are facing a U.S. Senate race this November. Sitting Senator Pat Toomey (Republican) is in a tough race to retain his seat. There are (so far) three Democrats running in a primary to oppose Toomey. Two of the three candidates support an immediate ban on fracking–across the state. Everywhere. Both public AND private land (your land!). You CANNOT afford to elect Democrats who want to deny you your Constitutional property rights! PLEASE do not vote for these two extremists who want to ban fracking…
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Anti-Drilling/Fossil Fuel | Industrywide Issues | Michigan | Regulation | Statewide MI

Democrats in Michigan Introduce Bill to Ban ALL Fracking
February 17, 2016February 17, 2016

What is it with Democrats? Are they congenitally anti-drilling? Last week Michigan Democrats introduced a bill that would ban all hydraulic fracturing in the state. But just in case fracking still happens, the bill empowers local municipalities regulate it, and the bill requires wells to be at least a mile away from “sensitive locations” like schools, hospitals, homes and public parks. That is, don’t bother drilling anywhere. Michigan Dems may want to visit Pennsylvania where there are schools with their own gas wells sitting right outside of classroom windows, and hospitals that allow drilling on their property. There have been no ill health effects, and those organizations have reaped millions of dollars in revenue. It seems Dems only want money to slide through their fingers first (the way they derive and hold on to power). Tell your local Michigan House member to vote no on this idiotic bill…
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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…
Read More “WV Forced Pooling Bill HB 4426 Introduced – Debate Rages”
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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