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    Black & Veatch Warns Electric Plants, Time to Prep for CPP is Now

    We’ve written plenty about Obama’s abominable Clean Power Plan, including an article yesterday about how the original plan was corrupted by radical environmentalists to freeze out natural gas (see How Environmentalist Radicals Ruined Obama’s Clean Power Plan). More than half of all states have joined a lawsuit to oppose this draconian “rule” (really an un-legislated law) that would force electric power plants to abandon using coal, natural gas and other fossil fuels in favor of obscenely high-priced so-called renewables. Electric rates will go through the roof, and it’s no joke there may be rolling brownouts and blackouts if fully adopted–we simply can’t generate the amount of electricity we need using renewables. Not now, not for several generations. No wonder states are suing to stop the CPP. But here’s the problem: If power generators don’t start to “comply” with the CPP now, if those lawsuits are not won for whatever reason, energy companies risk being shut down–fined out of existence. Obama and his cronies are using fear of a jackbooted government to force electric generators to comply now–and after they do, even if Obama loses in court he’s still won because he’ll say, “See, they’ve already complied, so it doesn’t make any difference that the regulation was struck down. We’ve made the U.S. a cleaner place. I did it. Me me me. Look at me.” Utter nonsense, but that’s the strategy. Black & Veatch, a huge engineering and construction firm that builds major projects for the energy industry is only too happy to help energy companies comply with the new CPP rules. Black & Veatch says, in essence, that energy companies shouldn’t sit on their hands, hoping to win the lawsuit. The time to act is now…
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  • Marcellus & Utica Shale Story Links: Thu, Jan 14, 2016

    The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Drillers donate to worthy causes in Ohio; how low can oil prices go; Obama wants to hike lease prices for drilling on fed land; industry leaders tell Obama to wise up; Hillary used to be for fracking, before she was against it; the future of MLPs; Stanford prof changes the data after being pressured; CSX predicts bad year for railroads; LNG demand in Asia down; and more!
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    Westlake Chemical Expanding Kentucky Ethane Cracker Capacity

    Westlake logoWestlake Chemical Partners has just announced it will expand ethylene capacity at its Calvert City, Kentucky facility. The expansion will add 70 million pounds of annual ethylene capacity to the Calvert City facility during the first half of 2017. OK, what does this have to do with the Marcellus/Utica? As it turns out, a lot. The Westlake Calvert City petrochemical plant is an ethane cracker plant by a different name. Cracking ethane into ethylene is not the only thing that happens at the facility, but it’s one of the main things that happens there. And the ethane that feeds the cracker at the Calvert City facility comes, in part, from the Marcellus/Utica…
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    Williams Plans to Start Clearing Trees for Constitution Next Week

    Since last October MDN has been calling on Williams, the company planning to build the 124-mile Constitution Pipeline from Susquehanna County, PA to Schoharie County, NY, to take the gloves off and go after New York State, aggressively (see Time to Force NY DEC to Issue Permit for Constitution Pipeline). Earlier this month we re-posted an article from MDN friend Tom Shepstone and his Natural Gas Now website (always excellent, must read) that chronicles where we are at and how we got here with ongoing delays of the Constitution from the NY Dept. of Environmental Conservation (see Time for Williams/FERC to Sue NY & End Constitution Pipe Delays). In short, the DEC is now arbitrarily (for political reasons) intentionally withholding stream crossing permits that are delaying construction of the Constitution. The state is in danger of being sued by, and their authority to grant those permits taken over by, the federal government if they don’t issue those permits forthwith. Williams is attempting to advance the ball, still playing nicey nice, hoping to coax the DEC into issuing the permits. Williams has asked for and received permission (from the DEC) to begin clearing trees along the pipeline’s path, a process that will begin next week. However, rabid anti-drillers have asked NY’s out-of-control Attorney General, Eric Schneiderman, to step in and stop the tree clearing. If Williams doesn’t start the tree clearing now, they risk losing another entire construction season. There is a finite window each year you can clear trees because of nesting Northern long-eared bats, an endangered species…
    Read More “Williams Plans to Start Clearing Trees for Constitution Next Week”

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    Seventy Seven Energy Hires Turnaround Expert, Hopes to Stay Afloat

    Seventy Seven Energy, an oilfield services company with major operations in the northeast, is the old Chesapeake Oilfield Operating division of Chesapeake–spun off into its own company on July 1, 2014. It’s very first quarterly income statement, issued in August 2014, was the first and last time the company actually cleared a profit (see Seventy Seven Energy’s 1st Quarterly Update: Revenue Down 6%). Since that time, quarter after quarter the company has lost money. One of the challenges faced by Seventy Seven is that its main customer was and continues to be Chesapeake Energy. As of the third quarter 2015, Chesapeake provided Seventy Seven with 58% of its revenue, down from a previous 64% (see Seventy Seven Energy 3Q15: Still Losing Money, But Not as Much). As we said at the time, “You can’t stay in business long with multi-million dollar losses quarter after quarter.” Indeed. Seventy Seven announced yesterday they’ve retained the services of Lazard Freres–an international financial advisory and asset management firm. One of Lazard’s talents is in helping companies “restructure” and/or find a buyer. Here’s what Seventy Seven said yesterday…
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    Severance Tax Not a Panacea After All – Down 50%+ in 2015

    There’s been a lot of talk over the past 5+ years in Pennsylvania that the state needs a severance tax. We’ve heard the repeated drumbeat that “eeeevvvvery other oil and gas state has a severance tax and we need one too.” A severance tax would, according to sticky finger Democrats and teachers unions, instantly solve funding shortfalls for education. Bam–solved. It would also fund a variety of “worthy” programs that the beneficent politicians in Harrisburg salivate to fund. A severance tax might even be the cure for cancer–who knows? Just one teeny, tiny problem. With the collapse of prices for oil and gas, and the resulting collapse in drilling, all of those “other states” with a severance tax are now scrambling to make up the difference in the shortfall they face in their own budgets. Turns out a severance tax isn’t a panacea after all. It also turns out an impact fee (PA’s equivalent of a severance tax), while sure to go down, will go down a lot less than a severance tax would. To our PA friends: Are you still happy you traded Tom Corbett, who was smart enough to create the impact fee, for the inept Tom Wolf who’s chasing a St. Elmo’s Fire severance tax? Here’s a look at the rapid fall of severance taxes in key oil and gas states in 2015, by the experts at the U.S. Energy Information Administration…
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    OH Releases Another 1,850 Geophysical Well Logs

    Pssst. Hey buddy. Wanna buy some more well logs? The Ohio Dept. of Natural Resources (ODNR) has just published another 1,850 newly scanned geophysical logs for oil and gas wells in the Buckeye State. Last summer they released 3,300 new well logs (see OH Releases Another 3,300 Geophysical Wells Logs). What’s a well log and why would you want one?…
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    EIA’s STEO Predicts NatGas Price Constant This Year, Up Next Year

    Yesterday the U.S. Energy Information Administration (EIA) released their monthly Short-Term Energy Outlook (STEO) report. It contains some interesting predictions. Among them: EIA predicts the average Henry Hub price for natural gas in 2016, when the year is completed, will end up being $2.65 per million British thermal units (MMBtu). The average price for 2015 at the Henry Hub was $2.63/MMBtu–so the EIA believes this year will be virtually unchanged from last year, when the final chapter is written. The EIA goes on to predict the average HH price in 2017 will be $3.22/MMBtu. Another interesting prediction in this month’s STEO: EIA says natural gas’ share of the electric generation pie will actually fall–with natgas generating 33% of all electricity in 2015 to 31% in 2017. Why? More renewable sources coming online…
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    How Environmentalist Radicals Ruined Obama’s Clean Power Plan

    In an excellent commentary article posted by the Cato Institute, a public policy research organization and “think tank,” the authors explain how President Obama’s so-called Clean Power Plan (CPP) was co-opted by radical environmentalists. Obama’s original CPP had a starring role for natural gas–the single biggest reason why the U.S. has reduced its carbon emissions over the past decade. But then the crazies got involved and Obama, bowing to pressure from the far left, threw natural gas under the bus in the final CPP. Here’s how the Cato experts explain it…
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    The Smartest Man in the Oil (& Gas) Patch: Rusty Braziel

    In 2015 MDN editor Jim Willis had the pleasure of sitting in on a one-day “State of the Energy Markets” presentation by RBN Energy, held in New York City. RBN, for those who don’t know, was founded by the former co-founder of Bentek Energy, Rusty Braziel. Rusty is a legend in the industry. He was there presenting, along with a few other seasoned pros that work for him at RBN. Great session. Jim learned a lot about the energy markets and how they work. And why they work the way they do. Rusty was a guest on Jim Cramer’s Mad Money program (on CNBC) last Friday. We have the video below. Jimmy Cramer calls Rusty “the smartest man on the oil patch” and the only person he consults with when it comes to the price of oil and gas and what’s happening. It’s high praise coming from Cramer. And well deserved. If you want to know why the price of oil (and gas) is doing what it’s doing, give this a watch and read…
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    Debate Rages: How Many Shale Drillers will go Bankrupt?

    Fadel Gheit, senior oil and gas analyst at Oppenheimer & Co., speculated on CNBC on Monday that half of all U.S. shale oil producers could go bankrupt before the price of oil reaches equilibrium. For Gheit, equilibrium price will be somewhere around $60-$70 per barrel. But, he says, it will take a few years to get there. His thesis is that in the meantime oil and gas companies are spending money out the wazoo and cannot sustain it and a good many of them (the smaller ones anyway) will go under. We compare his comments (below) with what Rusty Braziel recently said to Jim Cramer…
    Read More “Debate Rages: How Many Shale Drillers will go Bankrupt?”

  • Marcellus & Utica Shale Story Links: Wed, Jan 13, 2016

    The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: Gas downturn beats up Appalachian oilfield services companies; OH natgas prices for consumers drop 40%; 3 new drilling permits in OH; rig counts fall sharply in PA; how shale helps family farms; surveying with/without permission; Henry Hub price to collapse below $2; what’s next for Chesapeake?; the “bottom of the barrel” club; U.S. fighting for oil dominance; Saudis claim victory in oil war; and more!
    Read More “Marcellus & Utica Shale Story Links: Wed, Jan 13, 2016”

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    EIA Jan DPR: Marcellus Production Way Down Again, Utica Up

    EIAYesterday our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite report, the Drilling Productivity Report (DPR). The January 2016 report shows what the EIA predicts oil and natural gas production will be in February from the seven largest commercial shale plays in the U.S. What does the report (full copy below) show? The biggest drop in production will once again be the biggest natgas producer in the country–the Mighty Marcellus. The EIA predicts the Marcellus will produce 15.222 billion cubic feet per day (Bcf/d) in February, vs. 15.447 Bcf/d in January, a decrease of 225 million cubic feet per day (MMcf/d). Meanwhile the Utica Shale will continue to show an INCREASE in production month over month–from 3.206 Bcf/d in January to 3.249 Bcf/d in February, a 43 MMcf/d increase month over month. The Utica, for a second month in a row, shows the largest increase in natgas production of all seven plays covered in the DPR. Overall the DPR shows that oil production month over month will decrease in February, the seventh month in a row, and natural gas will decrease for the eighth month in a row…
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    Natural Gas and Electricity in U.S. Joined at the Hip

    Increasingly natural gas and electricity production in the U.S. are “joined at the hip.” What do we mean by that? In 2015 more electricity was generated from natural gas-fired generators than from coal-fired generators in the months of April, July, August, September, and October (data for November and December not yet available). Wholesale electricity prices at major trading hubs, on a monthly average basis for on-peak hours, were down 27%-37% across the nation in 2015 compared with 2014–driven largely by lower natural gas prices. It’s not a stretch to declare that natural gas has replaced coal as the #1 energy source for creating electricity. That’s what we mean by nagas and electricity being joined at the hip. Our favorite government agency, the U.S. Energy Information Administration (EIA), provides some context…
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    Which Marcellus/Utica Drillers are Part of the “Thousand Club”?

    It’s difficult to compare apples with apples when it comes to evaluating how productive, or profitable, a hydrocarbon-producing well is. We typically think of wells as “oil wells” or “natural gas wells” or perhaps “wet gas (NGL) wells.” While there are some wells that produce almost all natgas or almost all oil, etc., most wells produce multiple hydrocarbons. Oil wells in the Permian Basin or Eagle Ford Shale (in TX) produce natural gas along with the oil coming out of the well. Many Marcellus and Utica wells in southwestern PA and eastern OH produce very profitable quantities of natural gas liquids, a mish mash of ethane, propane, butane, isobutane, and pentane. And don’t forget condensate (natural gasoline). So how do you compare the relative output/profitability/production for different “types” of wells? One way is to convert all of those hydrocarbons into one hydrocarbon–oil. Specifically, barrels of oil. Once you convert all hydrocarbons into barrels of oil, you have a way to compare apples to apples–comparing wells located in the same shale play or comparing wells from one play with wells from another. Recently the sharp analysts at investment firm Sanford C. Bernstein & Co. ran the numbers to convert and compare wells across different plays. They issued a report showing wells that belong to the “Thousand Club”–wells producing at least 1,000 barrels of oil equivalent per day. Where are the most such wells located? The Eagle Ford Shale, the Bakken Shale, and yes, the Marcellus and Utica Shale. Which drillers are in the club?…
    Read More “Which Marcellus/Utica Drillers are Part of the “Thousand Club”?”

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    A Closer Look at GTL Technologies, Benefits for Marcellus

    MDN has written, many times, about companies planning or building gas-to-liquids (GTL) plants. Such plants convert natural gas into other hydrocarbon-based products–like gasoline and diesel fuel. As you can imagine there’s some sophisticated chemistry used in order to make it happen. The process was originally pioneered in Germany in the 1920s and (yes) was used by the Nazis to convert coal to diesel. That method is the most well-known and is called Fischer-Tropsch (FT). There are, however, other methods that have been pioneered since that time. A recent entrant in GTL technology is a process called STG+, created by the company Primus Green Energy, based in New Jersey. Primus CEO Sam Golan, writing for the Marcellus.com website, makes a product pitch for his tech that many in the Marcellus/Utica region could benefit from STG+. One of the primary selling points is that STG+ can be used, profitably, in areas where there are low volumes of stranded natural gas. We’re not interested in giving Primus a free product pitch, but we did find Golan’s description of the various technologies used in GTL, including their own STG+, to be interesting and helpful for our own understanding of how GTL works. We thought you might find it interesting too…
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