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    Captain Mercaptan Superhero is Back in Baltimore!

    Captain-Mercaptain
    Captain Mercaptain! (Pugh, what’s that smell?)

    Captain Mercaptan is back! You may recall last fall MDN had a good time poking fun at Baltimore Gas & Electric (BGE) and Marvel for creating a superhero, called Captain Mercaptan, based on one of the worst odors known to mankind (see Captain Mercaptan to the Rescue! Super Hero Named After Foul Odor). Mercaptan is the chemical added to natural gas that gives it that distinctive rotten eggs smell. It’s added as a safety precaution–so your nose can tell you if there’s a natural gas leak. Who knows how many lives that smelly chemical has saved over the years? The PR folks at BGE decided to create a superhero based on the odor as a way to educate kids about the potential dangers of natural gas if they should smell it. Last week BGE announced the kickoff of the 2016 “Adventures of Captain Mercaptan, BGE Natural Gas Safety Hero Challenge.” Don your capes kiddies! Oh, and bring along a gas mask. That Captain Mercaptan dude smells!…
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    Antero’s Proved Resources Up 4% to 13.2 Tcfe, 3P Hits 37.1 Tcfe

    Antero Resources, with 569,000 under lease, is one of the biggest leaseholders and one of biggest drillers in the Marcellus/Utica. Every year, in order to comply with Securities and Exchange Commission rules, companies like Antero revisit and revise what they call “proved reserves.” That is, how much gas (and NGLs and oil) do they have in the ground? There’s different types of reserves, with proved having the highest confidence. There’s also the “3P” reserve number: proved, probable and possible. 3P has a lower standard to qualify. The news from Antero is that as of Dec. 31, 2015, the company has 13.2 trillion cubic feet equivalent (Tcfe) of natural gas sitting under their leased acreage. That’s a 4% increase over year-end 2014. Antero’s 3P reserves totaled 37.1 Tcfe at the end of 2015…
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    Noble Energy Cuts Stock Dividend 44%, Lowers 2016 Capex 50%

    In an announcement made on Tuesday, Noble Energy, a driller with a significant presence in the Marcellus/Utica, said the company is reducing dividend payments for its commons stock–lowering the payment by 44% to 10 cents per share. MDN recently told you that both Rex Energy and Chesapeake Energy had suspended dividend payments on preferred stock, not common stock (see Rex Energy Suspends Preferred Stock Dividends to Conserve Cash, and Chesapeake Energy Suspends Preferred Stock Dividends, Saves $170M). Noble’s move is a bit different–lowering (not eliminating) dividends on common stock. All of these companies are engaging in strategies to hold on to some of the money in the organization so they can keep the lights on and keep drilling. But it’s a Catch-22. Investors are owners of the company, and they like to get paid. Receiving dividends is an important part of why they invested in the first place. But if the company keeps paying, it risks going out of business and then their shares of stock are worthless. No good choices. Noble also announced on Tuesday they are budgeting to spend $1.5 billion in 2016, which is down 50% from 2015…
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    Energy Transfer Lowers 2016 Capital Budget by $750M

    Energy Transfer Partners (ETP), a huge midstream company in the process of buying out Williams, another huge midstream company, announced yesterday they are scaling back capital spending in 2016. Last November ETP forecast they would spend on the order of $4.95 billion in 2016. That number is now $4.2 billion after ETP identified $750 million in further cuts it will make to the budget…
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    ISO New England: We Need More NatGas, Pipelines for Electric Grid

    ISO New England, the independent, not-for-profit corporation responsible for keeping electricity flowing across the six New England states, held a conference call/webinar on Tuesday. On the call, Gordon van Welie, president and CEO of ISO New England delivered a “state of the grid” address. On the call van Welie revealed that 49% of all electricity produced in New England now comes from natural gas-fired power plants–a number that will only go higher as nuclear and coal facilities are shuttered. According to van Welie, more gas-fired plants are needed, and pipelines like Kinder Morgan’s Northeast Energy Direct (NED) and Spectra Energy’s Access Northeast are needed to get cheap Marcellus gas to the region. Natural gas and electric generation are truly joined at the hip. The relationship is between natgas and electricity is tight and getting tighter as electric generation becomes a key market for drillers…
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    Cheniere’s Sabine Pass LNG Export Plant Delayed

    Corporate raider Carl Ichan isn’t have a good week. His tinkering at Chesapeake Energy hasn’t turned out so well. The company’s stock is hitting new lows. Yesterday Chesapeake’s stock closed at $3.27 per share, down from the mid-$20s just a year ago. Ichan, you may recall, fired Chespeake’s co-founder, Aubrey McClendon–so he has no one to blame but himself. Icahn recently did the same thing at Cheniere Energy–a company building an LNG export facility in Louisiana. Ichan fired Cheniere CEO Charif Souki in December (see Evil Corporate Raider Carl Icahn Claims Another CEO Scalp). Since then, things have gone downhill at Cheniere. The first shipment of LNG from the facility was supposed to happen this month, January 2016. The latest statement from Cheniere says it will be more like late February or even March before the first LNG shipment sets sail. Completing expanded capacity (extra “trains”) at the Louisiana facility is also behind schedule…
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    Shell Shareholders Vote in Favor of BG Buyout/Merger

    Shareholders in Shell just voted to cut 10,000 jobs. Well, not exactly. Shell’s shareholders voted yesterday to approve Shell’s plan to buy BG Group in a $69.7 billion megamerger. As we explained in April 2015 when the deal was first announced, this is a deal about LNG (see LNG Love Story: Shell Makes Play to Buy BG in $69.7B Megamerger). Why the snarky remark about voting to cut 10,000 jobs? Because last week that’s what Shell said they would do once the merger is approved. They plan to ax 10,000 jobs in Shell and at BG (see Shell to Cut 10,000 Jobs After Buying BG; Exiting Shale Drilling). One down, one to go. BG shareholders vote on the merger today. If they vote “yes” as is expected, the merger will be complete on Feb. 15. Expect the pink slips to appear in the mailbox starting Feb. 16. Happy Valentine’s Day…
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  • Marcellus & Utica Shale Story Links: Thu, Jan 28, 2016

    The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: MarkWest & Marathon consider opening butane refinery; things getting worse before better in Appalachia drilling; Marcellus producers looking for new markets; CNG garbage truck explodes in NJ; is the end in sight for natgas slide?; EPA tries to fiddle in FERC’s business; rosy future for natgas; and more!
    Read More “Marcellus & Utica Shale Story Links: Thu, Jan 28, 2016”

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    Hess Drilling 5 More Utica Wells 1Q16 Then Stopping

    stop signHess Corporation released their 2016 capital and exploration budget yesterday. Last October Hess said they would spend $2.9-$3.1 billion during 2016. Throw that out the door. They’ve now dropped the capex budget to $2.4 billion, which is 40% less than they spent in 2015. Hess has maintained an active drilling program in the Ohio Utica Shale. What part of that $2.4 billion do you suppose they plan to spend in the Utica this year? The number is $45 million, which will be spent on drilling five new wells and bringing a total of 14 wells online–all in the first quarter. After that? They’re releasing the single rig they now have under contract. So Hess is spending 1.9% of their budget on the Utica for 2016…
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    Canadian Antis Turn Criminal in Quest to Stop Fossil Fuels

    When radical environmentalists use lock cutters to break into an oil pipeline pumping station and turn the values–off or on or anything but what they are supposed to be–that’s a serious crime. It’s not cute. It’s not funny. It’s not “a statement”. It’s a hate crime–hatred of fossil fuels, which is driving some enviros criminally insane. And it’s happening in Canada where lunatic anti-fossil fuelers are attempting to disrupt, on a regular basis, the free flow of crude oil by pipeline throughout the country. We hope these criminals are caught and thrown in jail–for a long time…
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    Judge Stops WV County from Enforcing Injection Well Ban, For Now

    The second step has been taken in overturning an illegal ban on wastewater injection wells in Fayette County, WV. You may recall we told you two weeks ago that three Democrat county commissioners voted to ban injection wells (see WV County Officially Bans Injection Wells; Children Brainwashed). There are two injection well operators in Fayette County: Danny Webb Construction and EQT. The day after the vote EQT sued to overturn the new ban (see EQT Sues WV County that Banned Injection Wells, Seeks Injunction). On Tuesday, Jan. 19, U.S. District Court Judge John T. Copenhaver Jr. granted an injunction preventing the county from enforcing the ban at least until a Feb. 11 hearing. As part of his reasoning, Judge Copenhaver said EQT “is likely to succeed” in their lawsuit to overturn the ban…
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    FERC Investigates 3 Northeast Pipelines for Overcharging

    The Federal Energy Regulatory Commission (FERC) has launched five investigations into four pipelines, three of which operate in the northeast, to determine whether or not those pipelines have been “substantially” overcharging their customers with the excuse of “we have to recover our costs.” Although you might think the free market would govern what pipelines charge, pipelines, like other utilities, don’t operate in a totally free market. You can’t just up and leave one pipeline and take your gas to another. The government grants permission to operate, and the government keeps an eye on the rates charged–just like they do with your local gas and electric company. In the case of interstate pipelines, the government agency monitoring how much they charge is FERC. Apparently someone complained and FERC is now on the case. The three pipelines in the northeast under investigation are: Empire Pipeline, Iroquois Gas Transmission System and Columbia Gulf Transmission…
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    Drilling Slowdown – What to Do With Excess Produced Water?

    Ever hear of something called a crossover point in oil and gas drilling? No, we hadn’t either. When shale drilling is going full tilt, it uses, and produces, a lot of water. We’ve talked about this before. When you frack and force water down a hole, you get about 20% of it back (the rest dissipates into the rock layer a mile or more below ground). Millions of gallons. You also get, over time, something called “produced water,” or water that already existed in the depths that over time will come to the surface along with the oil and gas you’re extracting. In Pennsylvania most flowback (from fracking) and produced water (or brine) is recycled and reused to drill more holes. But eventually you drill so many holes and get so much brine or produced water out of the ground, you will begin to exceed the level that drillers can re-use it. That is, you “crossover” the point at which you produce more water from previously drilled holes than you can now use. Just last year predictions for the Marcellus were that it would be 5-9 years before crossover of water production. With the radical reduction in drilling in 2016, it may be this year we hit crossover. What do you do with all of that extra wastewater?…
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    New Report Says O&G Industry Repeating Mistakes from Last Downturn

    According to a new report published Monday by DNV GL, a Norway-based technical advisory firm for the oil and gas industry, a majority of oil and gas professionals believe the industry is repeating the mistakes they made during the last serious downturn in the industry. Namely, companies are laying off too many workers and cutting budgets too much. The report is titled “A New Reality: the outlook for the oil and gas industry in 2016” (grab a copy below). According to DNV GL Vice President Graham Bennett, “The operators can weather the low oil price storm for some time, but the supply chain will suffer far more, and there is a risk of a permanent loss of capacity in the supply chain if low prices persist.” Rather than being too quick to cut bodies and budgets, survey respondents believe now is the time to cut complexity, increase collaboration and work on standardization…
    Read More “New Report Says O&G Industry Repeating Mistakes from Last Downturn”

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    ExxonMobil: Fossil Fuels Will Produce 80% of World Energy Thru 2040

    Understanding the global energy picture is helpful so we know where the shale energy piece “fits” in that picture. Each year ExxonMobil prepares an annual energy outlook. On Monday they released the 2016 ExxonMobil Outlook for Energy: A View to 2040 report (full copy embedded below). Some interesting tidbits from the report: “In 2040, oil and natural gas are expected to make up nearly 60 percent of global supplies, while nuclear and renewables will be approaching 25 percent. Oil will provide one third of the world’s energy in 2040, remaining the No. 1 source of fuel, and natural gas will move into second place.” Perhaps most astonishing (for wacko environmentalists) is this: Fossil fules–oil, natural gas and coal– will continue to meet almost 80 percent of the world’s energy needs through 2040. It is intellectual suicide to pretend so-called renewables will be able to shoulder the energy burden in our lifetime. Ain’t gonna happen. We live in a world powered by fossil energy–and THERE’S NOTHING WRONG WITH IT…
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    API & GPA Say PHMSA Regs for Liquids Pipelines Not Necessary

    Last October the Dept. of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a notice of proposed rulemaking for new regulations governing hazardous liquid pipelines. It appears to be another case of aggressive action by the Obamadroids, bent on hassling the fossil fuel industry by requiring unnecessary regulations that don’t really improve safety. They just cost more money and take more time. The new rules will require safety inspections after “extreme” weather events and natural disasters–just to be sure there aren’t any leaks. Stepped up inspections would be required even if no problems are found–just to be sure no problems are found. The new regs also require all hazardous liquids pipelines to be piggable–something not physically possible with some pipelines. The list goes on. Recently both the American Petroleum Institute (API) and the Gas Processors Association (GPA) weighed in on the proposed new regulations. Needless to say they’re not impressed…
    Read More “API & GPA Say PHMSA Regs for Liquids Pipelines Not Necessary”