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    Protecting the Miracle of Fracking: NCPA Sounds Alarm on Bans

    The misguided attempt to ban or restrict fracking (i.e. using fracking in shale drilling) threatens our country’s economic health and even our security. So says a new video and map published by the non-partisan National Center for Policy Analysis (NCPA). The NCPA sounds the alarm on (yes) successful anti-fracking efforts that have “swept the nation.” We applaud the NCPA for not turning away or ignoring the successes our opponents have achieved. There are hundreds of local and state frack bans and moratoriums in place–choking our economic growth and making us less secure from petrostates that finance terrorism against the U.S. Have a look at the NCPA map (below) for an indication of just how widespread bans and moratoriums and other unnecessary restrictions on fracking have become…
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    Electric Grid & NE Pipeline Companies Get Up Close and Personal

    PJM Interconnection is a regional electric transmission organization that coordinates wholesale electricity for 13 states and the District of Columbia. PJM, headquartered in Valley Forge, PA, covers the electric grid in the Marcellus/Utica region, including PA, OH, WV, MD, KY and VA. It is the world’s largest competitive wholesale electricity market with 900 members serving 61 million people! In a clear signal just how important shale gas has become for electric generators, PJM yesterday announced yesterday an agreement (deal?) to work more closely with a group of the biggest pipeline companies in the Marcellus/Utica “to work more closely with each other to improve operational planning and address growing interdependence between the electric and natural gas industries”–at least through June 2016. Working more closely means sharing non-public information back and forth between PJM and the pipeline companies…
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    How Shale Gas May Change the Gasoline You Buy at the Pump

    Shale drilling may play an important role in the gasoline you purchase at the pump. No, not because compressed natural gas (CNG) will replace gasoline–that frankly isn’t happening any time soon. Other hydrocarbons come out of the ground along with methane–or what we call natural gas. Those other hydrocarbons are oil and NGLs–natural gas liquids. NGLs can be further separated into their component parts–ethane, pentane, propane and butane. It is butane that may play a role in the gasoline you buy at the pump. It all has to do with “alkylation.” Let us explain…
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    1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1

    U-TurnSomething really big is about to happen in the Marcellus/Utica region. Starting August 1, the Rockies Express Pipeline (REX), originally built from Colorado and Wyoming to Monroe County, OH to bring natural gas from west to east, will reverse the flow for a large and important section of the pipeline. On August 1, the section of REX from Monroe County, OH to Mexico, MO will reverse the flow and carry 1.8 billion cubic feet per day (Bcf/d) of Utica and Marcellus Shale gas to the Midwest, including to the greater Chicago area. This flow reversal has the power to a) increase prices northeast drillers receive for their natural gas, and b) lower the cost of natural gas for consumers (and industrial companies, and electric generating plants, etc.) in places like Chicago. It is a win/win scenario. It is so important, and will have such a profound affect on natgas prices in the Midwest, that our friends at NGI’s Daily Gas Price Index have created a “REX Tracker”–a free daily chart updating the price of natural gas along the REX’s Zone 3 section…
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    Antero Resources 2Q15: Production Up 67%, Continues to Bleed $$

    Antero Resources, one of the biggest drillers in the Marcellus/Utica and a company totally focused on northeast shale drilling filed its second quarter financial update yesterday. On the positive side, Antero’s natural gas production rose 67% year over year to 1.5 billion cubic feet per day equivalent (Bcfe/d) in 2Q15. Looking forward, Antero says they expect when you compare all of 2015 production with all of 2016 production you will see an increase of 25-30% for 2016. The company continues to drive down costs–9% lower in 2Q15 from a year ago. On the negative side, Antero continues to bleed (a lot of) money. In 2Q14, Antero had a net loss of $42 million. In 2Q15 that expanded to a net loss of $145 million–a 245% increase in the wrong direction, down. Antero is a company with great assets and a solid operation, but losing money. Antero, backed by Warburg Pincus LLC, has been mentioned in the past as a possible target for a takeover (by Spanish energy giant Repsol, but Repsol ended up buying Talisman Energy instead). No, we’ve not heard any recent rumors, specific or unspecific. But don’t be surprised if one of the majors makes a play for Antero. Here’s their 2Q15 update…
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    Rex Energy 2Q15: Production Up 61%, MDN Provides Missing Rev # s

    Yesterday Rex Energy issued a second quarter 2015 “production and price realization” update–the first such update we’ve seen like it. It’s sort of a cherry-picking of the data and presenting only portions–perhaps in advance of poor financial information they’ll issue for 2Q15? Rex, our “little energy company than can and does” has plenty to boast about. Production for all hydrocarbons year over year increased an impressive 61%, from 128.8 million cubic feet equivalent per day (MMcfe/d) in 2Q14 to 206.8 MMcfe/d in 2Q15. But the second part of this brief update, in chart form, shows the prices they receive by hydrocarbon. Those prices are lot lower–through no fault of Rex’s–year over year. MDN has done some arithmetic to compare Rex’s revenues in 2Q14 and 2Q15. Here’s what we found…
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    Williams 2Q15: Revenues Up Thx to the Marcellus/Utica

    Yesterday both Williams Partners and parent company Williams released their second quarter 2015 financial and operational updates. For our purposes of focusing on the northeast, Williams Partners is the company to focus on. Overall Williams Partners’ EBITDA (earnings before interest, taxes, depreciation and amortization) was up a healthy 41%, from $717 million in 2Q14 to $1.0 billion in 2Q15. When you peal back the onion, you find that Williams’ northeast operations are largely the reason for the increase. The 2Q15 numbers include revenue from Williams’ purchase of Access Midstream and largely explain the bump up in revenue, although both the Atlantic-Gulf pipeline division and the Northeast Gathering & Processing divisions also saw big increases year over year. So the financial picture for Williams is rosy largely because of the Marcellus/Utica. The quarterly update does mention the “indecent proposal” by Energy Transfer Equity (but not by name) and says Williams continues to evaluate all options (see Energy Transfer Makes “Indecent Proposal” to Buy Williams for $48B). Below is the Williams Partners 2Q15 update, along with a copy of the Williams quarterly “data book” with slides breaking down the particulars for each division…
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    2 Pipelines Will Raise Gas Sale Price by $1 for Range Resources

    As we told you yesterday, Range Resources is excited about two pipeline projects that will go online soon–Spectra Energy’s Uniontown to Gas City (U2GC) Project and Mariner East I–Sunoco Logistics’ NGL pipeline from western PA to the Marcus Hook refinery near Philadelphia. On the quarterly analyst conference call yesterday, Range Resources CEO Jeff Ventura led off with a discussion about those two projects. To point out the importance of pipelines, these two projects will mean, according to Ventura, that Range will get $1 per Mcf more for their production once the pipelines go online. That’s a huge increase–as much as 33%–over what they receive now. Here are Ventura’s enlightening comments from yesterday’s conference call…
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    Seventy Seven Energy 2Q15: Red Ink Continues to Flow Heavy

    red inkSeventy 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 (see Long Labor & Delivery: Seventy Seven Energy Born Yesterday). Yesterday the company released their second quarter 2015 results. The red ink continues to flow like the Mississippi at Seventy Seven. While revenues were down 6% from 1Q14 to 1Q15, revenues tanked in the second quarter, down 46%. Looking at revenue and expenses, Seventy Seven’s net income (actually net loss) doubled from 1Q14 to 1Q15 (net loss of $37.6 million). In the second quarter, it got worse. They had a net loss from 2Q14 to 2Q15 of 444%, losing $74.7 million in 2Q15. Ouch. The company used a $100 million “accordion loan” to keep operating. Here’s the red news…
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    PA Court: Gas Storage Fields Lock Up Property for Drilling Too

    In some locations there are small or large underground storage fields for natural gas located in the Marcellus/Utica. We’ve covered stories in the past about one such field–the Brinker Storage Field, a 35,000 acre area in Columbiana County, Ohio that Columbia has used to store natural gas going back more than 50 years (see Some Brinker Field (OH) Leases Revised, Others in Lawsuit). More often than not these fields seem to be a flash point with respect to leases and potential drilling under them. Because the fields were leased years ago, there are disagreements about what the leases say about royalties for any gas drilled under them. Little did we know (in fact we didn’t know) there are such storage fields located in Pennsylvania too. A case went to court challenging the right of Range Resources and NiSource (their Columbia Gas subsidiary) to retain lease rights for both storing natural gas and drilling for natural gas for property partially included in a unit that includes a 14,000 underground Donegal Storage Field operated by NiSource in Washington County, PA. The landowners have just lost the case–meaning units with storage fields under them can “hold by production” undrilled land in the unit solely because there is gas stored…
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    Stanford Univ Misses the Mark with Fracking Depths Study

    missing the markWhat could of been a valuable research project by a Stanford University researcher is, instead, just more “fracking maybe/might/could/possibly affect groundwater” headline grabber. Stanford environmental scientist Dr. Rob Jackson, a seasoned researcher, set out to determine at what depths is fracking safe and does not affect groundwater (“The Depths of Hydraulic Fracturing and Accompanying Water Use Across the United States” — abstract below). The press release describing the research attempts to redefine any shale well drilled and fracked at less than one mile down as a “shallow” well. This is an inaccurate characterization. From the release: “The most recent such study, published in Environmental Science & Technology, finds that at least 6,900 oil and gas wells in the U.S. were fracked less than a mile (5,280 feet) from the surface, and at least 2,600 wells were fracked at depths shallower than 3,000 feet, some as shallow as 100 feet. This occurs despite many reports that describe fracking as safe for drinking water only if it occurs at least thousands of feet to a mile underground, according to Jackson.” If a well was drilled at 3,000 feet down, that’s still 2,000-2,500 feet below water aquifers–a quarter of a mile of solid rock between the two! Not to mention that 2,600 wells out of 44,000 wells Dr. Jackson studied is a puny 6% of the total–a very small percentage. In other words, the vast majority of shale wells drilled are a mile or more under the surface. Interestingly, for all of the talk about “shallow” wells and the potential dangers of fracking, Dr. Jackson’s study “has not found evidence that frack water contaminants seep upward to drinking-water aquifers from deep underground”…
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    Pitt Law School Launches ‘Energy Law and Policy Institute’

    A meaningful percentage of MDN’s paying subscribers are lawyers. Energy lawyers. Why? Just about everything involved with shale energy–from exploration to signing leases to drilling, pipelines, production and even selling the end product involves lawyers. Whether the energy industry is in a up-cycle or down-cycle, the one recession-proof area of the industry is the law. So it was no surprise to learn that the University of Pittsburgh’s School of Law has just launched an Energy Law and Policy Institute. The institute “is a major priority of the School of Law and the University” according to the Pitt announcement. The purpose of the Institute? To “advance the training of law students to become leaders in providing legal services to the regional, national, and international energy sectors” by offering new courses, seminars, conferences and the like. Here’s the announcement…
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    CONSOL Drills 2nd Best Utica Well Ever in PA, Flows 61 Mmcf/d!

    2nd placeYesterday CONSOL Energy’s management team hosted their second quarter 2015 analyst and investor conference call. There was major information contained in that call. The big news is that CONSOL just hooked up and tested a new Utica Shale well in Westmoreland County, PA that is the second best initial producing Utica well ever. Just last week MDN told you about the #1 Utica well drilled so far, by EQT (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!). The EQT monster Utica well is located in Greene County, PA. The CONSOL well just brought online is located about four miles away from that well–and is initially producing and flowing at 61 million cubic feet per day! [Correction: CONSOL’s 61 MMcf/d gusher is the Gaut 4IH. CONSOL is right now drilling the GH9 well that is four miles from the big EQT monster well.] This is really big news and is the reason that Utica drilling has turned CONSOL’s head away from Marcellus drilling…
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    Indian Giant RIL Looking to Dump its Marcellus Joint Ventures

    The single largest company in India, and one of the largest energy companies in the world, is Reliance Industries Limited (RIL). As of July 2013, RIL had invested a massive $5.7 billion in three shale joint ventures–the bulk of that in the Marcellus Shale. The company was planning to double it’s shale investment to over $10 billion! But a funny thing happened on the way the Forum. Prices for oil and gas started to slump, and RIL’s return on their shale investments slumped with it. RIL invested $3.5 billion in a Marcellus joint venture with Atlas Energy in 2010 (see Joint Venture Between Reliance Industries and Atlas Energy Worth $3.5 Billion Over 10 Years). RIL later battled Chevron to buy Atlas–but Chevron won, so RIL became a jv partner with Chevron (see India’s RIL Loses Bidding War for Atlas Energy – $4.3 Billion Deal with Chevron Goes Forward). RIL currently has 3 jv’s, the Chevron jv in the Marcellus (owns 40% of that acreage), a jv with Carrizo Oil & Gas in the Marcellus (owns 60% of that acreage), and a jv with Pioneer Natural Resources in the Texas Eagle Ford (owns 45% of that acreage). Now comes word that RIL wants to exit all of their jv’s and wash their hands of U.S. shale, a 180 degree reversal from just a few years ago…
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