Marcellus Drilling News

Industrywide Issues | NGLs | Research | Supply Chain

White Paper Shines Light on Marcellus/Utica NGL Supply Chain
July 22, 2015July 22, 2015

One of the great stories about shale drilling in the Marcellus/Utica that often gets overlooked is the story of NGLs–or natural gas liquids. NGLs include “other” hydrocarbons that come out of the borehole–like ethane, pentane, butane, isobutane and propane. Ethane is typically the most voluminous NGL coming out of the ground and is the chemical that feeds giant cracker plants that turn it into ethylene–the raw feedstock used to make plastics and anti-freeze. The NGL market has been transformed, seemingly overnight, by the abundance of NGLs in the Marcellus/Utica region–now the #1 NGL producing region in the country. Tracking how much natural gas and NGLs flows through pipelines is a service offered by Genscape–a great company with great people. They use innovative technologies and techniques to figure out how much gas and/or liquids are flowing in a pipeline–including infrared cameras! They also use cameras mounted near facilities to snap pictures of tanker trucks exiting a facility. All in an effort to estimate how much of a given product is moving through the system. It’s really cool stuff. If you want to know who’s processing and flowing how much natural gas, NGLs or other types of power (even including electric power), Genscape is the company to use. So when we spotted a new white paper from Genscape titled “Disruptions & Vulnerabilities Impacting the Evolving Marcellus/Utica NGL Supply Chain,” we knew we had to read it. The white paper highlights the impacts of NGL expansion in the northeast, vulnerabilities to the NGL supply chain, infrastructure trends, and expectations for pricing…
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Energy Companies | Energy Services | Equinor/Statoil | GE Oil & Gas | Industrywide Issues | Research | Sand/Proppant

GE/Statoil Announce Winners of Sand-Alternatives Contest
July 22, 2015July 22, 2015

Quick–what two things do you need in abundance in order to horizontally drill and frack a well? Yep–water and sand. The two together make up 99.5% of what goes down the borehole to drill and frack a shale well. Water is used to fracture or break open the rock and deliver the sand, which is called a proppant because some of it stays behind and “props open” the fractures in the rock, allowing gas and oil to escape into the borehole. The vast majority of truck trips to a well pad are to deliver water and sand. GE and Norwegian giant Statoil have teamed up to run an “Open Invitation Challenge” which is a contest for technology innovators to propose alternatives to water and sand, to reduce the amount of each and therefore reduce truck trips to and from well pads. The results are in for the sand challenge and five winners will each take home a check for $25,000. The winners have some fascinating technologies and if they meet certain other criteria are eligible for more money to develop and commercialize their technologies. And what are some of these interesting bits of tech? How about a polymer that swells to 10 times its initial size when liquid is added. Or a ceramic proppant that’s shapped in the form of an X acting like a tiny steel girder to keep rock fractures propped open. This is truly creative and potentially industry changing stuff…
Read More “GE/Statoil Announce Winners of Sand-Alternatives Contest”
Best of the Rest

Marcellus & Utica Shale Story Links: Wed, Jul 22, 2015
July 22, 2015July 22, 2015

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
Read More “Marcellus & Utica Shale Story Links: Wed, Jul 22, 2015”
Butler County | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | XTO

PA Landowners Sue XTO Energy for Shorting Them on Royalties
July 21, 2015July 21, 2015

Two Butler County, PA landowners with a combined 245.7 acres of land leased to XTO Energy have sued XTO claiming that XTO is breaking the lease agreement by paying royalties below 1/8 of what XTO receives in revenue for the gas. So far we’ve heard about Chesapeake Energy being the focus of these types of lawsuits for their shenanigans of inflating post-production costs from the pipeline company and then receiving a “kick back” of investments by the same pipeline company (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). Although we don’t believe the XTO lawsuit claims the exact same thing, what it does claim is that the lease signed with the landowners does not include language that would allow XTO to deduct certain charges that they are now deducting. That’s the claim. Of course you need lawyers to sue and the lawyers in this case aren’t content with representing just two landowners. They want to turn this into a massive class action and represent hundreds of landowners (cha ching!)…
Read More “PA Landowners Sue XTO Energy for Shorting Them on Royalties”
Antero Resources | Energy Companies | Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

Muskingum Watershed District Royalties Fall 73% in 6 Months – Why?
July 21, 2015July 21, 2015

Ace reporter and MDN friend Bob Downing from the Akron Beacon Journal has written an insightful article about the dramatic decrease in royalty payments being received by the Muskingum Watershed Conservancy District (MWCD). The MWCD was organized in 1933 to reduce the effects of flooding and conserve water for beneficial public uses, and oversees 16 dams and reservoirs across 22 counties in Ohio, covering 20% of the state. It is a massive area of Ohio under the oversight and control of the MWCD. They’ve leased thousands of acres to Antero Resources for Utica Shale drilling and currently there are 13 Utica Shale wells drilled on MWCD property. Here’s the bombshell: Over the past six months, royalty payments to the MWCD for production from those 13 wells has dropped 73%, from just over $1 million per month last December to just under $275,000 in May. Why? That’s the question Bob set out to answer…
Read More “Muskingum Watershed District Royalties Fall 73% in 6 Months – Why?”
CONSOL Energy | Energy Companies

CONSOL to Announce 2Q15 Earnings Loss & Future Plans on July 28
July 21, 2015July 21, 2015

A brief statement was issued yesterday from CONSOL Energy, the mothership of CNX Gas and center of ongoing rumors about whether it may either sell CNX or possibly sell it’s controlling interest in its 50/50 joint venture in some 663,350 of 750,000 net acres it owns in the Marcellus/Utica to jv partner Noble Energy (see CONSOL Energy/Noble Energy Rumors Continue to Swirl). Yesterday CONSOL telegraphed to investors that during a forthcoming July 28 second quarter earnings announcement it will show a loss from operations because of the low commodity price of natural gas. CONSOL also said in the July 28 it will discuss a plan “to generate free cash flow over the next 18-months, beginning in the second half of 2015, while maintaining annual gas production guidance at 30% growth for 2015 and 20% for 2016″…
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Energy Services | Halliburton

Tough Times: Halliburton’s Net Income Drops 93% in 1 Year
July 21, 2015July 21, 2015

It’s tough times in the oil patch. Halliburton, the world’s second largest oilfield services company, posted second quarter financial results yesterday. While the marketers and bean counters do their best to put a happy face on the results, there’s no papering over the fact that Halliburton and other oilfield services companies have been hammered hard by the downturn in oil and natural gas prices and the rapid decline in drilling, as evidenced by lower rig counts. Halliburton’s revenue for 2Q14 (a year ago) was $8.051 billion. Revenue for 2Q15 was $5.919 billion–a drop of 26% year over year. When you add in expenses of all types, the picture becomes even clearer–and bloodier. In 2Q14 Halliburton’s net income was $775 million. In 2Q15 it was $53 million–which is a 93% drop year over year. It’s clear that oilfield services companies like Halliburton are being asked to discount their prices by producers and consequently they bear the brunt of the downturn…
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CNG/LNG | Exporting | Industrywide Issues | Processing Plants

2nd Canadian LNG Plant Gets U.S. Approval to Export Marcellus Gas
July 21, 2015July 21, 2015

In May MDN told you that one of four proposed Canadian LNG (liquefied natural gas) export facilities that wants to export American shale gas received a green light from the U.S. Dept. of Energy to export our shale gas (see Canadian LNG Project to Export Marcellus Gas Gets DOE Approval). Good news. A second Canadian LNG export facility, Bear Head LNG in Nova Scotia, has just received the DOE’s official approval to export American shale gas. The shale gas they will export, if the plant gets built (still a big “if”), for both of the approved plants, would be Marcellus and Utica Shale natural gas. There are still many hurdles, including: (1) the Maritimes & Northeast pipeline has to get FERC permission to reverse its flow; (2) the gas has to get to the Maritimes & Northeast pipeline in the first place via new pipelines from either Kinder Morgan or Spectra Energy; and (3) the price of oil has to rise to make the whole thing economical, since LNG is so closely tied to the price of oil. Here’s the announcement from Bear Head LNG…
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Energy Companies | Industrywide Issues | M&A | Noble Energy

Noble Energy Completes Buyout of Rosetta Resources
July 21, 2015July 21, 2015

Noble Energy, the company that with a 50/50 joint venture with CONSOL Energy in some 663,350 acres of Marcellus and Utica Shale leases in the northeast and rumored to be interested in either taking over all of the acreage (becoming the company of record on the acreage and doing the drilling on that acreage) or possibly buying the gas division of CONSOL Energy, one of America’s oldest and biggest coal companies, just closed on buying out Rosetta Resources Inc. Noble purchased Rosetta for its Eagle Ford and Permian Basin acreage–over 100,000 acres total (located in Texas). Here’s the details of that purchase…
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Electrical Generation | Energy Services | Industrywide Issues | Talen Energy

Talen Energy Picks Up Gas-Fired Electric Plants – Marcellus in View
July 21, 2015July 21, 2015

An electric generation company based in Allentown, PA–Talen Energy–has just cut a deal to acquire MACH Gen, LLC, the owner of three natural gas-fired electric generating plants. One of those plants is located in upstate New York and is likely to begin using cheap, abundant, clean-burning natural gas from the gas fields of Susquehanna County, PA once the Constitution Pipeline is built. Another of the three MACH electric generating plants is located in Massachusetts and also likely (in our opinion) to burn Marcellus Shale gas. Below is the announcement from Talen followed by two articles that reference the NY and MA plants as likely candidates to use Marcellus Shale gas…
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Economic Impact | Industrywide Issues | Jobs | Pennsylvania | Regulation | Statewide PA

PA Bill Gives Tax Breaks to “Downstream” Natgas Businesses
July 21, 2015July 21, 2015

Here’s a cool idea: What if Pennsylvania granted 10 years of tax breaks to businesses that use shale gas and create at least 10 new jobs within three years? And what if those tax breaks for businesses were available in PA’s more rural areas–not the big cities? In other words, what if PA created more “downstream” jobs–jobs in manufacturing? Sure sounds like a winner to us. PA State Senator Scott Hutchinson (Republican from Oil City) has introduced Senate Bill (SB) 886 that would do just those things–turning PA into a jobs-creating powerhouse in the downstream sector…
Read More “PA Bill Gives Tax Breaks to “Downstream” Natgas Businesses”
Industrywide Issues | Pipelines | Regulation | Statewide WV | West Virginia

WV Congressman Says Obama Purposely Not Enforcing Pipeline Safety
July 21, 2015July 21, 2015

Congressman David McKinley, Republican from West Virginia, recently expressed his frustration with the Obama Administration and their lack of action in enforcing the 2011 Pipeline Safety Bill. McKinley said pipelines are safe but because Obama isn’t interested in promoting the image of safe pipelines (because it leads to more natural gas use), the Obama Administration is intentionally dragging its feet as it so often does when it doesn’t want to enforce laws Congress has passed that the lawless Lord B.H.O. disagrees with. McKinley threatens if federal agencies won’t do their job, Congress will force them to do it…
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Energy Services | Industrywide Issues | M&A | Marathon Petroleum | MarkWest Energy

Marathon Outlines Strategy for Buying MarkWest in PPT Presentation
July 21, 2015July 21, 2015

Seemingly out of the blue, last week Marathon Petroleum’s midstream division, MPLX, announced they had reached an agreement with arguably THE premier Marcellus/Utica midstream company, MarkWest Energy, to buy out MarkWest and make it a division of MPLX–essentially a division of Marathon Petroleum (see Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum). We speculated at the time that MarkWest didn’t want to become a Williams–the target of a hostile takeover by someone they don’t want to own them. So MarkWest went and found a suitable suitor and sold themselves. Marathon has provided a bit more of their thinking about why they think MarkWest will make a great addition to MPLX and how it all works in the organization chart by issuing a useful PowerPoint presentation of “supplemental information.” We have that PowerPoint for you below…
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Best of the Rest

Marcellus & Utica Shale Story Links: Tue, Jul 21, 2015
July 21, 2015July 21, 2015

The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading:
Read More “Marcellus & Utica Shale Story Links: Tue, Jul 21, 2015”
CONSOL Energy | Energy Companies | Industrywide Issues | M&A | Noble Energy

CONSOL Energy/Noble Energy Rumors Continue to Swirl
July 20, 2015July 20, 2015

Following up on our CONSOL Energy/Noble Energy rumor from last Friday, MDN now has a second source that delivers a bit more information about the rumor–refining it for us. We told you on Friday that a persistent rumor among those working for or with CONSOL Energy is that Noble Energy is lining up to buy the gas division, CNX (see Rumors Circulate that CONSOL May Sell Itself to Noble Energy). A new source tells MDN that a complete buyout of CNX is not necessarily in the cards–but that Noble Energy is “taking over” the joint venture acreage the two currently hold in a 50/50 deal in the Marcellus/Utica…
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Blue Ridge Mtn Res/Magnum Hunter | Carrizo Oil & Gas | Coterra Energy (Cabot O&G) | Energy Companies | Equinor/Statoil | Exxon Mobil | Industrywide Issues | M&A | Range Resources Corp | Research | Rice Energy

Goldman: Cabot O&G, Range Resources Among Top Takeover Targets
July 20, 2015July 20, 2015

With all of this talk about CONSOL Energy and Noble Energy and mergers/acquisitions and workforce reductions, we came across an interesting story and analysis by SNL Financial summarizing a Goldman Sachs Global Investment Research report issued last Friday. The Goldman report evaluates 38 exploration and production (E&P) companies on their suitability and desirability as mergers and acquisitions candidates based on asset quality, potential upside returns to the buyer as oil and gas prices improve, and low break-even operations. That is, of all the E&Ps out there, which ones are most likely to be targeted for a takeover, and by whom? The surprising answer is that Cabot Oil & Gas and Range Resources, both huge Marcellus drillers, are among the takeover targets. And the super majors interested in doing the taking over? Exxon Mobil and Statoil…
Read More “Goldman: Cabot O&G, Range Resources Among Top Takeover Targets”