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    Why Wait for a Cracker to be Built? Canadian Plant Cracking Now

    Although both WV and PA are in a race to build the northeast’s first ethane cracker plant, such a plant will not be operational for at least another 4-5 years–if all goes well. The problem is, what do you do with all of the ethane being produced now in the Marcellus and Utica Shale? Ethane is a valuable commodity that can be sold for a lot more than regular methane (or “dry gas”)–unless there’s no way to get it to a cracker. Then ethane becomes a waste product and actually costs money. The three ways to deal with ethane in the northeast right now are: (1) blend it with methane and other hydrocarbons, (2) flare it, i.e. burn it off, or (3) ship it out of the northeast via pipeline to a cracker plant. Option #3 is, of course, the preferred option for drillers–and an option that is now, as of a few months ago, a reality.

    Although ethane has been flowing through the Mariner West pipeline (owned and operated by Sunoco Logistics) to the Corunna cracker plant in Sarnia, Ontario, Canada for the past few months, it has only been fully operational for a short time. Last Thursday, officials at the Corunna plant held a ceremony to commemorate full operation of receiving and processing Marcellus and Utica Shale ethane at the plant…
    Read More “Why Wait for a Cracker to be Built? Canadian Plant Cracking Now”

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    IHS Research Predicts Gas Price will Stay at $4-$5/Mcf Until 2035

    An interesting new report is out from IHS. Researchers with IHS predict that the price of natural gas, because of the flood of new shale gas coming into the market, will stay somewhere between $4-$5 per thousand cubic feet (Mcf) at the benchmark Henry Hub for the long-term–like until 2035, at least.

    The report, titled “Fueling the Future with Natural Gas: Bringing It Home” (25-page executive summary embedded below) says shale gas can be profitably produced at $4/Mcf or less. One of many conclusions from their research: “…the North American natural gas resource base can accommodate significant increases in demand without requiring a significantly higher price to elicit new supply.” Translation: A LOT more shale drilling just ahead, even with relatively “low” prices. Here’s another fascinating conclusion from the study…
    Read More “IHS Research Predicts Gas Price will Stay at $4-$5/Mcf Until 2035”

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    Belmont County School Gets Huge Checks from Utica Leases

    A local school district in Belmont County, OH–Union Local Schools–is reaping huge rewards from leasing land for Utica Shale drilling. Union Local Schools has already received a lease signing bonus check for $519,750, and a second check is on the way for $112,000–and that’s before a penny of royalties are paid (19% for one lease agreement, 20% for a second lease agreement).

    Here’s the low-down…
    Read More “Belmont County School Gets Huge Checks from Utica Leases”

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    Carrizo Releases IP Numbers for Guernsey County, OH Utica Well

    Last week Carrizo Oil & Gas released a brief update on the initial production for their newest Utica Shale well, the Rector 1H in Guernsey County, OH. In addition, Carrizo said they plan to move a drilling rig into the OH Utica in early 2Q14 and keep it there through the balance of the year.

    According to NaturalGasIntel.com, Carrizo’s acreage position is the smallest of the “major” drillers in the Utica with just 14,500 acres leased. Here’s Carrizo’s initial production (IP) numbers for the Rector 1H and their comments about their Utica drilling program:
    Read More “Carrizo Releases IP Numbers for Guernsey County, OH Utica Well”

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    Sunoco Logistics Answers NGL Pipeline Concerns in Portage, OH

    Sunoco Logistics personnel were treated last week to a variety of silly concerns about an NGL pipeline they’re proposing through Portage County, OH–concerns like people keeling over dead because of undetected leaks in the buried pipeline and mass contamination of water aquifers. The anti-drillers are so good at distributing lies and distortions it’s no wonder average folks are concerned. You’d think a pipeline was the equivalent of an environmental holocaust.

    Even though pipelines are the safest form of transportation in existence, people turned out last week and packed the local county commissioner’s office to express their unfounded concerns. Here’s how it went:
    Read More “Sunoco Logistics Answers NGL Pipeline Concerns in Portage, OH”

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    Article Falsely Implies Driller Interested in S Maryland Drilling

    A highly misleading headline (and article) running in an AOL-based “local” Patch publication trumpets, “Energy Company Eyeing Gas Basin that Runs Under Southern Maryland.” The “deck” or smaller headline under it goes on to reinforce this misconception by saying, “A gas basin underneath five counties in Southern Maryland is drawing a Texas-based energy company’s attention.” Both statements are, in a way true. However, the impression they leave–that a Texas driller is actively looking to lease land in southern MD for shale drilling, is 100% false. Hence another propaganda campaign is born by another anti-drilling “reporter.”

    This particular falsehood is aimed at whipping up Marylanders against common sense regulations that would allow shale drilling in the Marcellus–which is only found under parts of two MD counties in extreme western Maryland’s panhandle area–Garrett and Allegany counties. Landowners in that area have been stymied almost as along as landowners in New York State–locked in an ongoing moratorium while politicians dither and preen. MDN has already told you about the shale basin mentioned in this new Patch story which drillers want to tap–in Virginia (see Fracking Finally on the Way in Virginia? Maybe Yes, Maybe No). The same basin underlying parts of VA, called the Taylorsville, underlies a few counties in southern MD too. But not one driller has mentioned leasing any land in anti-drilling MD. Quite the opposite–they’re staying away from Maryland like it’s radioactive…
    Read More “Article Falsely Implies Driller Interested in S Maryland Drilling”

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    Internet Company Invests in…Marcellus Shale?

    An internet company–Worldwide Internet, Inc.–spent $5 million to acquire a 40% in Marcellus Shale property near Erie, PA. The company swapped some stock to make the purchase. It may seem kind of strange that an internet tech company would invest in a property specifically because it has Marcellus Shale drilling potential. But perhaps it’s not so strange when you consider Worldwide Internet develops technology for huge data centers (big server farms with lots of computers), and those data centers are increasingly powered by natural gas used to generate electricity.

    This investment is “crazy like a fox” on Worldwide’s part, if you ask us. Here’s their brief press announcement:
    Read More “Internet Company Invests in…Marcellus Shale?”

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    On a personal note…

    travel dayToday (Friday) is a travel day for MDN editor Jim Willis, so there will be no regularly scheduled news updates today. Don’t worry! I will catch you up on the all of the latest news that matters for the Marcellus and Utica on Monday.

    In lieu of today’s news, I would like to give you a brief update on the state of MDN and where things will go in 2014. It is a rare “personal note” where I pull back the curtain and discuss with you what happens backstage…
    Read More “On a personal note…”

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    Fracking Justice Denied NY Landowners Yet Again Thanks to NY AG

    justice delayed is justice deniedA liberal New York judge has just just granted New York State an additional month and a half to get their act together to respond to the Article 78 lawsuit filed by attorney Tom West on behalf Norse Energy. You may recall West filed the lawsuit in the middle of December in an attempt to force Gov. Andrew Cuomo, DEC Commissioner Joe Martens, and Health Commissioner Nirav Shah to actually do their jobs (see Norse Energy Sues Gov. Cuomo to Force Release of Fracking Regs). It’s been 5 1/2 long years and the state continues to intentionally delay the release of fracking regulations–the delay, which is now obvious to everyone, is for political reasons. The delays eventually sent Norse Energy into bankruptcy. The company can’t even sell their leases via auction to compensate shafted investors because of the continuing delay by Cuomo. West was hired to force the governor and his minions to suck it up and do their jobs.

    How does the state respond? Cuomo’s Attorney General Eric Schneiderman (a strong anti-driller himself) has found a sympathetic lib judge to, incredibly, further delay! Until March 7 (instead of the scheduled January 24)–to give the state “more time” to…I don’t know, to do what? Make more coffee runs to Dunkin Donuts? Apparently 5 1/2 years isn’t enough time! West said it’s this very kind of delay tactic that prompted Norse to file the lawsuit in the first place! So now, justice is delayed yet again. You know the old saying, justice delayed is justice denied. Landowners in NY have certainly been denied justice under this corrupt governor and his AG…
    Read More “Fracking Justice Denied NY Landowners Yet Again Thanks to NY AG”

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    Magnum Hunter’s Proved Reserves Jump 23% Thanks to the Marcellus

    Magnum Hunter Resources published numbers yesterday for their total proved reserves (how much recoverable oil and gas they have in the ground) for 2013–sort of a scorecard for how they ended the year. They report that total proved oil and natural gas reserves increased by 23% in 2013. Magnum Hunter CEO Gary Evans says the increase was primarily due to their Marcellus Shale drilling program. He said he expects 2014 to be another banner year for the company because of the Marcellus, and because of their drilling program just getting started in the Utica Shale. The company owns 97,000 acres of leases in the Utica and that program is just getting off the ground, so they expect to really pump up proved reserves in the Utica in 2014.

    Here’s the full statement from Magnum Hunter. Lots of numbers–don’t go cross-eyed reading it. The interesting stuff is further down the statement…
    Read More “Magnum Hunter’s Proved Reserves Jump 23% Thanks to the Marcellus”

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    Kinder Morgan’s 4Q13 Update for Marcellus/Utica, Condensed

    Kinder Morgan, a $110 billion company with 11,000 employees, is the largest midstream (pipeline and processing plant) company in North America. As you might imagine, their vast operations include pipelines and plants in all of the major shale plays, including the Marcellus and Utica. Yesterday KM issued their fourth quarter 2013 update, which is extensive. Really long, like you may turn another year older by the time you finish reading it! So we “took one for the team” and scanned through it to bring you all of the references to either the Marcellus or Utica, which we’ve extracted and list below (saving you a lot of time).

    KM’s update for the northeast centers on its $500 million Northeast Upgrade Project for the Tennessee Gas Pipeline, new pipelines they plan to build, including the UTOPIA NGL pipeline, and on their joint venture deals with MarkWest. Here’s the greatly condensed version of the KM update relevant for the Marcellus/Utica:
    Read More “Kinder Morgan’s 4Q13 Update for Marcellus/Utica, Condensed”

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    Rex Energy 4Q13: Several Marcellus Experiments Paying Off

    The “little” driller in the Marcellus, Rex Energy, posted impressive gains in production for the fourth quarter of 2013. According to their 4Q13 update issued yesterday, Rex’s production, nearly all of which comes from the Marcellus and Utica Shale region, was 110 million cubic feet per day–a 12% increase over 2012. Of keen interest to investors is that 31% of net production for 4Q13 was oil and natural gas liquids (NGLs). The company gets a lot more money for those products than just plain “dry gas” methane.

    Rex has operations in western PA and eastern OH. Of interest to MDN is that Rex is testing a strategy of drilling both the Marcellus and the shallower Upper Devonian layers in a single well, apparently with good success. They’re also experimenting with spacing wells closer together–at 600 feet apart instead of the traditional 750 feet. Rex is innovating, and reaping the rewards. Here’s their full 4Q13 update:
    Read More “Rex Energy 4Q13: Several Marcellus Experiments Paying Off”

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    Murrysville Park Lease to be Discussed at Meeting

    Last June MDN told you that Huntley & Huntley, a small conventional gas driller, had leased land surrounding the Murrysville Community Park in Westmoreland County, PA. At that time Huntley made overtures to Murrysville officials about leasing the land under the park for drilling from neighboring properties they already have under lease (see Conventional Driller Eyes Marcellus Under Murrysville, PA Park). Since that time MDN has learned that Huntley often works with and for Range Resources. Although it’s not clear if Range is the client in this case, we suspect that is the case.

    Next Wednesday, Murrysville Council will take up a proposal from Huntley & Huntley (Range?) at their regularly scheduled public meeting. Both council members and Huntley want the public to attend and hear more about Huntley’s (Range’s?) plan, “in the interests of good communication.” Should be interesting…
    Read More “Murrysville Park Lease to be Discussed at Meeting”

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    BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?

    Yesterday BP, a huge driller with a sizable acreage position in the Utica Shale (84,000 leased acres), issued its annual BP Energy Outlook 2035 (full copy embedded below). The 96-page report sets out BP’s view of the most likely developments in global energy markets to 2035, based on up-to-date analyses. BP experts expect global energy demand to rise 41% from now until 2035 with 95% of that growth coming from “emerging economies.” According to BP, gas as a source of energy is growing fastest among the fossil fuels and by 2035 gas is expected to be at parity with coal–each providing about 27% of power needs in 2035. BP says shale gas will make up 68% of U.S. gas production by 2035.

    Of course, all of this speculation is fun to read, but frankly is just so much folly. MDN editor Jim Willis heard Charif Souki, CEO of Cheniere Energy address the predictions game at the Platts Global Energy Forum in New York City last December (see Energy Industry Leaders Gather at Platts Forum in NYC). At that forum, Souki said any kind of prediction beyond 2-3 years in the rapidly changing energy industry is meaningless. He said if you go back 20 years and look at those predictions about today, none of them predicted shale and how the industry would change so dramatically. We concur with Souki–making these kinds of predictions is a fool’s errand. Still, it’s fun to read and muse about what might be…
    Read More “BP’s Annual Energy Outlook Through 2035 – Fool’s Errand?”