EQT Still Fighting WV Minimum Royalty Law for Flat Rate Leases
Follow the bouncing ball. Earlier this year the West Virginia legislature passed Senate Bill (SB) 360, which Gov. Jim Justice subsequently signed into law (see WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty). The new law overturns a ruling by the WV Supreme Court in Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own previous decision and allowed EQT to deduct post-production expenses in old flat rate leases. In essence, SB 360 guarantees rights owners/landowners a 12.5% minimum royalty, regardless of post-production deductions–but only in flat rate leases. A flat rate lease is a lease in which a company pays a regular (in EQT’s case, annual) payment, regardless of how much oil/gas is produced. Traditionally drillers don’t deduct post-production expenses because the payments landowners get are piddly anyway. But EQT began to claim deductions, prompting a lawsuit that went all the way to the Supreme Court. The legislature aimed to “fix” what they considered an error in the court’s ruling. EQT claims the new law is unconstitutional and in April filed a lawsuit asking a judge to stop the law from taking effect (see EQT Sues WV for Passing Minimum Royalty Law re Flat Rate Leases). WV responded in June, asking the judge to dismiss EQT’s lawsuit (see WV Files Motion to Dismiss EQT Lawsuit Targeting Royalty Law). And now the ball has bounced again. EQT just filed paperwork asking the judge to deny the state’s motion to dismiss the lawsuit, claiming the new law improperly invokes “police power”…
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There is an ongoing legal squabble in Trumbull County, OH over a proposed second Utica gas-fired electric plant in Lordstown. Clean Energy Future (CEF) is currently building the Lordstown Energy Center, and has been since June 2016 (see 
MarkWest Energy, now part of Marathon Petroleum, is the premier midstream company in Ohio and West Virginia. Yesterday MarkWest issued its second quarter 2018 update. MarkWest reported record income of $453 million compared with $190 million in the second quarter of 2017. Put another way, MarkWest made close to half a billion dollars in profit! What about MarkWest’s operations in the Marcellus/Utica region? There was “solid growth” during the quarter. Gathered volumes averaged 2.8 billion cubic feet per day (Bcf/d) for the quarter, a 46% increase versus 2Q17. The increase came mostly from higher Utica dry-gas volumes. Processed volumes averaged 5.2 Bcf/d, a 10% increase versus 2Q17 due in large part to bringing online the Sherwood 9 and Houston 1 plants…
Yesterday a bunch of dignitaries gathered in Lusby, Maryland to celebrate the launch of Dominion’s Cove Point LNG facility with a ribbon-cutting ceremony. Yes, the facility has been up and running since April (see 
The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: Beaver Community College gets another $1M to help train cracker plant workers; BP pays $10.5B for BHP Billiton’s U.S. shale assets; residents in Virginia worry solar farm will hurt the environment; energy companies (falsely) praise carbon tax bill; acting EPA administrator challenges Big Corn; US natgas storage increases, prices stay the same; new pipeline testing tool from Baker Hughes; heatwave tests the limits of so-called renewables; the regulation that could push oil to $200/barrel; and more!
Yesterday the Pennsylvania Department of Environmental Protection (DEP) issued administrative orders requiring three oil and gas companies–Alliance Petroleum Corporation (a subsidiary of Diversified Gas & Oil), XTO Energy, and CNX Resources–to plug 1,058 abandoned oil and gas wells across Pennsylvania. Alliance has 638 wells, CNX has 327, and XTO has 93. In a quick scan of the list of wells to be plugged, we didn’t spot a single shale well. All 1,058 wells are conventional/vertical wells. So why is this news for MDN? Because all three drillers (but in particular CNX and XTO) drill shale wells, and plugging old conventional wells takes time and money–time and money that could be spent on drilling shale wells. It takes anywhere from $10,000 to $100,000 to plug an abandoned conventional oil/gas well. Most of the wells are located in the southwestern part of the state. CNX responded that in reviewing the list, some 190 of the wells in their list (out of 327) were part of a recent asset sale. Here’s the details on where, and how long these companies have, to plug old/abandoned oil and gas wells…
It’s the end of the road for a highly hypocritical order of nuns in Lancaster, the Adorers of the Blood of Christ, who use natural gas to heat an old folks home they operate, yet are trying to block the Atlantic Sunrise Pipeline from traversing that very same property. The nuns appear to be radical environmentalists. We don’t know how they justify using natural gas yet actively try to block a pipeline that delivers it. Only in the mind of a leftist. The nuns, with the help of local anti group Lancaster Against Pipelines, stuck a garden trellis and a few wooden park benches in the middle of a corn field they own (leased to a local farmer), declaring it a “chapel”–hence our attempt at humor, calling them “Sisters of the Corn.” The sisters then sued to block the pipeline based on religious grounds (see 
Despite intense opposition from nutty so-called environmentalists (i.e. fossil fuel haters), the Federal Energy Regulatory Commission issued permission on Tuesday to Dominion Energy to commence construction of the 600-mile, $6 billion Atlantic Coast Pipeline as it passes through North Carolina. Antis like those from the Southern Environmental Law Center are up in arms. Their strategy to stop the project is to attack it in small, specific areas. There is a pending lawsuit against the project using the Endangered Species Act, potentially blocking construction in certain geographies. If that lawsuit goes against the pipeline, it only affects construction in a small area and for a limited time. Yet Southern Environmental Law Center claims that if a pipeline project is stopped at any point along its route, that should trigger stopping the entire project at all points along the route. FERC isn’t buying into the legal bull and has cleared Dominion to start up the bulldozers. This pipeline will get built, despite the best efforts of antis. In fact, Dominion says it will be built and online by late 2019…
It’s probably self-evident to most people that if you slap a ban on new leasing of state land for shale drilling, as was first done by liberal Democrat Ed Rendell, and later solidified by liberal Democrat Gov. Tom Wolf, it will result in (tada!) less drilling on state land. That’s the conclusion of an updated report just issued by the Dept. of Conservation and Natural Resources (DCNR). The “Shale Gas Monitoring Report” (full copy below) was first published in 2014. An updated second edition of the report was just issued by DCNR. It shows: gas development on state forest lands has “slowed considerably” since 2014; even though roads to interior parts of forests have been improved (paid for by shale drillers), some folks would rather have “pristine” dirt roads full of potholes instead; there has been a growth of “invasive” plants, perhaps carried into forests by hitching a ride on drilling equipment; drilling hasn’t affected the quality of nearby creeks and rivers. Here’s an overview of the report, followed by a copy of the full 202-page report…
In late June Ascent Resources, a company founded by Aubrey McClendon after he left Chesapeake Energy, announced it is buying 113,400 Utica Shale acres along with 93 operating wells located in eastern Ohio for $1.5 billion (see 
Yesterday MDN posted a story about our growing grumpiness that Federal Energy Regulatory (FERC) Commissioner Rob Powelson is about to leave FERC to further his own career, jeopardizing a number of important pipeline projects (see 
Although this story concerns California, it is a preview of what’s coming to New England. Because of ongoing record-high heat in Cali, the Los Angeles Department of Water and Power (DWP) is telling residents to either “voluntarily” stop using electricity, or DWP is going to cut electricity to different communities on a rolling blackout basis. The cancer of anti-fossil fuel hatred has more fully metastasized in Cali than elsewhere in the country, and therefore Cali is an instructive case study. California, if it were it’s own country (now there’s a thought!), would be the fifth-largest economy in the world–larger than the United Kingdom, India and Brazil. Cali is the third largest consumer of gasoline and diesel on the planet, behind only China and the United States. And yet Cali persists in blocking new gas-fired electric plants, blocking pipelines, and shutting down existing oil and gas drilling. They are, in a word, insane. And now their insanity is on display for the world to see. Because of the heat wave and lack of natural gas supplies, natgas prices in Cali have zoomed to nearly $40/Mcf (thousand cubic feet). Residents now face either “voluntary” reduction in electric use–or forced blackouts. We take no pleasure (well, maybe a little pleasure) in saying Cali is reaping what it has sown…
Last week MDN brought you the exciting news that Williams says their $3 billion Atlantic Sunrise Pipeline that runs through 10 Pennsylvania counties to connect Marcellus Shale natural gas from northeastern PA with the Williams’ Transco pipeline in southern Lancaster County will go online in August (see 
Anti fossil fuel radicals continue to try and stir up opposition to the Mariner East 2 (ME2) pipeline project near Philadelphia. Local supervisors in Middletown (Delaware County, PA) walk a tightrope between a desire to protect area residents and anti groups fomenting irrational fears. The Board of Supervisors hired a consultant to advise them on potential safety issues with ME1 & 2. Monday night the supervisors held a public meeting to allow residents to hear from and ask questions of the consultant. The consultant, to his credit, maintained his objectivity. He’s not for or against pipelines–he’s looking at safety issues and discussing realistic scenarios. His responses to some of the questions were not what antis in the crowd wanted to hear. They wanted him to feed their fear-mongering (and false) beliefs. The consultant refused to do so. We found one bit of news from the session highly instructive. There is an anti group calling itself Middletown Coalition for Public Safety. The group presents itself as a “nonpartisan grassroots group of parents and residents whose goal is to educate elected officials and the public regarding the risks associated with the proposed Mariner East 2 pipeline.” It is the exact opposite. Rabidly partisan (Democrat). And not composed of residents. The people who belong to the group, at least its leaders, aren’t from Middletown! At the Monday meeting one of their members, Eric Friedman, was not allowed to question the consultant because he doesn’t live in Middletown. What does that tell you about how these “grassroots” groups are operated and funded?…