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    Energy Transfer: Rover & ME2 Pipelines Both Online by End 2Q18

    Earlier this week Energy Transfer Partners (ET), one of the country’s largest midstream (pipeline) companies, released an update covering fourth quarter and full year 2017 results. As part of that update, the muckety-mucks from ET held an analyst conference call (yesterday). On that call they not only discussed what happened in 2017, but what is happening and will happen in 2018. ET, in case you didn’t know, is builder of both the monster Rover Pipeline project (from PA, WV and eastern OH through OH and into Michigan), as well as the Mariner East 2 (ME2) pipeline (NGL pipeline from eastern OH across the entire length of PA to the Marcus Hook facility near Philadelphia). We learned some important information from yesterday’s update. While the good news for both the Rover and ME2 is that they will both soon be fully operational, the truth is, both are delayed from their originally intended “in-service” dates. In the case of Rover, the new news delivered on yesterday’s conference call is that full operation of the entire length of Rover Pipeline, which will be capable of flowing up to 3.25 billion cubic feet per day (Bcf/d) of natural gas along its entire length, won’t happen until sometime in the second quarter 2018–that is, by the end of June. This is the first time ET has admitted full operation of the Rover pipeline will not be ready by end of March. However, to put this news in perspective, much of the pipeline is already done and currently flowing 2 Bcf/d–even as you read this. As for ME2, following an already-admitted delay until end of 2Q18, ET yesterday said it is keeping their estimate that the pipeline will be up and running by end of June, even though the project just came through a one-month construction shut down imposed by the PA Dept. of Environmental Protection. After ET (i.e. Sunoco Logistics Partners) paid a $12.6 million ransom (“fine”), the DEP relented and allowed it to restart construction. The one-month construction hiatus has not, according to officials, delayed the in-service date for ME2. Cool! Below is ET’s 4Q & full 2017 update. First up are ET comments about Rover and ME2…
    Read More “Energy Transfer: Rover & ME2 Pipelines Both Online by End 2Q18”

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    Cabot: 2018 “Inflection Year” with 1.5 Bcf/d of New Demand Coming

    Cabot Oil & Gas, one of the biggest and best drillers in the Marcellus Shale, released its fourth quarter and full year 2017 update today. Cabot continues to be the low cost leader. Cabot’s cost to find and develop shale gas in northeastern PA is an amazingly low $0.22 per thousand cubic feet (Mcf). Breakeven price for Cabot in the Marcellus in 2017 was ~$1.05/Mcf, meaning any sales above that amount is profit. Cabot sold its gas for an average of $2.31/Mcf in 2017, a 36% increase over 2016. You can see why they’re profitable, even with low gas prices in NEPA. Cabot produced 685.3 billion cubic feet equivalent (or 1.9 Bcfe/d) in 2017. Most of that came from a single county, Susquehanna County, PA. Like many shale companies, Cabot lost money in 2016 ($417 million), but they turned it around last year by making a $100 million profit. Cabot has now drilled in NEPA for the past 10 years. Have they run out of places to drill? Nope. Looking at a chart in Cabot’s most recent slide deck, they still have around 3,000 locations left where they can drill on existing leased acreage. At the end of last year Cabot owned 561 producing Marcellus wells. There’s plenty more to come! In this update Cabot indicates that 2018 will be “an inflection year” for the company. Why? Several large projects will come online in PA this year that will sop up a considerable amount of Cabot’s gas: (1) Moxie Freedom Power Plant, (2) Lackawanna Energy Center Power Plant, and (3) Atlantic Sunrise Pipeline. You can likely add a fourth to the list–the startup of the PennEast Pipeline. Take all of those together, and Cabot will get new demand to sell an additional 1.5 Bcf/d of gas they don’t sell now. In other words, Cabot will just about have to double their production to meet the new demand–which they are quite capable of doing. All eyes are on Cabot in 2018 as they hit an inflection point…
    Read More “Cabot: 2018 “Inflection Year” with 1.5 Bcf/d of New Demand Coming”

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    Chesapeake Stock Soars w/Update; More Marcellus Wells in 2018

    Yesterday the country’s second largest natural gas producer, Chesapeake Energy, issued its fourth quarter and full year 2017 update. Chessy CEO Doug Lawler began his comments during an analyst phone call this way: “2017 was another foundational year for Chesapeake as we continued to transform all aspects of our company.” Even though Chesapeake sold a number of assets and reduced headcount in 2017, production still rose 3% for the year. Lawler said he expects production to rise another 3% in 2018, even with a planned $2-$3 billion in sales of even more assets (what’s left to sell?). Lawler also said the company will reduce spending 12% this year. The news of production increases on the way using less money sent the company’s stock price soaring 22 higher%. But all is not peaches and cream. The company is still saddled with almost $10 billion worth of debt, which tends to remove the oxygen from a company’s lungs. Still, the Chesapeake doggedly soldiers on. Disappointingly, nothing was said during the conference call about either the Marcellus or the Utica. There’s only two brief references to our region in the official update–even though the Marcellus and Utica combined provided the lion’s share of Chesapeake’s production in 4Q17 (50% of all their production came from the M-U). Chessy says they will drill 55 wells in the Marcellus in 2018 (more than the 43 drilled in 2017), and they will drill 40 wells in the Utica in 2018 (less than the 67 wells drilled in 2017). Below is the full update, the latest slide deck, and a good overview of yesterday’s news from Reuters…
    Read More “Chesapeake Stock Soars w/Update; More Marcellus Wells in 2018”

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    Hilcorp’s Billionaire Founder Steps Down from CEO Role

    Jeff Hildebrand

    Hilcorp is a major driller founded in 1989 by Jeff Hildebrand. It is one of the largest privately-held (stock not publicly traded) oil and natural gas exploration and production companies in the U.S. Hilcorp is the largest oil producer in Louisiana. Headquartered in Houston, TX, Hilcorp has over 1,825 employees in multiple operating areas including the Gulf Coast of Texas and Louisiana, Wyoming, New Mexico, Alaska, and (yes) in the Marcellus/Utica. While they don’t have a huge presence here in the northeast, Hilcorp does actively drill shale wells in Lawrence County, PA and Columbiana County, OH. In fact, of the 58 operating shale wells in Lawrence County, Hilcorp owns all but 10 of them (see Lawrence County, PA O&G Production “Inching Upward Again”). Hilcorp has, until now, been captained by its founder Jeff Hildebrand, called an “oil baron” by Bloomberg back in 2015 when Hildebrand, among other big oil guys, backed a loser in the presidential campaign–Jeb Bush (see Big Oil & Gas Money Flows to Jeb Bush Campaign, Disappointingly). Hildebrand, the 209th richest person in the world, has just stepped down as CEO of Hilcorp. The new CEO is Greg Lalicker–a petroleum engineer who joined the company in 2006. But don’t worry. Hildebrand will continue on as executive chairman of the company and remain “heavily involved”…
    Read More “Hilcorp’s Billionaire Founder Steps Down from CEO Role”

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    Gulfport Energy: Utica Provides “Reliable, Repeatable Growth”

    Gulfport Energy is among a number of companies we’re highlighting today that, earlier this week, delivered their 4Q17/full 2017 update. Gulfport is an “independent” oil and gas driller with significant acreage positions in the Utica Shale of eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma. Gulfport also owns acreage along the Louisiana Gulf Coast. Although Gulfport drills (we’d call it “dabbles”) elsewhere, make no mistake–the Utica Shale is the company’s main focus. During 2017, Gulfport spud (drilled or began to drill) 94 Utica wells. Gulfport turned-to-sales 68 Utica wells in 2017. The Utica wells drilled last year had an average lateral length of approximately 8,150 feet. It took Gulfport an average of 19.2 days to drill a well, a decrease of 16% over the time it took to drill wells in 2016. Gulfport currently runs three drilling rigs in the Ohio Utica, with plans to decrease that number down to two in March, when the contract expires for one of the rigs. So what about 2018? As you can imagine, running one less rig means drilling less wells in 2018. Gulfport is budgeted to drill 36 to 40 Utica wells with an average lateral length of 11,200 feet this year. They plan to turn-to-sales 33 to 37 wells with an average lateral length of 8,000 feet. Gulfport made a profit of $435.2 million last year, versus losing $979.7 million in 2016 (a $1.5 billion swing into the black). According to CEO Michael Moore, “Our Utica asset provided reliable, repeatable growth throughout the year.” Here’s the full reliable, repeatable Gulfport update…
    Read More “Gulfport Energy: Utica Provides “Reliable, Repeatable Growth””

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    WV House Advances Bill to Fix Post-Production Deductions

    Earlier this week MDN told you that West Virginia royalty owners are pushing Senate Bill (SB) 360 to fix the issue of post-production deductions drillers take from royalty checks (see WV Royalty Owners Push Bill to Fix Post-Production Deductions). SB 360 would eliminate post-production expenses, such as transportation or severance taxes from royalty owners’ checks. The new news is that the WV House of Delegates is working on its own version of SB 360, called House Bill (HB) 4490. On Wednesday, the House Judiciary Committee voted to report the bill out–that is, they approved the bill to go on to the next step. But the vote, which was a voice vote, was split, indicating the ultimate success of the bill is far from assured. Needless to say drillers are not happy with either SB 360 or HB 4490. According to Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, her group (which represents many, perhaps all of WV’s shale drillers) is not actively opposing the bill, but they are letting everyone know they don’t support it–which we call a distinction without a difference. Hundreds of people who work for the drilling industry rallied at the state Capitol in Charleston on Wednesday–there to push for passage of a bill that appears to be on the fast track: HB 4268, the “co-tenancy” bill. Below is an article covering the rally, which mentions HB 4490 on post-production deductions…
    Read More “WV House Advances Bill to Fix Post-Production Deductions”

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    Shell Tries to Calm Troubled Ambridge Water Authority re Pipeline

    Shell wants to build a 97-mile ethane pipeline to feed the mighty $6 billion cracker plant its building in Beaver County, PA. Shell chose not use eminent domain but instead negotiated with (paid big bucks for) rights of way along the pipeline’s path. Earlier this month additional details came out about the proposed project when the Pennsylvania Dept. of Environmental Protection (DEP) published an application from Shell for stream crossing permits. When the details became known, the Ambridge Water Authority (in Beaver County), an organization that oversees a reservoir that provides drinking water for ~30,000 people, expressed “strong opposition” to the route of the pipeline (see Ambridge Water Authority Strongly Opposes Shell Ethane Pipe Route). But wait. Didn’t Ambridge know the route back in October 2017, when Shell first filed an application for the project? Yes they did. However, the stream crossing permit application reveals details either not in, or not obvious, in the original application–details that the pipeline will go under three streams that feed the Ambridge reservoir. That got the board up in arms. In a statement, the Water Authority said, “we will do everything in our power to try and have the pipeline relocated outside of our watershed and away from our main, and only, raw water line.” Tuesday night the Authority held a regularly scheduled meeting. Shell sent along several officials to talk with members of the board, to try and calm the troubled waters at Ambridge, so to speak. Did it work? Not really…
    Read More “Shell Tries to Calm Troubled Ambridge Water Authority re Pipeline”

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    Final State Permits Expected Soon for OH Mountaineer NGL Storage

    Some new details have emerged with respect to the Mountaineer NGL Storage facility proposed for Monroe County, OH, located just across the river (and border) from West Virginia. What did we know about the proposed project? The Colorado company behind the project plans to spend up to $500 million to build it; some 20 drillers have expressed interest in contracting with the facility to store ethane; and the nearby PTT Global cracker plant project (if it gets built) and the under-construction Shell cracker plant are both interested in connections to the facility. Last November, we learned there is a construction delay until mid-this year (see Yet Another Update on Stalled Mountaineer NGL Storage Proj in OH). Why the delay? Because of regulators in Ohio. At the “Emerging Opportunities Ohio Valley Conference” held yesterday in WV, Mountaineer NGL president David Hooker provided an update and some new-to-us details about the project. He said his company will file paperwork for “final state permits” in March. While “not a lot has changed” with Ohio regulators dragging their feet, here’s something that has changed. In order to pump out the NGLs from the underground storage cavern, brine (salty water) will be pumped down the bore hole, to force the NGLs back up to the surface. Original plans called for a single brine pond to store the liquid when it’s at the surface, waiting to be used. New plans call for two brine ponds. So far Mountaineer has spent $20 million on the project. If everything gets approved and demand develops as expected, the plan is to spend up to $130 million, which will build enough infrastructure to store 3 million barrels of NGLs. However, there is also a stretch goal of investing up to $500 million to store 10 million barrels. Here’s an update from our friends at Kallanish Energy, who attended yesterday’s event…
    Read More “Final State Permits Expected Soon for OH Mountaineer NGL Storage”

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    Last In-Person DRBC Frack Ban Circus Held in Lehigh Valley

    In September, MDN told you that the obsequious members of the Delaware River Basin Commission (DRBC) had slavishly obeyed their radical environmental masters by voting to move forward with a permanent ban on fracking in the Delaware River Basin (see DRBC Votes Tomorrow on Permanent Frack Ban Resolution). The final ban language/regulation was dropped like a bomb by DRBC staff on Nov. 30 (see DRBC Drops Permanent Frack Ban Bomb – Public Hearings in January). The DRBC announced they would allow public comment, via written communication, through Feb. 28. They also planned four public hearings (i.e. freak shows) to allow antis the opportunity to parade before the microphones and make jerks of themselves (we’ve seen it many times). Antis said three months wasn’t enough time to crank up the form letter machine nor is it enough freak show opportunities, so the DRBC caved (yet again) to the only constituency they listen to: anti-drillers. The DRBC subsequently announced they would extend the public comment period from Feb. 28 to Mar. 30 and add another two freak show public hearings to the roster (see DRBC Schedules More Freak Shows on Proposed Frack Ban Regulation). Yesterday the final in-person session was held in the Lehigh Valley, at Lehigh Carbon Community College. What’s that? The Lehigh Valley isn’t actually IN the Delaware River Basin? You think that actually matters? The purpose was to locate the session somewhere that’s solidly against fracking. Yesterday’s session didn’t disappoint. Grab the peanuts and popcorn…
    Read More “Last In-Person DRBC Frack Ban Circus Held in Lehigh Valley”

  • Other Energy Stories of Interest: Fri, Feb 23, 2018

    The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: DCNR to release PA state forest drilling report by early summer; 2017 was a good year for Washington County’s economy, thx to shale; what Ohioans need to know about PA serial protester; Marcellus/Utica fighting strong Gulf of Mexico bias; oil price jumps; shale remains leading source of U.S. crude; a downside for midstreamers in new tax law; Shell backing both deepwater and shale; and more!
    Read More “Other Energy Stories of Interest: Fri, Feb 23, 2018”

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    EQT Pulls Trigger to Split Company in Two: Drilling & Pipelines

    After EQT announced its plan to buy/merge in Rice Energy last year, the company got pushback from a couple of so-called activist investors (i.e. corporate raiders). One raider, Jana Partners, tried its best to stop the EQT/Rice deal outright (see Proxy Fight: Jana Partners, Atlas Tries to Stop EQT/Rice Deal). Jana slithered away after the merger happened (see Corp Raider Slinks Away After Losing EQT Fight; Selling Stock). However, a second raider, D.E. Shaw, supported the merger but lobbied hard that once the merger is complete, the company should split itself into two companies: upstream (drilling) and midstream (pipelines). Shaw’s pressure made EQT tap dance to their tune (see Under Pressure, EQT Moves Up Timeline to Explore Splitting Co.). True to their word, once Rice was merged in, EQT then added a couple of new board members and set about exploring how to separate the company into two companies. The theory is that by separating, each company can focus on what it does best (drilling or pipelines), meaning each separately will have a higher valuation/stock price than the two combined. That is, “the sum of the parts” is worth more than the whole. The review process is now done, and EQT’s Board of Directors voted to proceed with a plan to divide the company in two…
    Read More “EQT Pulls Trigger to Split Company in Two: Drilling & Pipelines”

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    XTO Exploded Belmont Well Still Not Capped, Neighbors Stay Away

    Last Thursday XTO Energy was drilling a Utica Shale well on the Schnegg well pad near Captina Creek (York Township, Belmont County, OH) when they “lost control” of the well and it exploded and caught fire (see XTO Energy Utica Well Explosion in Belmont County – 100 Evacuated). As we reported yesterday, most evacuees were allowed to return home, with just a few still not able to access their homes (see Most Evacuees Return Home After XTO Well Explosion in Ohio). However, we’ve since that time, we’ve learned that although evacuees were allowed to return home (and some did, to check on things/grab items), none of them stayed overnight in their own homes. Why? The well is still not capped. And as long as it’s not capped and continues to “spew” methane into the air, residents don’t feel safe. Can’t say that we blame them. We wouldn’t want to be in the vicinity either. The latest news is this: Power was restored to the area yesterday, but since the power has been out since last Thursday, you can imagine the condition of refrigerators and freezers in those homes where power was off. XTO has pledged to replace all fridges and freezers, and compensate residents for the cost of food lost, from having the power turned off. There’s still no estimate on when the well will be capped (a damaged crane has to be removed first)…
    Read More “XTO Exploded Belmont Well Still Not Capped, Neighbors Stay Away”

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    Rover Starts Up 2nd Mainline Compressor, Volume Grows to 2 Bcf/d

    Yesterday the Federal Energy Regulatory Commission (FERC) granted Rover Pipeline permission to start operations at its Mainline Compressor Station 2 in Wayne County, OH. Rover is a “monster” pipeline, a $3.7 billion, 711-mile natural gas pipeline that runs from western PA, northern WV and eastern OH through OH into Michigan and eventually to Canada. Rover is the largest of all Marcellus/Utica pipeline projects that will (within the next month or so) begin to flow 3.25 billion cubic feet per day (Bcf/d). With the startup of this second mainline compressor, volume along the portions of the completed pipeline will flow 2 Bcf/d. The company maintains it is on track to have the pipeline fully operational by the end of March. It is an engineering marvel, although not without some bumps along the way (see yesterday’s post, Ohio EPA Continues to Target Rover Pipe in New FERC Letter). Here’s the stellar news that the Wayne compressor is, likely as you read this, up and running…
    Read More “Rover Starts Up 2nd Mainline Compressor, Volume Grows to 2 Bcf/d”

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    New WV Facility Ships First Compressors for M-U Pipe Customers

    Bidell Gas Compression facility in Weirton, WV (click for larger version)

    In March 2017, Bidell Gas Compression, a subsidiary of Canadian company Total Energy Services, announced it would establish its U.S. manufacturing headquarters in Weirton (Hancock County), WV–in the northern panhandle of WV (see Biddel Gas Compression Selects WV Northern Panhandle for US HQ). Biddel manufactures and sells pipeline compressors. The site they chose in Weirton includes a 100,000 square-foot building, part of the old ArcelorMittal machine shop operation. On Monday, Biddel shipped out from the new Weirton facility, their very first truckload of newly manufactured compressors. The news article we spotted says delivery of the compressors will happen today. We’re assuming delivery is to a Marcellus/Utica pipeline project, somewhere in our region, given the short time between shipment and delivery. This is a feel-good story. It is one more evidence that our industry, which used to import everything from workers to equipment, has matured. We now make what we use right here at home! Here’s the deets on Biddel’s first compressor shipment…
    Read More “New WV Facility Ships First Compressors for M-U Pipe Customers”