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    OH Supreme Court Rejects Challenge to Forced Pooling Law

    On Tuesday, the Ohio State Supreme Court rejected a case in which landowners who were made part of a “unitization order” (i.e. forced pooling) had objected claiming their property rights were stripped away without due process. In legal terms, the landowners claimed it was a “taking” of their property without just compensation. The Supreme Court rejected the case because, they said, there were other legal means the landowners could have tried first (a lower court) before appealing the case direct to the Supremes using something called a mandamus action. In essence, the Supremes said, “Nice try, but you need to jump through the proper hoops first.” Ultimately the Supremes did not rule on the Constitutionality of the claim itself because the case had gotten to them via the wrong path. We’re guessing the landowners will now go back to square one and use the path laid out by the Supremes. Here’s the low down on the rejection by the Supremes, from the legal beagles at the Vorys law firm…
    Read More “OH Supreme Court Rejects Challenge to Forced Pooling Law”

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    The Great Chesapeake Massacre III: Lawler Fires Another 400 People

    2/2/18 Update: Have we been unfair in our characterization of Doug Lawler? Perhaps. We don’t know Doug–have never met him. He started firing masses of people at Chessy before the downturn hit. He arguably inherited a troubled company. We intensely dislike Carl Ichan and other corporate raiders, so we attributed Doug’s actions to Carl’s influence. MDN received a very nice note from a subscriber who personally knows Doug Lawler and has a different perspective to offer, which we’re happy to pass along. He said: “Jim, regarding your article on CHK, Doug Lawler probably learned a lot from Carl Icahn, but knowing Doug the way I do, I can assure you it hurt him to release people at his home office or other areas of operations. He was left with a mess and will take him years to clean it up. Hopefully with oil & gas prices stabilizing and going up, CHK will become profitable.” We thank our subscriber for sending that along!

    Just like those 80s slasher movies that did so well at the box office that studios kept making more of them (Friday the 13th, Nightmare on Elm Street, Texas Chainsaw Massacre, etc.), Doug “the ax” Lawler, CEO of Chesapeake Energy, is back with part III of mass firings at the company. In October 2013 when Lawler was newly appointed as CEO (by Chesapeake’s board, which was under the influence of corporate raider Carl Ichan), he swung his ax and fired 800 people in one gory episode, promising that was the last of it (see The Great Chesapeake Massacre: Lawler Fires 800 People in One Day). It worked so well the first time, Lawler came back with a sequel two years later (see The Great Chesapeake Massacre II: Lawler Fires Another 740 People). It’s now a little over two years since the sequel, and Lawler is back for a third time, firing another round of people–400 this time, 13% of the workforce. The latest victims worked at HQ in Oklahoma City. When corporate raiders take control of a company, as Icahn did at Chesapeake, they pressure management to fire people and sell assets–in a bid to make the stock price jump higher so they can sell their shares of stock at a higher price, pocketing the profit. It’s disgusting to ruin people’s lives and pretend it’s “just business.” At any rate, Icahn is long gone from Chessy, but Lawler learned his lessons well by sitting at the feet of the master. This is rich: Lawler said because the company has sold so many of its assets, it no longer needs the people. Kind of a vicious cycle. Fire people, sell assets. Fire more people, sell more assets. Where does it end? Pretty soon Lawler will be able to cater the company’s office Christmas party with a personal pan pizza from Pizza Hut…
    Read More “The Great Chesapeake Massacre III: Lawler Fires Another 400 People”

  • Marcellus & Utica Shale Story Links: Thu, Feb 1, 2018

    The “best of the rest”–stories that caught MDN’s eye over the break that you may be interested in reading. In today’s lineup: Big Green groups want “more time” to “review” Shell ethane pipeline plans; natgas industry helps rescue Nicholson from ice jam; Enterprise building ethylene export terminal on Gulf Coast; ND Bakken shale oil field “stronger than ever”; Exxon tripling its bet on the Permian; new study in “Nature” magazine pokes another gaping hole in climate change theory; drilling costs rise as rig counts climb; Trump’s State of the Union for energy; and more!
    Read More “Marcellus & Utica Shale Story Links: Thu, Feb 1, 2018”

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    Gulfport Energy Continues Focus on Utica in 2018, No Borrowing

    On Monday Gulfport Energy (drills mainly in the Utica but also in Oklahoma and Louisiana) issued it’s fourth quarter and full year 2017 results, along with a preview of what they expect to do in 2018. Gulfport has drilled the second highest number of Utica wells in Ohio, second only to Chesapeake Energy. Gulfport’s production in 4Q17 averaged 1.26 billion cubic feet per day equivalent, up 5% from 3Q17 and up a whopping 61% from 4Q16. Gulfport brought 15 Utica wells online in 4Q17. What’s ahead in 2018? The company will spend $770-$835 million in 2018. Astonishingly, Gulfport will not borrow to spend that kind of cash! Their spending will be 100% funded by the cash flow they generate from selling gas and oil and NGLs. Gulfport figures production will average somewhere around 15-19% more in 2018 than in 2017. Using an “average of 2.5 rigs” (how does that work?), Gulfport will drill 36-40 new Utica wells this year with an average lateral length of 11,200 feet. Gulfport plans to bring online 33-37 Utica wells with an average lateral length of 8,000 feet. Here’s the update of what happened in 2017, and what to expect in 2018, for one of the most important players in the Ohio Utica…
    Read More “Gulfport Energy Continues Focus on Utica in 2018, No Borrowing”

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    Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?

    Our lead story today is about Gulfport Energy which highlights some exciting news: This year (in 2018) Gulfport will fund their entire drilling budget out of the cash flow the company generates from selling gas/oil/NGLs (see Gulfport Energy Continues Focus on Utica for 2018, No Borrowing). Thing is, Gulfport isn’t the only Marcellus/Utica driller to advertise the fact that this year they are “living within their means” and not borrowing. Others include Range Resources, EQT and Antero Resources. Wow! We’re finally profitable!! Or are we? MDN spotted some analysis by a hedge fund manager. Writing on the Seeking Alpha investor’s website, Josh Young says (in our words) “hold on a minute” with respect to M-U drillers appearing to be able to grow production without borrowing. Why is Josh not convinced with this good news? Because when you dig deeper into the numbers, you find that “organic growth within cash flow is further from reach” because drillers are using DUCs to spend less on drilling, and grow production, than they otherwise would be. A DUC is a Drilled but UnCompleted well. Many times drillers will drill the initial hole in the ground, but then not “complete” (or frack) the well. Why do that? For a variety of reasons. The biggest reason is usually because the commodity price of gas (or oil, depending on the well) is not favorable. Rather than lose the lease (an expensive proposition), drillers will begin the process by drilling, and then leaving, the well, returning later to complete it when prices go up again. Josh’s thesis is that by using DUC inventory drillers aren’t really funding the entire budget from current year cash flow, because some of the money was spent in a previous year to drill the well. They are, in essence, still borrowing–from a different year. Josh estimates an average of 20% of the “new” wells coming online are DUCs and not truly new wells funded by current year dollars–meaning these companies aren’t as “profitable” as they may seem. Does he have a point? Is it all just financial mumbo jumbo? You decide…
    Read More “Impressive 2018 Marcellus Growth Not So Impressive Because of DUCs?”

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    Rover “Frustrated” with FERC Order to Stop Drilling at Tuscarawas

    In a strongly worded letter dated Sunday, Rover Pipeline tells the Federal Energy Regulatory Commission (FERC) they are “frustrated by the inaccurate central premise underlying the letter received from” FERC shutting down drilling at the Tuscarawas River location. On Jan. 24 FERC sent a letter to Rover stopping drilling at Tuscarawas, which had only restarted in December (see FERC Stops Rover Drilling Near River After 200K Gal Mud Disappears). In April 2017, some 2 million gallons of drilling mud went down the hole near the Tuscarawas River and popped back out where it should not have, harming a wetland by smothering aquatic life (see Rover Pipeline Accident Spills ~2M Gal. Drilling Mud in OH Swamp). That 2 million gallon “spill” in April triggered a shutdown of all HDD work in Ohio. It was only last December that Rover was allowed, by FERC, to resume more HDD work at the Tuscarawas site (see FERC Gives Rover OK to Resume All HDD Work, Incl. Tuscarawas River). After “losing” another 200K gallons down the hole, FERC shut it down a second time, on the 24th. So why is Rover frustrated? Because (a) losing some drilling mud was predicted and expected, and (b) NONE of the 200K gallons of mud lost has come back to the surface. There is no “inadvertent return,” as it’s called. Rover says 200K gallons staying down the hole, in the ground and not coming back out, is no big deal. That’s why they’re frustrated…
    Read More “Rover “Frustrated” with FERC Order to Stop Drilling at Tuscarawas”

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    Part of TGP’s Broad Run Pipe Expansion Starts Up in Kentucky

    In December 2016 MDN brought you news about Kinder Morgan’s “Broad Run Expansion Project” that will expand transportation capacity of natural gas on the existing Tennessee Gas Pipeline (TGP) system. Antis tried to stop the project, but the Federal Energy Regulatory Commission rejected their pleas (see FERC Denies Anti Request to Stop KM’s Broad Run Expansion Project). The Broad Run Expansion includes construction of two new compressor stations in Kanawha County, WV, one new compressor station in Davidson County, TN, and one new compressor station in Madison County, KY. TGP is also increasing compression capacity by modifying two of its existing compressor stations in Powell and Boyd counties in KY by replacing existing capacity with new, higher-rated horsepower compression units. The project will provide an extra 200,000 dekatherms per day (Dth/d) of transportation capacity along the same path as the Broad Run Flexibility project, which was placed in service on Nov. 1, 2015. All of the additional gas will come from Antero Resources and their Marcellus/Utica program. Kinder/TGP has been busy working on the $406 million project and the pieces are now coming together. On Monday, FERC sent a letter to KM/TGP telling them the brand new compressor station in Madison County, KY can begin operations. KM plans to have the entire project up and running by June 1st of this year…
    Read More “Part of TGP’s Broad Run Pipe Expansion Starts Up in Kentucky”

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    Antero Res. Tells Stockholders: We’re Working on Low Share Price

    Antero’s stock price performance last 12 months – click for larger version

    We spotted a press release from Antero Resources which says, in essence, “We’re working on it.” What are they working on? Antero’s leadership is working on a way to boost the stock price. The press release begins this way: “Antero Resources announced today that the Company and its Board of Directors are working with its financial and legal advisors to evaluate various potential measures to address the discount in trading value of Antero’s stock relative to some of the premier U.S. large capitalization upstream independents that have a similar profile in terms of leverage, capital efficiency, production growth and free cash flow generation.” Translation: We know our stock price isn’t has high as other companies in our league. We’re working on ways to fix it.” What might those ways be? They don’t say. It has been our observation that companies with a perceived “discount in trading value” are often targets of corporate raiders, aka “activist investors,” who buy up 6-7% of a company’s outstanding shares and proceed to bully the company into laying off people and selling assets in an effort to make the stock price pop. We suspect Antero is positioning itself to fend off such an effort. You know, “He who gets there with the bad news first, wins” kind of thing. Antero is admitting there’s a problem and that they’re working on it (and they don’t need the help of someone like Carl Ichan, thank you very much)…
    Read More “Antero Res. Tells Stockholders: We’re Working on Low Share Price”

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    Dominion Energy Gives Update on ACP, Greensville Plant & SCANA

    Dominion Energy, a huge company with fingers in many pies (gas and electric utility, electric generator, nuke plant owner, pipeline company, LNG exporter) issued its fourth quarter and full year 2017 update on Monday. Dominion’s top brass also held an earnings call with analysts. We reported yesterday that on the earnings call, Dominion CEO Tom Farrell said the Cove Point LNG export plant on the shore of Maryland will begin shipping LNG “in early March” (see Dominion CEO Says Cove Point LNG Operational in “Early March”). Farrell said getting the facility ready is “an enormously complicated process” and safety is front and center. While the Cove Point news was tops in importance for us, Dominion is working on other critically important projects for the Marcellus/Utica. Dominion is the company building the $5 billion Atlantic Coast Pipeline, a huge 1,588-megawatt gas-fired electric plant in Greensville County, VA, and they are in the process of (hopefully) buying South Carolina-based SCANA Corporation–the main electric and gas company for much of South Carolina. What about an update on all these other important projects? We have it for you below…
    Read More “Dominion Energy Gives Update on ACP, Greensville Plant & SCANA”

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    PA Senate Ctte Sends “Study Slow DEP” Resolution for Full Vote

    You have to understand something about politicians–a lesson we learned long ago when working in Washington, D.C. If a politician floats a plan to “study” something, that really means “we’re not going to do a single thing about it.” Over the past couple of years the Pennsylvania Dept. of Environmental Protection (DEP) has gotten slower and slower in issuing permits for shale drilling–for simple things, like erosion permits a driller needs to push dirt around to create a well pad. The DEP has a policy of issuing erosion and sedimentation permits 14 days from the date of application. These types of permits are common and necessary when building roads, well pads, etc. As of last summer it was taking the DEP 250 days to issue those permits (see More Pushback on PA Senate Plan to Fix Slow DEP Permit Reviews). The drilling industry has been loudly pushing for a change. The DEP says it has fewer people on staff and that’s the reason for the slowdown. The thing is, the number of requests for permits has gone down too–so that particular argument doesn’t hold a lot of water. PA House Republicans have introduced a number of bills to “fix” the DEP, not least of which is a bill introduced that allows certified third parties to assist the DEP in reviewing permit applications (see Bill Introduced to Fix PA DEP’s Extreme Delays Issuing Permits). The House bill got Gov. Wolf’s attention. Last week he introduced his own plan to fix the DEP–by hiring more people and hiking fees on the drilling industry to pay for it (see PA Gov Wolf Floats Plan to Fix DEP Slow Drilling Permits: Hike Fees). Not to be outdone, the PA Senate now wants to weigh in. Last fall a Democrat Senator from Wilkes-Barre, John Yudichak, floated a “let’s study the problem” resolution (see PA Dem Senator Calls for “Study” to Address DEP Permit Delays). That resolution was just reported out of the Senate Energy Committee (of which Yudichak is the Minority Chair). Yep, both the swamp-dwelling Republicans and Democrats on the committee voted to “study” the DEP slowness problem, meaning they plan to do NOTHING about it…
    Read More “PA Senate Ctte Sends “Study Slow DEP” Resolution for Full Vote”

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    Marcellus Industry AWOL at Philadelphia DRBC Frack Ban Hearings

    Last week the Delaware River Basin Commission (DRBC) held two public hearings in Philadelphia about its proposed plan to ban fracking in the Delaware River Basin (see Low Turnout for Philly DRBC Frack Ban Hearing, Antis Dominate). As we pointed out in our post, you would think a city with 1.5 million residents would turn out more than 120 people on a topic that is sold as “threat to everyone’s drinking water.” But no. Just a relative handful. However, the handful was almost exclusively in favor of the ban. One of two speaker who spoke against the ban was Dan Markind, an attorney in Philly. We’ve highlighted Dan’s comments here on MDN a few times over the years. Smart guy. We don’t always agree with his take, but we do this time. Dan circulated his thoughts after the DRBC hearing. His words are humbling. Dan makes the point that although many who spoke in favor of the frack ban have made up their minds and won’t change, some in the audience were open to being persuaded otherwise. Problem is, nobody from “our side” was there! One rep from the API spoke and left. And that’s it, beside Dan. We fielded nobody to present our side of the argument. As hard as it is to attend these types of events, attend we must. Here’s Dan’s take–that we missed a big opportunity by being AWOL at the DRBC hearings in Philly…
    Read More “Marcellus Industry AWOL at Philadelphia DRBC Frack Ban Hearings”

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    NYT, Boston Globe Delve into Russian Gas Coming to America

    The more we read about and dig into the story of Russian gas coming to Boston, the angrier we get. Just yesterday we told you that a rumored second shipment of Russian gas may be heading to Boston (see 2nd LNG Tanker with Russian Gas Coming to Boston?!). We have more details about the story. According to a New York Times article, in 2014 then-President Obama slapped sanctions on the “financiers and producers of Russian oil and natural gas, not the output.” Russia, at that time and since, has tried to “destabilize eastern Ukraine” with an ongoing occupation of Crimea. Sanctions against the financial services and energy sectors followed. Vladimir Putin (one of his cronies) was building an LNG export plant in the Arctic–Yamal LNG. The sanctions were aimed at stopping the plant from getting built–but it got built anyway with the help of Chinese banks. Yamal’s very first shipment of LNG recently left the facility and (as we previously outlined) was offloaded for a couple of days in the UK (see Confirmed: LNG Coming to Boston on Jan 22 is Illegal Russian Gas). What we still don’t understand is this: How can you impose sanctions on the financers and producers, but not on the outcome, the production (gas) itself? That seems crazy. We still think the gas is illegal–but nobody in D.C. (wake up Trump Administration!) is doing anything to stop it. Regardless of whether or not the shipments are illegal, even the far-left libs at the Boston Globe think this is nuts. It is humiliating (and an outrage) that sanctioned Russian gas–the VERY FIRST SHIPLOAD–is now being unloaded in Boston Harbor…
    Read More “NYT, Boston Globe Delve into Russian Gas Coming to America”

  • Marcellus & Utica Shale Story Links: Wed, Jan 31, 2018

    The “best of the rest”–stories that caught MDN’s eye over the break that you may be interested in reading. In today’s lineup: Westmoreland transit growing fleet of natgas buses; Warren County discusses distribution of Act 13 funds; Washington State looks to ban fracking for 10 years; FERC faces complications with new Trump tax cut; why is shale still not profitable; Sierra Club finally drops opposition to Sabine Pass LNG exports; fracked horizontal wells vast majority of new wells drilled; battling weather models; Canadian battle for U.S. gas markets; and more!
    Read More “Marcellus & Utica Shale Story Links: Wed, Jan 31, 2018”

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    2nd LNG Tanker with Russian Gas Coming to Boston?!

    Gaseyls tanker (now docked in Boston Harbor)

    A shipment of arguably illegal Russian natural gas (LNG) arrived in Boston Harbor on Sunday and will soon be offloaded, according to Russian news service Sputnik International. The U.S. slapped the Russian Yamal LNG plant, located in the Arctic, with sanctions following Russia’s moves against the Ukraine several years ago. Those sanctions make it illegal to receive gas produced from that plant. So shippers “whitewashed” the gas by unloading it in the UK, and a few days later, reloading it on a different ship–the Gaselys. The Gaselys is now docked and undergoing inspection and will then offload the gas for use in New England. It is an outrage that for a couple of reasons: (1) because New England is blocking pipelines from the Marcellus that would carry domestically produced gas that is cheaper, and (2) the Jones Act prevents our ships from the Gulf Coast and other locations from carting our own LNG to Boston. So, using a slight-of-hand to hide the origin of the gas, illegal Russian gas has now arrived and will be used in New England to heat homes–while they watch the Superbowl. Plenty of irony, wouldn’t you say? But the outrage doesn’t end there. A second shipment of Russian gas is rumored to be on its way to Boston. HELLO–IS ANYBODY AWAKE IN D.C.? How can this continue? Here’s an update on the first shipment now arrived, and a second shipment that quite possibly is now on its way…
    Read More “2nd LNG Tanker with Russian Gas Coming to Boston?!”

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    NTE Energy Plans to Build 550 MW Gas-Fired Elec Plant in CT

    Artist rendering of Killingly Energy Center – click for larger version

    In April 2016, MDN told you NTE Energy, headquartered in St. Augustine, Florida, plans to build several new natural gas-fired electric generating plants, one of them in Connecticut (see NTE Energy Developing 3 NatGas-Fired Electric Plants in CT/NC/OH). Since that time NTE has been busy with all of three projects. The Connecticut project is called Killingly Energy Center, a 550-megawatt plant that will be located near Killingly, CT. NTE has secured a site for the plant, filed a request to connect to the power grid, filed for an air permit and filed with the siting council. NTE expects to get all of the various permits they need sometime by the second quarter of this year (May-June time frame). When they do get the necessary permits for Killingly, construction will begin (in 2Q of this year). No doubt Marcellus gas will feed the plant, which will go online in 2021 (it takes a few years to build these things). NTE will spend $500 million on the project and employ 250-350 people to build it. But what about the location? You know how allergic New Englanders are to any new natural gas-related infrastructure! NTE is also building a plant in Ohio. The mayor of the city where the Ohio plant is getting built (Middletown, OH) is giving his “full-throated support” of NTE and is telling Killingly they don’t have anything to worry about. NTE does what they say they’ll do, and they do it right. So far Killingly appears to be playing ball. Killingly Town Council approved agreements with NTE earlier this month. When the plant gets built, Killingly will see $90 million in tax revenue over the next 20 years. Who wouldn’t sign on the dotted line for 90 million bucks?! Below is news about the project along with a recent PowerPoint presentation loaded with information about the Killingly Energy Center…
    Read More “NTE Energy Plans to Build 550 MW Gas-Fired Elec Plant in CT”

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    WV Co-Tenancy, Royalty Transparency Bills Make Progress

    As predicated, a co-tenancy bill has been introduced in this year’s 60-day session of the West Virginia legislature (see Co-Tenancy Front and Center for WV Legislature as Session Nears). What is co-tenancy? It is legislation that will give a majority of rights owners of a property the authority to sign a lease on behalf of all the rights owners. It corrects a situation in which multiple rights owners are listed for a property–sometimes 200 or more rights owners for a single piece of property! It is often difficult, if not impossible, to track them all down and get them to sign on the dotted line. Co-tenancy corrects that situation, opening up more Marcellus and Utica acreage that can be drilled. Last Thursday a co-tenancy bill was introduced in the House Energy Committee–House Bill (HB) 4268–which should see an initial vote this week. Various groups are lobbying for and against the bill. The WV Surface Owners Rights Organization is pushing for two amendments, without which they won’t support the bill. Although co-tenancy is a major emphasis for Marcellus/Utica drillers, a different bill is a major emphasis for landowners–a bill to provide greater transparency of royalty statements (more information provided on statements). House Bill (HB) 4270 already passed in a vote by the House Energy Committee last week. It still has to pass muster with the House Judiciary Committee, but the bill seems to be off to a fast start. Here’s a rundown on these two important bills, with copies of the bills as introduced, with background on the backroom wheeling and dealing over the co-tenancy bill…
    Read More “WV Co-Tenancy, Royalty Transparency Bills Make Progress”