Marcellus & Utica Shale Story Links: Thu, Dec 21, 2017
The “best of the rest” – stories that caught MDN’s eye that you may be interested in reading. In today’s lineup: MSC president has ‘cautious optimism’ for 2018; natgas prices for consumers decline sharply in WV over last 10 years; anniversary of Gov. Cuomo’s Upstate choke hold; NY wants to evict oil tank rail cars; Cheniere’s Corpus Cristi LNG export plant 77% done; surge in US shale hedging will boost drilling in ’18; tax reform benefits energy markets big; Saudi Arabia shopping for US shale assets; and more!
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Deals to lease land for Marcellus and Utica Shale drilling happen on a regular basis–even today. Perhaps not as much as several years ago when large deals cut by landowner groups were headline news. But lease deals still happen–you just don’t hear about them because they are private deals (deal terms are not recorded at the county clerk’s office). However, every now and again a public entity–a town or school–will lease land for shale drilling. And that IS a matter of public record. When we spot such deals, we like to bring you the details. Such a deal was cut on Monday, by the Ohio County Board of Education. The Board of Ed signed a deal with American Petroleum Partners (from Pittsburgh) to lease the 66 acre Wheeling Park High School campus for shale drilling–under (not on) the campus. Which is so cool for a number of reasons. First of all, the deal includes a $6,000 per acre signing bonus, and if/when the gas begins to flow, an 18% royalty. Second of all, it’s a school! How many times have we read about nutjob anti parents with their knickers in a twist over putting a shale well more than a half mile away from a school, like we heard about endlessly from those in the Mars School District (Butler County). It was a long, hard fight, but we eventually won (see 
A Bradford County, PA judge has turned down Chesapeake Energy’s attempt to wiggle out of a royalty lawsuit on a technicality. However, the judge also punted the case to a higher court to settle what he calls “novel questions of law”–rather than spending more time and money on such issues at the county court level. This is good news for landowners in Bradford County who have been shafted by Chesapeake’s royalty scheme to shift the cost of piping and processing to landowners by using inflated values for those services. In December 2015, Pennsylvania’s felony-indicted Attorney General, Kathleen Kane (now gone), brought a lawsuit against Chesapeake Energy, Anadarko and Williams accusing them of, among other things, royalty fraud (see 
While Buffalo “Marcellus” Bills owner Terry Pegula’s JKLM Energy has been “steadily increasing activity” in Potter County, PA (northcentral PA) grabbing headlines, another company, National Fuel Gas (NFG) subsidiary Seneca Resources, is also active in Potter and several neighboring northcentral PA counties (Cameron, McKean, Elk, and Lycoming). We spotted a pair of stories in a local newspaper recounting Seneca’s activity to date, and outlining plans for the future. One statement in particular stood out for us: Seneca will be “shifting to 100-percent Utica development by the end of this fiscal year.” At first blush, you might think “end of fiscal year” means by Dec. 31, 2017. However, NFG and subsidiary Seneca operate on a strange fiscal year. Fourth quarter 2017 (Oct-Dec) is NFG/Seneca’s first quarter 2018 fiscal period. Since the quote about focusing 100% on PA Utica drilling came at the end of November, we interpret the quote to mean “Seneca will be 100% focused on the PA Utica by September 2018.” At any rate, let’s not get caught up in semantics and timing. The takeaways from the pair of articles below, which appeared about a week apart at end of November/beginning of December, are: (1) Seneca is shifting to 100% Utica drilling; (2) Seneca spent 60% more on drilling in 2017 than 2016; (3) Seneca is currently running either 1 or 2 rigs, depending on which quote from which story you read; and (4) between royalty payments, impact tax payments and money spent with local PA businesses, Seneca has now spent nearly $1 billion on shale drilling–all of it in northcentral PA…
For months Dominion’s top brass has signaled that the country’s newest LNG export facility, Cove Point (situated along the coast of Maryland), would begin full commercial operations “by the end of this year” (see 
A group of landowners in Ohio calling themselves the Coalition to Reroute Nexus (CORN), whom we affectionately call CORNballs, filed a lawsuit in federal court in May against the NEXUS pipeline project (see 
The Millennium Pipeline stretches ~244 miles from Independence in Steuben County, NY to Buena Vista in Rockland County, NY. The Millennium, which is supplied by local production and storage fields and interconnecting upstream pipelines, serves customers along its route in New York’s Southern Tier region and helps meet the energy needs of northeast markets. In August 2016, the Millennium filed an application for what it calls its Eastern System Upgrade (see 
It’s full speed ahead for Mountain Valley Pipeline (MVP)–a $3.5 billion, 303-mile pipeline that will run from Wetzel County, WV to the Transco Pipeline in Pittsylvania County, VA. In October, the Federal Energy Regulatory Commission (FERC) gave final approval for the project (see 
By our reckoning, Antero Resources’ $275 million wastewater recycling facility in Doddridge County, WV is now operational (see 
Looks like the Utica/Marcellus has its own brand of beer! Who knew? We spotted an article about a small startup called Shale Brewing Company–saying the company is “back.” Back from where? We didn’t know it existed and had left, let alone that it’s now “back.” The company produces microbrews with names like “Cold Rolled Ale” and “Roughneck Red.” Hmm, we thought that sounded intriguing, so we kept digging. We found information that Shale Brewing Company was started by shale co-workers who had “a passion for easy drinking brews.” The company, started in 2014, “has had a couple of starts and stops since its early days as a nanobrewery.” But once again it’s back–this time making batches of beer in downtown Canton, OH. Currently it’s hard to find a bottle of Shale Brewery’s beer, but there are a few locations around Canton where you can score a six pack…
Yesterday our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month. EIA has adjusted their previous prediction for December’s natural gas production from 61.7 billion cubic feet per day (Bcf/d) to 62.3 Bcf/d. Wow! Not only that, EIA predicts average production in January 2018 will hit 63 Bcf/d–yet another record high in a string of successive monthly record highs going back more than a year. The 800-pound gorilla is, of course, the Marcellus/Utica region. Our region will add another 347 million cubic feet per day (MMcf/d) of natural gas production from December to January. Yikes! Of the seven major shale play regions tracked in the DRP, Appalachia (the Marcellus/Utica) represents a full 42% of total U.S. production! Our region is a MONSTER natural gas producer. Here’s the latest DPR, along with some analysis from Reuters…
In November MDN shared the exciting news that an old oil pipeline stretching from Northampton County, PA through Bucks, Montgomery, and Chester counties, terminating in Delaware County at Marcus Hook, had been purchased by a subsidiary of New Jersey Resources and will get converted to flow more Marcellus natural gas to the greater Philadelphia region (see 
It’s GO-TIME at the Pennsylvania Dept. of Environmental Protection (DEP). GO-TIME stands for Governor’s Office of Transformation, Innovation, Management and Efficiency. In English, please! “Eliminate paper by using electronic devices.” Yesterday DEP Deputy Secretary for Oil and Gas Management Scott Perry said that by dumping paper and using apps on iPads, oil and gas inspectors save goodles of time by not filling out paperwork “back at the office” and instead stay in the field longer. All of which means that even with using less inspectors in 2017, the DEP actually increased the number of well site inspections by an extra 2,000 over 2016, saving the agency half a million dollars. It’s about time the DEP came into the 21st century. Now if we could only get them to speed up well permit approvals…
The Lansing, Michigan Board of Water & Light (BWL) announced yesterday it will build a brand new $500 million natural gas-fired power plant. The new plant will generate 250 megawatts of electricity, create 1,200 construction jobs, and go online in 2021. The plant will be located at the Erickson Power Station facility in Delta Township as part of its Lansing Energy Tomorrow plan, replacing (and retiring) BWL’s coal-fired Eckert plant at that location. Out with old, in with the new. Why report about a new gas-fired power plant in Michigan here on MDN? Because the mighty Rover Pipeline, which is due to be completed and online by the end of March 2018, terminates very close to Lansing (see the map below). While we’ve not spotted any stories indicating where the gas will come from to feed the new Lansing plant, we’d wager a lot of money that at least some–perhaps most/all–of the gas to feed the plant will come from the Utica/Marcellus, gas hitching a ride along the Rover Pipeline. The nuts from the Sierra Club are ecstatic that BWL will close the coal plant, but opposed to building a clean-burning natural gas plant. Some people are never happy…
Last Friday MDN told you about three proposed new injection wells planned for the Town of Brookfield, in Trumbull County, OH (see