Wednesday, September 30, 2015

FrackNation Director Coming Out with Short Film to Counter Latest Josh Fox Production

From Breitbart:
Journalist and filmmaker Phelim McAleer is releasing a newshort film that draws attention to the scaremongering and deceptive tactics of anti-fracking activists. 
GasHoax will be released on Thursday, October 1 to coincide with the premiere of a new Josh Fox film, GASWORKS, which McAleer describes as “a zero credibility film because it comes from filmmaker Josh Fox who has a history of health hoaxes regarding fracking.” 
GasHoax will go live at 9 a.m. Eastern on so the public can know the truth about Josh Fox before his new film airs on MSNBC’s All In with Chris Hayes at 8 p.m. 
GasHoax highlights how many of Fox’s claims have been debunked, and it criticizes journalists for continuing to report new claims despite Fox’s record of unethical and misleading journalism. 
“Journalists should reject all of Fox’s claims about fracking and health until he corrects the record and apologizes for his notorious film, The Sky Is Pink, which claims that fracking causes breast cancer—a claim rejected by all leading cancer experts,” McAleer said.
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Final Rule Expected This Week on Stricter Ozone Standards

From TheHill:
The Obama administration is poised this week to issue a final rule on ozone levels that business groups contend would be the single most expensive regulation ever imposed by the U.S. government. 
The air pollution rule, due by Thursday, will touch off another flurry of legal battles and congressional tussling over the president’s environmental agenda, with business groups and Republicans opposed to the rule looking to block it. 
The Environmental Protection Agency (EPA) is expected to tighten its standard for surface-level ozone from 75 parts per billion to between 65 and 70 parts per billion. 
Green groups and health organizations say a tighter standard will help the environment and improve public health, but they too feel they could be left disappointed in the long-awaited rule. 
Industry groups mounted a massive blitz against a draft version of the rule, warning that large sections of the country would fall out of compliance with the standards
and that it would be expensive to bring many locales into compliance. 
The National Association of Manufacturers (NAM), which is leading the charge against the rule, commissioned a study earlier this year showing compliance costs topping $1.1 trillion, though environmental groups dismiss those numbers. The manufacturers have taken to calling the rule the most expensive regulation in history, a talking point picked up by Republicans.
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Chesapeake Energy Fires 15% of Its Workforce

Chesapeake Energy Corporation laid off hundreds of employees Tuesday. 
Officials say a total of 740 employees from all areas and levels of the company were laid off; 562 of those employees are from Oklahoma City. 
The layoffs affected 15% of employees overall, but the numbers represent 19% of the Oklahoma City employees. 
After today, there are about 4,000 employees left working for Chesapeake, with 2,500 of those employees being in Oklahoma City. 
A filing from the company in regards to “Costs Associated with Exit or Disposal Activities” said,

“On September 29, 2015, Chesapeake Energy Corporation (the “Company”) implemented a workforce reduction initiative as part of an overall plan to reduce costs and better align its workforce with the needs of the business and current oil and natural gas commodity prices. The plan resulted in a reduction of approximately 15 percent of its workforce. In connection with the reduction, the Company estimates it will incur an aggregate of approximately $55.5 million of one-time charges in the 2015 third quarter, including related employer payroll taxes, all of which will be paid in cash during 2015.”
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The massive job cuts come almost exactly 2 years after the company fired 800 employees in one day on October 8, 2013.

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10 New Permits for Utica Shale Drilling Issued Last Week

The latest weekly permitting update has been made available by the Ohio Department of Natural Resources, and activity continued for the second straight week to be busier than over the previous couple of months.

10 new permits were issued last week.  Gulfport Energy was the busiest driller, securing six permits for wells in Belmont County.  The other four permits on the report were all issued to Ascent Resources, with two for Jefferson County, one for Guernsey County, and one for Harrison County.

The report shows that there are now 2,017 permits issued for horizontal drilling in Ohio's Utica shale, along with 1,598 wells drilled and 1,014 producing.  The Utica rig count dropped back down to 21.

View the report below.

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Tuesday, September 29, 2015

09/29/15 Links of the Day: Chesapeake Energy Cutting Jobs, Debt Problems Loom Large for Drillers, and More

Columbus Business First:  Chesapeake Energy Cutting 750 Jobs, According to Media Reports in Oklahoma City   -   "Chesapeake Energy Corp., the largest oil and gas driller in Ohio, is laying off 750 employees, according to media outlets in its Oklahoma City home base. The company hasn't commented, but KFOR-TV is reporting employees were notified today and that cuts are..."

Energy in Depth:  Activists Fast for "World Free of Fracking" in (Failed) Attempt to Capitalize on Pope's Visit   -   "Yesterday, EID noted that a group of activists decided to try and capitalize on Pope Francis’ visit by fasting for 18 days to protest pipelines – or as one of their signs puts it, for a “world free of fracking.” According to..."

Forbes:  With Redeterminations Looming and Hedges Rolling Off, 4Q 2015 Looks Bleak   -   "October will mark the second bi-annual review of the credit lines for many heavily indebted shale players. Unfortunately their options are shrinking since oil prices now hover around $45 per barrel, significantly lower than the April 2015 mark of around..."

Baker Hughes:  Halliburton and Baker Hughes Announce Additional Divestiture Proposals   -   "Halliburton Company(NYSE: HAL) and Baker Hughes Incorporated (NYSE: BHI) today announced that the companies will market for sale additional businesses in connection with Halliburton’s pending acquisition of Baker Hughes. Pursuant to the Merger Agreement, and in order to permit..."

Washington Free Beacon:  Jeb Bush Energy Plan Gets Personal   -   "A week after Democratic presidential frontrunner Hillary Clinton proposed policies to scale back U.S. oil production, Republican hopeful Jeb Bush is emphasizing the economic benefits of continuing to expand it. Bush is releasing..."

The Journal Record:  Massive Layoffs Reported at Chesapeake Energy   -   "As of 11:30 a.m., the company had not released any official information. But analyst Neal Dingmann said the layoff could be more severe than the company’s October 2013 round, when Chesapeake laid off 800 people, including 640 at..."

Oil and Gas Investor:  Appalachian Basin: Robust and Viable   -   "So far in 2015, operators in the Appalachian Basin have been adjusting to changes in commodity prices. Conservative exploration and production strategies are being emphasized in order to better position operators in the depressed price..."

Platts:  No Sign of OPEC Policy Shift as Low Crude Oil Prices Bite Into Supply   -   "OPEC's next meeting is just ten weeks away and, barring some unforeseen development, there's little sign of a policy change in the offing. If anything, forecast declines in non-OPEC production may bolster Saudi Arabia's..."

Fortune:  Why America's Power Grid Needs Natural Gas Now More than Ever   -   "Now that the Obama administration has finalized its Clean Power Plan regulating greenhouse gas (GHG) emissions from the power sector, the focus of attention turns to the states, which must now find a way to reduce emissions consistent with..."

Butler Eagle:  XTO Seeks to Have Lawsuit Over Royalties Dismissed   -   "XTO Energy filed a motion Monday to dismiss a lawsuit filed against it over how it calculates royalty payments. On July 14, the Thiele family and Richard Marburger as a trustee of the Olive M. Marburger living trust, both Butler County landowners, filed a suit..."

The New York Times:  New York's Southern Tier, Once a Home for Big Business, is Struggling   -   "The region is resource rich, but landowners are angry the government will not let them capitalize on it. Many had pinned their hopes of an economic revival on the prospect of the state’s authorizing hydraulic fracturing, known as..."

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Video: Debate Continues Over Increasing Ohio Severance Tax, and Where the Extra Money Would Go

From WTOV 9:

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Morgan Stanley Admits Mistake, Backs Away from Energy Stocks

From Bloomberg:
Toward the beginning of 2015, with crude oil prices in free fall, Morgan Stanley's equity strategy team made a bold call, upgrading the energy sector to overweight. 
But there's been no reprieve for those stocks this year, with the S&P 500 energy sector index losing nearly one-quarter of its value year-to-date:  

Now, in a display of candor that's rare on Wall Street, chief U.S. equity strategist Adam Parker is waving the white flag.

"We made a really bad call by going overweight energy at the beginning of this year," he wrote. 
Morgan Stanley downgraded the sector to market weight, indicating the supply glut in oil may not improve for another year, at a minimum, and that investors will likely find a better entry point in six to nine months.
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Energy Transfer is Buying Williams Cos. in $32.61 Billion Deal

From the San Antonio Express-News:
Energy Transfer Equity is buying pipeline operator The Williams Cos. for approximately $32.61 billion. 
The companies said Monday that the combination creates one of the five biggest energy companies in the world. 
Energy Transfer Equity LP will pay $43.50 per share, a 4.6 percent premium to Williams' Friday closing price of $41.60. Williams' shareholders can choose shares of Energy Transfer Equity affiliate Energy Transfer Corp., cash or a combination of both. 
The companies put the deal's value at about $37.7 billion, including debt and other liabilities. 
Williams' stockholders will also receive a one-time special dividend of 10 cents per share that will be paid immediately before the acquisition closes.
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Is the U.S. Shale Boom Over, or Just On Hold?

From The Fuse:
U.S. oil production has received a lot of attention lately for stalling out and beginning to decline, but the U.S. shale gas revolution also appears to have slowed down, at least for now. It’s far from over: New sources of demand and improved drilling efficiency will mitigate damage to the industry in the medium term, but for now, the shale gas industry appears to be experiencing a painful adjustment that is impacting both company balance sheets as well as U.S. production as a whole. 
Years before the boom in shale oil production, drillers were extracting massive volumes of natural gas by fracturing shale. As a result, U.S. natural gas production surged by more than 40 percent between 2006 and 2015, making the country the world’s largest producer. 
The dramatic rise in shale gas production caused prices to crash. Henry Hub spot prices for natural gas routinely traded above $6 per million Btu (MMBtu) in the years preceding the shale boom, but since early 2010, natural gas prices have remained below $5/MMBtu and are now trading at just $2.5/MMBtu. 
The flood of shale gas has been a huge boon for consumers, contributing to a petrochemical and manufacturing revival, but the resulting price drop has been bad for gas drillers. The rig count began falling in 2011, and continues to this day.
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Analyst: Marcellus and Utica Shale to Buck the Trend With Gas Production Growth Next Year

From SNL:
The galloping growth rate of natural gas production in Appalachia will slow in 2016, but the Utica and Marcellus shales will be the only plays in the U.S. with dry gas production growth, Jefferies LLC gas analyst Jonathan Wolff told his clients on Sept. 24. 
Introducing a new 21-basin U.S. gas production model, Jefferies said overall U.S. domestic production will fall by 0.8% in 2016 as non-Marcellus gas and associated gas production volumes decline. 
But in low-cost Appalachia, growth is still in the cards. 
"After rising ~3 Bcf/d per annum over the past 6 years (to ~20 Bcf/d), we expect northeast natural gas output growth to slow in 2016/2017 due to weak local prices and pipeline bottlenecks," Jefferies said. "For 2016, we forecast northeast supply growth of ~1.4 Bcf/d, with a fairly equal split between the Marcellus and Utica developments." 
"Within the model, we have PA production rising ~0.5 Bcf/d between now and year-end (largely from de-bottlenecks in NE PA), with an additional 0.5 Bcf/d growth next year," Jefferies said. "Production in the southwest part of the state should be fairly flat through at least 1Q given a limited completion schedule."
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Small Monroe County Cracker Plant on Hold Thanks to "Manpower Draw" of Other Projects

From Rigzone:
The underlying economics are still good and the concept remains solid, but the prospect of finding enough qualified people to actually build and staff it is too daunting – at least for now. Such are the conclusions of Houston-based Appalachian Resins, Inc. (AR), whose board earlier this month decided to put its "less-than-world-scale" ethane cracker project in Monroe County, Ohio, on hold. 
"Looking at the timing, we are not able to get ahead of the two other projects," Bob Mifflin, AR's president, told Rigzone. 
The "two other projects" to which Mifflin refers are world-scale ethane crackers proposed by PTT Global Chemical (PTTGC) and partner Marubeni Corp. in Belmont County, Ohio, and Shell Chemical in Beaver County, Pennsylvania. Like AR, PTTGC/Marubeni and Shell have been considering building ethane crackers in Appalachia to leverage plentiful natural gas liquids (NGL) feedstocks from the region's Marcellus and Utica shale plays. 
Mifflin explained that the larger, multibillion-dollar projects are on track to reach critical development milestones before AR. For instance, he noted that Shell has already secured its air permit and land for the facility. Consortia led by Bechtel Enterprises Holdings Inc. and Fluor Corp. are spearheading preliminary front-end engineering design work and cost estimates for the PTTGC/Marubeni project, President and CEO of PTTGC Supattanapong Punmeechaow, said Sept. 3, during the project announcement with Ohio Gov. John Kasich. Thailand-based PTTGC expects the project's feasibility study to conclude within the next year.
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Sources Say 20,000 Layoffs Coming From Halliburton

From Seeking Alpha:
Two days ago, my oil and natural gas contact network allowed me access to an internal Halliburton (NYSE:HAL) document that was sent out by Halliburton President Jeff Miller to the company-wide employee base. 
This internal memo summarized the commodity pricing downturn driven structural pressures that the company is under as well as cost reduction measures HAL would take to help remedy some of the structural stress pressing down on its share price. Of course, Halliburton is also in the midst of acquiring Baker Hughes (NYSE:BHI), which has provided its own equity pressure addition in the form of short selling coming from parties doubting the success of the transaction, as well as those hedging the merger spread. 
Since I published this memo for public viewing, and it was immediately sent out to my Seeking Alpha follower base via Seeking Alpha's new contributor messaging function, Suzanne Edwards of the Houston Business Journal hasconfirmed with a Halliburton spokesperson that the memo is accurate and was sent out by Miller. 
The spokesperson, from what I gather from Edwards' reporting, did not confirm or deny the memo-stated "two week" window before layoffs would start. That said, I've since come to find out from members of my oil and natural gas network that Halliburton has blocked off time today (September 24, 2015) for "HR people" to begin "addressing" certain working verticals within the Houston office. From my understanding, these "meetings" are not limited to any single division within the local area. I've also come to find out that at least some international layoffs have taken place over the last two days (since Monday, September 22, 2015). A very credible source of mine has told me Halliburton could let go up to 20,000 employees on a global basis when all cuts have been finalized. So, while the memo did state that workers being cut would receive notification over the next "two weeks," it appears that the cutting has already started. Again, this closely follows Williston Herald confirmed layoffs in North Dakota from just a few days ago.
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Friday, September 25, 2015

Links for 9/25/15: Ruling on NEXUS Pipeline Access in Medina County Coming on October 2, Job Loss Continues, and More

The Sun Herald:  Leonardo DiCaprio says he's shedding fossil fuel investments   -   "Leonardo DiCaprio is joining a campaign to use investment decisions to fight global warming: He's planning to shed his own investments in fossil fuels, an activist group said..."

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Gas & Oil:  The Myths About Hydraulic Fracturing Are Many and Damaging   -   "Fracking media coverage is a confused mess. One day there's a news story implying that fracking is causing earthquakes or groundwater contamination; the next day there's a different story asserting there's no clear connection. No wonder the Gallup Polling Co. recently found that an equal number, 40 percent, supported and opposed..."

NGI:  Oil/Gas Job Cuts Continue in Appalachian Basin   -   "Oil and gas industry jobs continue to be eliminated in the Appalachian Basin as more companies - primarily in the supply chain and oilfield services sectors - announce broad layoffs that have left more than 1,500 people..."  El NiƱo Could Turn Into Worst Nightmare For U.S Natural Gas Producers   -   "We have now tumbled into fall, although you wouldn’t know it by looking at the weather forecast. As NOAA’s 8-14 day outlook illustrates, we are set for above-normal conditions for the first week of October across, ooh, basically the entire US. This morning’s natural gas storage report is expected to yield..."

Energy in Depth:  Top Five Silliest Things Anti-Fracking Activists Did During the Pope’s Visit   -   "Washington, D.C. was abuzz this week with excitement over the historic visit of Pope Francis – and of course, anti-fracking activists didn’t waste the opportunity to push yet more misinformation about hydraulic fracturing. A coalition of anti-fracking groups launched a number of “climate” protests and..."

Akron Beacon Journal:  Coalition to Fight Ohio EPA on Compressor Station Permitting   -   "A coalition of 27 grassroots environmental organizations and 15 Ohio individual citizens have joined together and formally challenged new rules proffered by the Ohio Environmental Protection Agency (OEPA) to weaken air quality regulation for compressor station installations, which are key parts of gas mega-pipelines planned to serve..."

Fuel Fix:  Pro-Industry Group Throws Support Behind Drilling on Texas University Land   -   "A pro-industry group is firing back at calls by environmental advocates to restrict drilling on university land in Texas, arguing that oil and gas revenue has provided massive financial support for the University of Texas and Texas A&M. North Texans for Natural Gas, a loose coalition of people who support natural gas development, is circulating a petition urging UT Chancellor William McRaven and..."

Rigzone:  Oil, Bonds Go Their Separate Ways   -   "The rebound in oil prices has not been enough to stop the bleeding at many US energy companies, whose bonds keep weakening - and whose ability to muster fresh capital is dwindling away. Oil and bond prices are moving in opposite directions, underlining the market's lack of confidence in a cash-strapped sector that is seeing its prospects go..."

Akron Beacon Journal:  Medina Co. Judge to Rule on Oct. 2 on Nexus Pipeline Access   -   "Medina County Common Pleas Judge Christopher Collier said he expects to rule on Oct. 2 on whether the Nexus Pipeline will be given survey access to private property. The judge said during a 40-minute hearing on Thursday that he expects to work on his decision this weekend and early next week. State law gives the Texas-based Nexus Gas Transmission LLC the authority to..."

Public Herald:  BREAKING: Oil & Gas Drilling Impacts Public Drinking Water Supplies in Potter County   -   "Two public drinking water systems have been impacted and at least six private water supplies contaminated due to ongoing pollution being caused by a natural gas fracking operation of JKLM Energy in Potter County, Pennsylvania. An emergency public meeting occurred September 24th at 4PM at the Gunzburger Building in downtown Coudersport to inform the public. Public Herald was the only press agency in..."

Associated Press:  Judge Tosses Landowners' Lawsuit Against Fracking Opponents in Western Pennsylvania Township   -   "A judge has dismissed a lawsuit that landowners filed against people and groups who oppose fracking in a western Pennsylvania township. Natural gas drilling has been delayed in..."

Alternet:  Don't Frack With the Pope: Faith Leaders Say It's Our Moral Duty to Ban Fracking

Akron Beacon Journal:  Antero Resources Shifts Water Business to Antero Midstream   -   "Antero Resources Corporation (NYSE: AR) ("Antero Resources" or the "Company") announced today that it has entered into a definitive agreement for Antero Midstream Partners LP (NYSE: AM) ("Antero Midstream" or the "Partnership") to acquire Antero Resources' integrated water business for an aggregate $1.05 billion in..."

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Gulfport Energy Awards Nearly $35,000 in Grants in Ohio

From Gas & Oil:
The Gulfport Energy Fund at the Foundation for Appalachian Ohio has announced its first 2015 grant recipients. 
During this first round, the Gulfport Energy Fund awarded nearly $35,000 to 10 projects throughout four counties, including projects benefitting local citizens in Guernsey and Belmont counties. 
“We are proud to invest in educational opportunities through the Gulfport Energy Fund,” said Gulfport Energy President and CEO Mike Moore. “Investing in the communities where we operate is a hallmark of our work and we appreciate the opportunity to support the efforts of these dedicated educators.” 
The Gulfport Energy Fund was created to support projects that create opportunities by improving quality of life, creating access to opportunities, or identifying and implementing a solution for a community need or issue in the counties where Gulfport operates. Tax-exempt organizations from Belmont, Guernsey, Harrison, and Monroe counties are eligible to apply for these grants.
Click here to read more about the organizations that received these grants.

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Winter Forecast Calls for Low Natural Gas Prices and Relatively Mild Weather

From The Columbus Dispatch:
Here’s one winter forecast that most people will be glad to hear:

Natural gas prices are low and look to stay that way.

Demand for gas is increasing, but not nearly enough to catch up to growth in supply, according to analysts. That, plus a forecast of a relatively mild winter, adds up to a continuation of low prices through the heating season.

“I think, overall this winter, we’ll have a little extra in our pockets and save on heating,” said Paul Pastelok, senior meteorologist for AccuWeather in State College, Pa.

In Ohio, 67 percent of households heat with gas, according to the Census Bureau. An additional 22 percent heat with electricity, whose market prices are closely tied to gas prices.

That leaves 11 percent that use other fuels, including propane, fuel oil, wood or others.

It’s a good time to heat with gas. The U.S. benchmark price is hovering between $2.50 and $3 per 1,000 cubic feet of gas, which is so low that some producers are struggling to make a profit.
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Five Key Things to Know About EPA’s New Report on Ohio’s Class II Injection Wells

by Jackie Stewart, Energy in Depth

Last week, the U.S. EPA released a report praising the effectiveness of Ohio’s Class II Underground Injection Control (UIC) regulatory program.  The 34 page report debunks anti-fracking activists who have claimed Ohio’s standards are “profoundly weak” and not protective of public health. EPA concluded that Ohio runs a “good quality program” and highlighted five noteworthy areas where the state received particularly strong remarks.  These include: preventing contamination of drinking water, seismic monitoring, permitting, inspections, and resolving violations. Here’s what the report said:
1) Ohio’s Class II UIC program is complying with the Safe Drinking Water Act, Section 1425
EPA looked at Ohio’s compliance under the Clean Water Act, Clean Air Act, and Resource Conservation and Recovery Act and concluded that the Ohio Department of Natural Resources (ODNR) is running a “good quality program.”
Since Ohio was granted primacy over its UIC program in 1983, there has not been a single case of groundwater contamination.  If ODNR was not doing its job and the standards were weak, this certainly wouldn’t be the case.  This history is matter of public record, not opinion, and clearly the Groundwater Protect Council has concurred. Executive Director, Mike Paue stated:
“Ohio is at the forefront of regulating Class II injection wells and is continuously advancing regulations of the UIC program. ODNR’s ongoing efforts provide the necessary protections to help ensure that Ohio’s underground drinking water resources are safe.”
This shouldn’t be surprise, considering Ohio’s regulations are in fact more stringent that the federal government’s own standards. Which leads to the question: why would activists want to seek weaker standards for this program?
jackie post
2) Ohio is a “leader” in addressing seismic concerns
Ohio received particularly high remarks from the EPA for its regulations to address seismic concerns. In fact, Ohio’s regulations are considered some of the most stringent in the nation, and due to subsequent updates in July 2012, they go above and beyond requirements mandated by the EPA. As EPA’s report concluded,
Significantly, EPA finds that these changes strengthen the program that was approved.”
The report noted that new wells require continuous monitoring of injection pressure and provide ODNR with the authority to request well tests for a variety of seismic monitoring and testing. As the EPA report explains, ODNR “commonly installs seismometers before new Class II wells operations and consults with DGS and U.S. Geological Survey.” There’s simply no question, that when it comes to regulating seismic activity, Ohio has set the gold standard.
3) Activists’ claims that the permitting process does not include public input are flat wrong
A few months back, representatives from 23 known anti-fracking groups including Frackfree Mahoning Valley and the Frackfree America National Coalition, wrote a letter to the EPA Office of Environmental Justice calling for a ban on injection wells both in Ohio and nationwide.  In their fact-free letter, activists had an entire section entitled, “Inadequate Public Notice and Public Participation”— a four page rant that includes such nonsense as “no public hearing has been conducted by ODNR on any injection well anywhere in Ohio.” Much to the activists’ dismay, the EPA found that “the current process is consistent with the approved primacy program description.”  EPA went on to note:
“EPA is aware that some nongovernmental organizations and citizens in Ohio are concerned that public hearings are not held on request, that informational meetings are held in lieu of hearings, or that ODNR determines that comments received on specific wells did not require permit changes or public hearings. However, these ODNR decisions are within the bounds of the EPA-approved program.”
In other words, the state is meeting the criteria to address public inquiries and the overall permit process.
4) ODNR is monitoring the industry through rigorous inspections
The EPA report noted that Ohio’s inspection of injection wells is an “area of strong performance.” In fact, the EPA itself cited that ODNR, “witnessed 100% initial mechanical integrity tests since 1983” and “ODNR’s high inspection presence is key component for a program that relies in part on inspections.”
Ohio ranks second in the country for number of inspections performed each year. The EPA noted that ODNR conducts spot-checks for fluid hauled in for injection, sending samples to an EPA-certified lab. This is done to determine that the fluids are appropriate for the well. In addition, Ohio also requires a shut-off switch and consistently monitors injection pressure limits. ODNR responded to the EPA’s high marks for its inspections, by stating in their press release:
“ODNR’s high inspection presence is a key component for a program that relies in part on inspections to ensure ongoing mechanical integrity of Class II wells. ODNR has strengthened its field inspections by adding staff inspectors whose time is fully dedicated to UIC inspections.”
5) Ohio’s ability to resolve violations another area of “strong performance”
Resolving violations is another “area of strong performance,” according to the EPA.  The federal agency also stated that they found “examples of violations being addressed on the spot during inspections” and ODNR ensures that “violations have been addressed.” When it comes to playing by the rules, Ohio regulators have made it clear that they mean business. For example, there have been several instances where regulators have been on the scene immediately after receiving a tip from the public. They have consistently worked by a code of “see something, say something”, which has led to working with other agencies, such as the U.S. EPA and the U.S. Department of Justice.
The bottom line
ODNR’s record speaks for itself and Ohio is continuously looking at new rules and regulations to safeguard Ohio’s environment.  This is something we have seen with SB 165 in 2010, SB 315 in 2012, and HB 59 in 2013.  Having state primacy means updates to rules and regulations can be swiftly implemented and go far and above what’s required at the federal level.  This is important because local control measures, like the ones recently shot down by the Ohio Supreme Court, would take authority away from an agency that has received high remarks from the federal government in many areas.
Given all of this,  it appears that other than garnering headlines the only thing anti-fracking activists accomplish was proving just how little they know, or care to know, about the actions of  Ohio’s regulators and the regulations in place protecting Ohio’s environment.
By way of background, the Safe Drinking Water Act (SDWA) gave authority to the EPA to protect public health and underground sources of drinking water from injection wells through theUnderground Injection Control (UIC) program which regulates the permitting, construction, operation and closure of injection wells. There are six categories of injection wells. Class II injection wells relate specifically to the oil and natural gas industry, as related to the disposal of fluids used by the industry. Class II injection wells are the EPA’s “preferred way to dispose of waste fluid”.  The SDWA allows the EPA to give states the authority implement their own UIC program, much like another EPA program, the Emergency Planning Community Right to Know Act (EPCRA) also gives the states authority to implement their own program. Ohio earned the right to be granted the authority from EPA to implement their own program in 1983, the state agency that controls both the UIC program and EPCRA requirements resides in the Ohio Department of Natural Resources (ODNR). The EPA still maintains a permanent role relative to approved state UIC programs and is mandated to review state programs, such as the audit recently conducted on Ohio’s program. In fact, if the state is not doing its job, the EPA has within its authority to take over the program. The Government Accountability Office (GAO) audits and evaluates the EPA oversight of the Class II UIC program nationwide. In fact the GAO reported its findings of the program just last year. Still, anti-fracking activists continue push misinformationregarding this highly regulated program, and in April, a group of known activists called upon the EPA to essentially shutdown Ohio’s program.  In response, the EPA conducted a thorough reviewof Ohio’s program and found that Ohio runs “good quality program.”  In short, Ohio has again earned the right to continue to implement its program in accordance with the Safe Drinking Water Act (SDWA).
Copyright Energy in Depth. Reprinted with permission. View original article here:

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Ohio Lawmakers Not Going to Meet October 1 Deadline for Severance Tax Proposal

Ohio lawmakers said this week they won't meet a self-imposed Oct. 1 deadline to hammer out recommendations on an oil and gas severance tax deal, as they need more time for negotiations. 
The impasse is the latest delay in a years-long effort to tap into a potentially lucrative source of revenue to pay for income-tax cuts and funding to local governments in eastern Ohio, where drilling activity is ramping up. 
In June, House and Senate leaders held a rare joint news conference to announce that a legislative study committee would work over the summer to reach a compromise agreement on raising taxes on fracking activity. 
Senate President Keith Faber, a Mercer County Republican, told reporters that Oct. 1 was a "hard deadline" to compile recommendations on a compromise between industry groups, which oppose any severance tax increase, and Gov. John Kasich's administration, which has called for a major tax hike. 
At the time, Faber disputed that sending the issue to a study group was "just a stalling tactic."
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Senator James Inhofe Calls Out Obama Administration's "War on Fossil Fuels"

Oklahoma Senator James Inhofe is not in agreement with the Clean Power Plan and the methane regulations recently announced by the Obama administration.  He makes his case against the approach of the administration in an editorial appearing on website Human Events:
President Obama and his administration are embroiled in an all-out war on fossil fuels. Under the guise of saving the planet from global warming, the administration has issued rampant regulations trying to further reduce CO2 emissions under the so-called Clean Power Plan. Not only have these regulations been shown as ineffective at actually impacting global temperatures or sea levels, it turns out that the rules will have serious economic impacts on all Americans, especially low-income and minority families. 
A study by the American Coalition for Clean Coal Electricity (ACCCE) found the president’s climate agenda would only reduce CO2 concentration by less than one-half of a percent; reduce the average global temperature by less than 2/100th of a degree; and reduce the rise of sea levels by 1/100th of an inch – or the thickness of three sheets of paper. These paltry numbers make the president’s agenda seem downright reckless in light of the $479 billion price tag that it comes with. 
It gets worse. Under the Clean Power Plan, electricity prices will steadily increase – by double digits in the majority of states, and over the course of the next decade, tens of thousands of Americans will lose access to well-paying jobs that will be shipped overseas to places like China with less stringent environmental standards.
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Truck Hauling Fracking Coil Strikes Railroad Bridge in Columbiana County

From Shale Play:
It's been said that 13 is an unlucky number, and James Bumbarger most likely feels this way after his over-sized load of fracking coil didn't pass through the 13-foot clearance under the Youngstown-Southeastern Railroad Co.'s train trestle Sept. 10. The 1930s-built bridge trestle was ripped off the overpass and fell onto state Route 558 in Fairfield Township, Columbiana County, blocking it completely. 
According to highway patrol trooper Michael Smith, a tractor-trailer driven by Bumbarger, 43, of Phillipsburg, Pa., was eastbound on Route 558 hauling a large fracking coil.
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400 Jobs Coming to Dover in Connection with Pipeline Project

From the Times-Reporter:
About 400 good-paying jobs with the Price Gregory pipeline company will be coming to the city as it becomes the headquarters for a major pipeline project covering 52 miles from Cadiz to Canton. 
Mayor Richard Homrighausen made the announcement at Monday night’s Dover City Council meeting. 
“This will indeed be a boon to Dover’s economy and to this area,” the mayor said. “It will generate untold tax dollars, not only to the city, but also to businesses throughout the Dover area” and Tuscarawas Valley region. 
The 16-inch diameter pipeline project is for Marathon Oil. 
Price Gregory will employ about 400 people based at the site, he said, adding that at least half of them will be subject to Dover’s 1.5 percent city income tax.
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Thursday, September 24, 2015

09/24/15 Links of the Day: Chesapeake Looking to Up Oil Production, Forced Pooling is Addressed in Ohio, and More

Northeastern Agricultural and Resource Economics Association:   The Economic Impact of Shale GasDevelopment: A Natural Experimentalong the New York / PennsylvaniaBorder   -   "Over the past decade, the technological advancements of hydraulic fracturing and horizontal drilling have led to the economic feasibility and rapid growth of natural gas production using shale and other unconventional sources. Hydraulic fracturing (“fracking”) is the process..."

Energy in Depth:  New Report Attempts to Downplay Incredible Job Creation from Shale Development   -   "A new report published in the August edition of Agricultural and Resources Economics Reviewattempts to undermine the job creation and economic development that has taken place over the last decade thanks to shale development. According to the researchers, countywide employment and wages varied little in counties..."

StateImpact Pennsylvania:  Giuliani urges shale industry to fight ‘irrational’ public fear of fracking   -   "Former New York City Mayor Rudolph Giuliani on Wednesday urged the natural gas industry to mount a public-relations campaign to overcome what he said was an irrational fear of fracking among some sections of..."

Duke University:  How Much Water Does Fracking Really Use?   -   "Energy companies used nearly 250 billion gallons of water to extract unconventional shale gas and oil from hydraulically fractured wells in the United States between 2005 and 2014, a new Duke University study finds. During the same period, the fracked wells generated about 210 billion gallons of..."

Reuters:  House panel passes bill to repeal U.S. oil export ban   -   "A bill to repeal the 40-year-old ban on U.S. oil exports easily passed the energy panel in the House of Representatives on Thursday, but the measure faces an uphill battle in the Senate. The legislation, which passed 31 to 19, is expected to be passed by the full House in coming weeks. But the bill is not backed by President Barack Obama. The White House said..."

Energy & Environmental Law Blog:  Ohio Oil and Gas Commission Issues First Order Addressing Compulsory Unitization   -   "On Thursday of last week, the Ohio Oil and Gas Commission issued its first order addressing unitization under R.C. 1509.28. See Gary L. Teeter Revocable Trust v. Division of Oil & Gas Resources Management (Appeal No. 895) (Sept. 17, 2015). The Commission, in effect, affirmed the issuance of the unit order by the Division of Oil and Gas with one modification, despite..."

Fuel Fix:  Goldman Sees 15 Years of Cheap Crude   -   "A glut of crude may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc. There’s less than a 50 percent chance that prices will drop to $20 a barrel, most likely when refineries shut in October or March for maintenance, Jeffrey Currie, head of commodities research at the bank, said in an interview in Lake Louise, Alberta. Goldman’s long-term forecast for crude is at..."

OPSB:  OPSB approves Lordstown Energy Center, Lorain County substation   -   "The Ohio Power Siting Board (OPSB) today authorized Clean Energy Future-Lordstown (CEF-L) to construct an 800-megawatt natural gas-fired combined-cycle generation facility in Lordstown, Ohio. The Lordstown Energy Center will be located on a 17-acre parcel in the Lordstown Industrial Park east of State Route 45 and south of Henn Parkway. The facility and associated transmission infrastructure will interconnect to..."

The Intelligencer/Wheeling News-Register:  Union Official: ‘Sky Is the Limit’   -   "According to one local trade union official, the sky's the limit for students at Utica Shale Academy. Chris Ricker of the Ohio State Association of the Plumbing and Pipefitting Industry Local 495 of Canton spoke to nearly 30 students in the program on..."

Wood Mackenzie:  Upstream cost cuts must go deeper to save projects   -   "In a comprehensive analysis looking at the impact of cost deflation on the global upstream oil & gas sector, Wood Mackenzie concludes that while operators are seeking an average cost reduction of 20-30% on projects, supply chain savings through squeezing..."

Forbes:  Why Is Chesapeake Boosting Production Despite Low Oil Prices?   -   "At a time when most of the oil and gas companies are restricting their operations due to the slump in the commodity prices, Chesapeake Energy Corporation has plans to expand its 2015 production by close to 4%, beating its original production estimate of a 1-3% increase for..."

RBN Energy:  Dry County? Utica Dry Gas Wells Headline Third Quarter Production Spurt   -   "U.S. Lower 48 natural gas production is averaging a record 74.2 Bcf/d in September to date, according to PointLogic Energy. Meanwhile, CME’s Henry Hub natural gas futures contract has languished at an average of $2.68/MMBtu this month to date, the lowest for any September since 2001. Much of the recent gain..."

NGI:  Landowners' Law Firm Asks FERC to Delay Rover Pipeline   -   "A law firm representing more than 200 landowners who could be impacted by the proposed Rover Pipeline has asked FERC to delay issuing a draft environmental impact statement (DEIS) for the project on the grounds that, among other things, Rover has filed insufficient details about..."

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Former EPA Employee Says New Ozone Standard is Unreasonable

From the Las Vegas Review-Journal:
The Environmental Protection Agency is proposing much tighter federal standards for ground-level ozone. These regulations will punish the West for emissions we did not create, including pollution from China and wildfires from California, while simultaneously driving industries out of America and into countries such as China, which have very few clean air protections. Accordingly, the EPA's ozone plan will actually do more harm than good. 
This doesn't make sense, which is why President Barack Obama rejected a similar plan in 2011. I previously served as chair of EPA's Clean Air Scientific Advisory Committee, and I applauded the president's common-sense decision four years ago. But now, the White House and new advisers at the EPA are pushing the same idea all over again. A decision is due by Oct. 1. 
Environmental groups want the EPA to replace the existing ozone standard of 75 parts per billion — set in 2008 — with a much stricter limit, somewhere between 65 and 70 ppb. Ozone-forming emissions come from many sources, including cars, trucks, factories, farms, power plants, energy production and even vegetation. That means lowering the standard will have impacts all across the nation's economy. It could cost roughly $140 billion annually, according to the National Association of Manufacturers, making it the most expensive federal regulation ever. 
Imposing these tremendous costs does not make sense when you consider how far the nation has come on air quality issues. Ozone levels have fallen 33 percent nationally since 1980. The EPA even concedes ozone levels will keep falling based on regulations we already have.
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Tuesday, September 22, 2015

Ohio Supreme Court Rules That Youngstown Fracking Ban Will Go to Vote for Fifth Time

From the Youngstown Vindicator:
The Ohio Supreme Court agreed with Youngstown that the Mahoning County Board of Elections lacks authority not to certify an anti-fracking charter amendment and ordered it placed on the Nov. 3 ballot. 
In a 7-0 decision Thursday, the court ruled the board does “not have authority to sit as arbiters of the legality or constitutionality of a ballot measure’s substantive terms. An unconstitutional amendment may be a proper item for referendum or initiative. Such an amendment becomes void and unenforceable only when declared unconstitutional by a court of competent jurisdiction.” 
“We’re pleased the court did what we thought was the law and glad citizens will have an opportunity to vote on the proposed charter amendment,” said city Law Director Martin Hume. “This was about the separation of powers. The board made a decision that should be the responsibility of the judicial branch.” 
The city filed a writ of mandamus with the high court Aug. 28, two days after the board voted not to certify the citizen-initiative charter amendment. The city contended the board acted “illegally” by refusing to put the issue on the ballot.
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Americans Still Support Keystone XL Pipeline Construction, Poll Says

CALGARY – A poll of American voters for the American Petroleum Institute published Thursday shows the majority of Americans support the construction of TransCanada Corp.'s Keystone XL pipeline. Harris Poll contacted 907 registered voters for API, the largest oil industry association in the U.S., and found that 68 per cent of respondents supported building Keystone XL.…

Utica Shale Permitting Picks Up, Rig Count Increases

After some more weeks of slow activity, permitting for the Utica shale saw an uptick in the latest weekly report from the Ohio Department of Natural Resources.

15 new permits were issued last week by the ODNR.  Harrison County led the way, with five new permits.  All five were issued to Hess.  Belmont and Guernsey counties each saw four new permits last week.  Ascent Resources is the operator on all four wells in Guernsey County and on two of the Belmont County wells.  XTO Energy is the driller for the other two Belmont County wells.  Noble County rounds out the report, with two permits issued to Antero Resources.

After the busiest week in some time there are now 2,013 total permits issued for horizontal drilling in Ohio's Utica shale.  1,591 wells have been drilled, 1,009 are producing, and the Utica rig count increased to 22.

View the report below.

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As Drillers Slow Down Thanks to Oil Prices, Natural Gas Supplies Could Run Short

From Bloomberg:
The retrenchment in drilling for U.S. oil is threatening to leave a different market short: natural gas. 
“The impacts of oil rig counts extend beyond oil: the outlook for U.S. natural gas is critically dependent on the outcome of this balancing act in U.S. oil rigs,” Anthony Yuen, a strategist at Citigroup Inc. in New York, said in a report to clients Wednesday. “If the oil market remains oversupplied and oil-rig counts fall, the decline in associated gas production would leave the market short of gas.” 
Associated gas is the gas that comes out of oil wells along with the crude. Supplies of this byproduct from fields including the Bakken formation in North Dakota and the Eagle Ford in Texas may fall by about 1 billion cubic feet a day next year as drillers idle rigs in response to the collapse in oil prices, Yuen said. That’s about 7 percent of U.S. residential gas demand.
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Rover Pipeline Awards Contract to Ariel Corporation

A press release from Ariel Corporation:
Rover Pipeline LLC, a subsidiary of Dallas-based Energy Transfer Partners and Mount Vernon, Ohio-based Ariel Corporation announced today that Ariel has been awarded the contract to supply 39 natural gas compressors to the Rover Pipeline. The total cost of the contract is estimated at more than $34 million.

Rover Pipeline is a natural gas pipeline that will transport domestically produced natural gas from multiple processing facilities in Northeast Ohio, West Virginia and Pennsylvania to multiple markets in the central United States including Ohio and Michigan. The pipeline also will facilitate natural gas deliveries to markets in the Northeast, Great Lakes and Gulf Coast regions of the United States as well as to Canadian Provinces. The $4.2 billion pipeline is designed to transport up to 3.25 billion cubic feet of natural gas through 36” and 42” diameter pipeline.

“Energy Transfer has a ‘buy American’ mentality,” said Joey Mahmoud, senior vice president, Energy Transfer Partners and project executive for Rover Pipeline. “We are proud to announce this contract with Ariel as they have been an integral part of the Ohio business community for nearly 50 years. Their deep Ohio ties are especially important to us as more than 200 miles of our proposed route passes through Ohio. 
“We are looking forward to becoming an integral part of the Ohio business and civic communities as well through the anticipated 6,500 construction jobs we will be bringing to the state and the 30-40 permanent jobs associated with the Ohio section of our Rover Pipeline.” 
Rover Pipeline purchased a combination of Caterpillar natural gas engines and Ariel compressors providing in excess of 211,000 horsepower at nine compressor stations along its proposed 711-mile route. 
“Ariel Corporation is proud to play a significant role in our country’s growing energy sector,” said Robert Drews, Director of Marketing. “The depth of our experience and the quality of our products and distribution partners uniquely position us to deliver compressors to support Rover Pipeline’s compression needs.” 
Houston-based SEC Energy has been contracted by Rover Pipeline to package the 39 compressor units. SEC is a leading packager of large-scale natural gas compression equipment, and the only company in the industry to offer a full range of gas, electric and dual drive compressors. 
Established in 1966 and headquartered in Mount Vernon, Ohio, Ariel Corporation is the world's largest manufacturer of separable reciprocating gas compressors utilized by the global energy industry. As a world-class manufacturer, Ariel sets the industry standard through industry-leading research & development, expert design & manufacturing, and unmatched customer support.

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Asian Utilities Taking a Look at What Chesapeake Energy Has to Offer

From Bloomberg:
Chesapeake Energy Corp., the U.S. natural-gas producer that’s been selling assets to cut debt by more than $3.8 billion, said Asian utilities have begun kicking the tires at fields it might divest. 
Utilities seeking a hedge to gas they’ve contracted to import in liquefied form have shown “significant interest” in “the things we are going to potentially sell,” Chief Executive Officer Doug Lawler said today in a web cast from the Barclays CEO Energy/Power Conference in New York. To raise cash, Chesapeake has been selling assets including gas fields, pipelines and buildings, and has said it will consider partners for joint ventures. 
Lawler’s predecessor, Aubrey McClendon, had an affinity for Asian deals. Under McClendon, Chesapeake sold stakes in fields to CNOOC Ltd. in 2010 and to China Petroleum & Chemical Co. in 2013. In December, U.S. utility Florida Power & Light, a unit of NextEra Energy Inc., won regulatory approval to partner with a gas producer to develop an Oklahoma gas field. FP&L persuaded officials that owning gas can provide cheaper price protection than a financial hedge.
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