Wednesday, November 30, 2016

NEXUS Pipeline Gets FERC Approval; Green Continues to Threaten Surveyors

The Federal Energy Regulatory Commission today approved the NEXUS pipeline project and its environment impact on Ohio communities. (The pipeline will also travel through Michigan to Canada; it was approved in its entirety.) 
As far as Northeast Ohio is concerned, the pipeline is planned to run through fairly dense, almost suburban portions of Stark, Summit, Medina and Lorain counties. The 36-inch pipeline covers 256 miles, all told.

The FERC environmental impact statement admits there will be "some adverse environmental impacts." The commission will establish an environmental compliance inspection program as the NEXUS project continues, watching for parent company Spectra Energy's compliance with environmental regulations.
Read that whole article by clicking here.

The NEXUS project has encountered no shortage of opposition in Ohio.  Despite court rulings on lawsuits that were filed to block NEXUS surveyors from doing their jobs in some communities which shot down those efforts, the community of Green continues to threaten surveyors with arrest if they go on properties where landowners have not given permission in order to do their jobs.

From the Times Reporter:
Surveyors for NEXUS Gas Transmission may be charged with trespassing if they try to survey land in the city without the permission of the landowner or a judge. 
The city’s Law Department sent NEXUS a cease-and-desist letter Friday after learning the company planned to survey properties this week in southern Summit County. 
NEXUS wants to build a 36-inch-diameter pipeline through Summit and Stark counties to carry 1.5 billion cubic feet of natural gas a day from the Utica and Marcellus shale regions. Spectra Energy and DTE Energy are partners in the project. 
The city of Green and individual landowners have fought the proposed pipeline route. Two lawsuits over whether NEXUS has the right to survey property without the permission of landowners are pending in Summit County Common Pleas Court.
The rest of that article is available by clicking here.

Meanwhile, WKYC reports on the efforts that are still being made to conduct the needed surveys for the project:
Sources say between 40 and 50 Summit County residents were notified surveyors and armed guards with the NEXUS Pipeline might try to come on properties beginning Monday. 
In Summit County, the proposed pipeline might snake through two cities, Green and New Franklin.

A letter sent to some residents by attorney David Mucklow, details the plans and asks residents impacted to “not consent even if threatened.” 
The letter is all about continuing efforts to put a massive high-pressure pipeline underground.

Click here to view that report on the WKYC website.

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IEA: Natural Gas and Oil Will Be a ‘Bedrock’ of Global Energy System for ‘Many Decades to Come’

by Seth Whitehead, Energy in Depth

The International Energy Agency’s (IEA2016 World Energy Outlook was released this week, and it notes that natural gas will be one of the “clear winners” over the next 25 years, while oil demand will continue to grow and production will remain “pivotal for energy security.”
These are two big reasons the report emphasizes that “the era of fossil fuels is far from over” and that “natural gas and oil will continue to be a bedrock of the global energy system for many decades to come.”
In the IEA’s New Policies scenario — which the agency considers the most likely set of circumstances, because it includes existing climate policies and assumes declared policy intentions are followed through on — global demand for natural gas will grow 50 percent by 2040. IEA predicts this will spark increased production, two thirds of which will come from the U.S., primarily from the Marcellus and Utica shale plays.
IEA forecasts natural gas demand growing an average of 1.5 percent year until 2040, stating,
“As a result of major transformations in the global energy system that take place over the next decades, renewables and natural gas are the big winners in the race to meet energy demand growth until 2040.”
As EIA said before that natural gas is a “valuable component” in reducing greenhouse gas emissions, which is just another reason it expects demand for the fuel to continue growing,
“Low carbon fuels and technologies, mostly renewables, along with natural gas, win the race to meet the growth in energy demand, accounting for more than 80% of the increase to 2040.”
In fact, IEA forecasts a “second natural gas revolution” spearheaded by LNG trade
“A more flexible global gas market, linked by a doubling of trade in LNG, supports an expanded role for natural gas in the global mix. … The development of a more globalised market and its status as the least-polluting of the fossil fuels helps gas gain ground, overtaking coal in the global mix. Changes in market operation, business models and pricing arrangements are catalysed by a new diversity among suppliers, with North America, Australia, East Africa all emerging as major exporting regions.”
With U.S. LNG exports already booming, there are signs that this “second natural gas revolution” is already underway.
IEA also forecasts oil demand continuing to grow until 2040 “mostly because of the lack of easy alternatives to oil in road freight, aviation and petrochemicals.” In warning that oil “remains pivotal for energy security,” the report states that approvals of new conventional crude oil projects in 2015-16 have fallen to their lowest levels since the 1950s, and that if approvals remain low in 2017, an “unprecedented” effort will be needed to avoid a supply-demand gap in a few years’ time.
That said, IEA claims that further U.S. shale development will be absolutely essential, noting “U.S. tight oil provides a potential lifeline,” adding, “If oil prices rise in the short term, then shale producers can react quite quickly to put more oil on the market…”
The latter statement is even more relevant in the wake of this week’s announcement from United States Geological Survey (USGS) that the Wolfcamp Shale area in the Permian Basin may have may have an estimated 20 billion barrels of continuous oil. This new discovery is 19 times larger than in the Eagle Ford Shale and three times larger than in the Three Forks region of the Bakken Shale, so it appears the U.S. shale industry is in an even better position to respond to a potential global supply shortfall than the IEA anticipated.
All told, the IEA report clearly indicates “natural gas and oil will continue to be a bedrock of the global energy system for many decades to come,” and the U.S. shale represents that bedrock both literally and figuratively.

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Oil Prices Jump as OPEC Reaches Agreement to Curb Output

From CNBC:
Oil prices jumped as much as 8 percent on Wednesday to a five-week high as some of the world's largest oil producers agreed to curb oil output for the first time since 2008 in a last-ditch bid to support prices. 
Brent crude futures for delivery in January were up $3.67, or 7.9 percent, at $50.05 a barrel by 11:38 a.m. ET (1638 GMT), recovering from a drop of nearly 4 percent on Tuesday and on course for their biggest one-day move in nine months. Brent crude for delivery in February was up $3.63 at $50.95 a barrel. 
U.S. West Texas Intermediate (WTI) crude futures rose $3.50, or 7.7 percent, to $48.73 a barrel, a one-week high.

The Organization of the Petroleum Exporting Countries has agreed its first output limiting deal in eight years, OPEC said on Wednesday.
Read that whole article by clicking here.

Reuters shares these details:
Saudi Arabia would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while Iran would freeze output at close to current levels of 3.797 million bpd and other members would also cut production. 
The source added that OPEC had also suspended Indonesia from OPEC and hence the exact combined reduction was yet to be calculated. The meeting was still ongoing after around six hours of debate. 
"OPEC has proved to the skeptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut," said OPEC watcher Amrita Sen from Energy Aspects. 
Before the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was indeed focusing on significant cuts and hoped Russia and other non-OPEC producers would contribute a reduction of another 0.6 million bpd.

"It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017," Falih said.
Click here to read all of that article.

The Daily Caller, meanwhile, concludes that the oil war between U.S. shale producers and OPEC is over - and OPEC has lost:
The Saudi’s and OPEC thought by flooding world markets with oil, they could eliminate competition and also put oil companies in America out of business. Having done so, they would gain a larger market share and reassert their power to control global economies. There is no question that many people lost billions of dollars in this power play by the OPEC countries. The mistake that OPEC and the Saudis made, in my opinion, was the failure to understand the resolve of American oilmen. This foreign effort did shut down production, closed down a number of rigs drilling for oil, and in some cases, caused companies to go out of business. While successful in the short term, Saudi Arabia and OPEC may have paid a very high price for this war. 
On Thanksgiving Day 2014, Saudi Arabia and OPEC declared war on the American oil fracking industry. I watched as on that Thanksgiving Day, the price of crude oil dropped by almost five dollars a barrel. Later that weekend the Saudi oil ministry told us that they had declared war on American oil companies. They wanted to drive these upstarts in the Dakota’s and in other parts of the country out of business. I first wrote about this attack the following week, long before anyone else was writing about this new war. 
Saudi Arabia, who was the leader of this war, didn’t count on the possibility that Saudi Arabia and many of the OPEC nations would see the devastation to their own economies. The revenue loss from the reduced sale of crude oil put enormous pressure on the financial reserves of all the OPEC nations. The International Monetary Fund, IMF, said earlier this year that a drastic reduction of oil revenue could create such a significant problem for Saudi Arabia that this once mighty nation could be bankrupt by the year 2020. 
Other nations in OPEC like Venezuela and Nigeria are probably already bankrupt, and the remaining members of OPEC are rapidly moving towards their own bankruptcies if oil doesn’t get above $60 a barrel. The “Independent” projected that Russia, if oil prices continued to stay low, would run out of financial reserves by the end of 2017.
Click here to read that article in its entirety. 

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Ohio's Takeaway Capacity Stands to See Large Increase with New Pipeline Projects

From the U.S. Energy Information Administration:
A number of pipeline projects that have been approved, or are in various stages of the approval process, would increase capacity to transport natural gas from the Utica production region in Ohio to natural gas markets. Collectively, these projects could add up to 6.8 billion cubic feet per day (Bcf/d) of takeaway capacity out of the Utica region by the end of 2018. 
Over the past several years, natural gas production in the Appalachian basin from the Marcellus and Utica shales has grown significantly. Because pipeline projects often have longer lead times than production projects, transport infrastructure for accessing natural gas demand centers and export locations in the Appalachian Basin has not kept pace with production capability. This situation has resulted in a lower price for natural gas from the Appalachian region relative to many other natural gas trading hubs in the United States. 
Construction of a new interstate natural gas pipeline in the United States requires approval by the Federal Energy Regulatory Commission (FERC), which can be a lengthy process. Construction on a pipeline can begin once a final environmental impact statement is issued, pending that project receiving Clean Water Act, Coastal Zone Management Act, Clean Air Act, and other necessary state permits. 
Key projects that are undergoing FERC review and may enter service in the next few years include: 
  • The Rover pipeline, which recently received a final environmental impact statement from FERC, is designed to transport 3.25 Bcf/d of natural gas from the Marcellus and Utica Shale areas to various market hubs.  
  • The Leach Xpress project, which received a draft environmental impact statement (DEIS) from FERC, seeks to add 1.5 Bcf/d of natural gas takeaway capacity along the Columbia Pipeline Group’s network.
  • The Rayne Xpress project, which received a DEIS, will augment the Leach Xpress project.  The Rayne Xpress Project seeks to add 0.6 Bcf/d in takeaway capacity from the Columbia Pipeline system to Gulf Coast markets, which will help facilitate liquefied natural gas exports, among other uses.
  • The Nexus Gas Transmission project, which received a DEIS from FERC in July 2016, is designed to deliver 1.5 Bcf/d of natural gas supplies from the Utica region to markets in northern Ohio, southeastern Michigan, the Chicago Hub in Illinois, and the Dawn Hub in Ontario, Canada.
Click here to read more. 

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Rig Count Drops and Permitting Slows During Holiday Week

Typically the weekly Utica shale permitting report from the Ohio Department of Natural Resources reflects decreased activity during a holiday week, and last week was no exception.

Only two new permits were issued last week, one for a Belmont County well site and one for a Monroe County well.  The Utica rig count fell for the first time in several weeks, dropping from 21 on the previous report to 19 on this one.

The cumulative totals now stand at 2,312 wells permitted, 1,856 wells drilled, and 1,468 wells producing.

Read the report below or click here to download it.

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Tuesday, November 29, 2016

Analyst: Chesapeake Energy's Credit Ratio Getting Worse Despite Maneuvering

From Seeking Alpha:
Chesapeake Energy's (NYSE:CHK) credit ratios continue to not improve. Put another way, Chesapeake has failed to deleverage - despite reducing net debt by dollar volume. This is also despite costly financial engineering; which has seen the junior tranches of the capital structure further primed and all but abandoned in a comprehensive usurping of enterprise collateral. In fact, despite all this, Chesapeake's credit ratios continue to deteriorate. Yes, deteriorate. They have been for several quarters now, sequentially. 
That Chesapeake's credit ratios continue to deteriorate is a scary realization for those long any junior exposure - specifically, the last-in-seniority equity class. This is something I've been watching for a while now. In this note, I'll reiterate and update. First though, I should lay out some housekeeping items. 
The revenue numbers in the data visuals below are NOT taken from SEC filings but from Thomson Reuters' I/B/E/S and Reuters Fundamentals. What's the difference? These historical numbers include analysts' adjustments (with the forward-looking estimates being just that, estimates). Therefore, they may not match reported GAAP/IFRS numbers. Why would Thomson Reuters' I/B/E/S, Reuters Fundamentals, et al., prefer to use these "adjusted" figures rather than "as reported" figures? Using the adjusted figures gives a cleaner read on progressive fundamentals.
Read more by clicking here.

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Monday, November 28, 2016

Sierra Club Comes After NEXUS Pipeline; DTE Pushes Back

From The Detroit News:
A national environmental group has filed an antitrust complaint against DTE Energy over its proposed natural gas pipeline, alleging the project will raise consumer energy prices above competitive rates. 
The Sierra Club filed the complaint in response to a planned 250-mile, multi-billion dollar pipeline, partially financed by DTE and affiliate Nexus Gas Transmission, LLC. The project is slated to deliver natural gas from Ohio to Michigan, officials said in their complaint
"DTE Electric has contracted to buy delivery of natural gas over the pipeline for use in generating electricity for resale to Michigan retail customers. When DTE Electric entered into this contract, at least six alternative sources of gas were available to transport the needed supply," officials said. "All six offered transportation services at lower rates than Nexus Nonetheless, DTE Electric contracted to buy gas from (the) proposed pipeline, despite the availability of these less-costly alternatives."
Click here to read the whole article.

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Friday, November 25, 2016

2015 Oil & Gas Production in Ohio Was Up, But Value Was Down

From NGI:
The combined value of Ohio's oil and natural gas production last year came in under $3 billion, or about $130 million less than it was in 2014, according to an annual mineral industries report released this week by the Ohio Department of Natural Resources' (ODNR) Division of Geological Survey. 
Oil and natural gas production was valued at more than $3.1 billion in 2014. Despite a banner year for production, low oil and gas prices brought down the value of production in the state to about $2.97 billion last year. ODNR said that while the value of natural gas in the state last year actually increased by 2.1% from 2014, the value of oil was down by nearly 18% year/year. 
The report, which provides economic information about the state's extraction industries, was changed for the 2015 reporting year. The detailed oil and gas portion of the analysis was excluded to eliminate duplicate reporting by the Division of Geological Survey and ODNR's Division of Oil and Gas Resources, which tracks and publishes drilling and production information.
Click here to read more.

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Wednesday, November 23, 2016

Rig Count and Producing Wells See Increase on Latest ODNR Report

The latest weekly report on Utica shale permitting from the Ohio Department of Natural Resources shows activity on the increase.

13 new permits are listed on the report.  Five of those are for Belmont County wells, while Guernsey and Monroe counties each had four new wells permitted.  The rig count increased for the third straight week, going from 19 to 21.

The cumulative totals are now 2,311 wells permitted, 1,851 wells drilled, and 1,468 wells producing - an increase of 36 producing wells from the previous week's report.

View the latest report below or by clicking here.

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Election of Trump and OPEC Production Plans Have Shale Industry on the Move

From Reuters:
U.S. shale producers are redeploying cash, rigs and workers, cautiously confident the energy sector has turned a corner after Donald Trump's election victory and OPEC's recent signal that it plans to curb production. 
The downturn produced a leaner, more efficient U.S. shale industry that was forced to develop and quickly adapt new technology to compete with conventional oil supplies during a two-year period of depressed prices.

"You're starting to see a little bit of light at the end of the tunnel," Ryan Lance, chief executive of ConocoPhillips, the largest independent U.S. oil producer, said in an interview last week. "We're beginning to put capital back to work, but we're being cautious." 
Specifics of the deal by the Organization of the Petroleum Exporting Countries - especially what it means for each member - need to be finalized at a meeting later this month in Austria. But the tentative agreement indicated OPEC kingpin Saudi Arabia is keen to end a damaging two-year oil price war. That prodded U.S. producers to action.
Click here to read the rest of this article.

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Tuesday, November 22, 2016

Carl Icahn Severs All Ties with Chesapeake Energy, Sealing a Big Loss

From Valuewalk:
Carl Icahn has offloaded all his Chesapeake Energy shares and Transocean shares. This does not come as a surprise, as Icahn has been selling his stake in Chesapeake for quite some time now, reports Investopedia. 
In August, he reduced his stake from 9.4% to 4.5%, citing tax planning as the reason. The billionaire investor held close to 73 million shares worth about $239 million at the end of 2015. 
Icahn seems to be rebalancing his position in the energy industry, as he maintained his stake in Chenier Energy and Freeport- McMoRan, notes Investopedia. Further, he offloaded 250,000 shares in CVR Refining LP (CVRR); he had owned about 6 million shares worth roughly $113 million as of Dec. 31, 2015. 
In October prior to the third quarter conference call, Chesapeake Energy revised its production guidance and stated that it cannot achieve a cash neutral position until 2018. Earnings per share for the third quarter were reported at 9 cents per share, substantially outperforming analysts ‘expectation of 3 cents per share in losses.
Click here to read more.

While we haven't been able to track down an exact figure, it would appear a certainty that Icahn lost well over $500 million on his investment in Chesapeake Energy, and the actual number may perhaps be closer to $1 billion.

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Friday, November 18, 2016

EPA Rushing to Implement President Obama's Plans Before President-Elect Trump Takes Office

From The Daily Caller:
The head of the Environmental Protection Agency (EPA) urged employees to finish out the last weeks of the Obama administration “running” to finish implementing what they can of the president’s environmental agenda. 
“As I’ve mentioned to you before, we’re running — not walking — through the finish line of President Obama’s presidency,” EPA Administrator Gina McCarthy wrote in an email to staff after Republican nominee Donald Trump won Tuesday’s election. 
“Thank you for taking that run with me. I’m looking forward to all the progress that still lies ahead,” McCarthy wrote, according to Politico
Trump has promised to rollback EPA rules put out under President Barack Obama, including the agency’s signature global warming regulation, the Clean Power Plan. So, EPA and other regulatory agencies are likely to push through a slew of “midnight regulations” before Obama leaves office.
Read the rest of the article by clicking here.

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Thursday, November 17, 2016

Chesapeake Energy Sells Off 27 Utica Shale Wells, 37,000 Acres of Ohio and Pennsylvania Assets

From NGI:
A Chesapeake Energy Corp. subsidiary has sold 27 Utica Shale wells and 37,000 net acres in Northeast Ohio and Western Pennsylvania to Geopetro LLC, a Worthington, OH-based legacy producer. Terms of the sale were not disclosed. 
Geopetro said in an announcement that the package includes 22 producing wells that averaged 24 MMcf/d during the first half of this year. One of the wells produces oil and gas from the Upper Devonian shales and the others produce primarily from the Utica. The company also acquired five drilled and completed wells that are awaiting pipeline connection. 
Chesapeake Appalachia LLC sold the assets, which are located in Columbiana County, OH, and Beaver County, PA. The sale closed on Oct. 27.
Read the whole article by clicking here.

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Utica Shale Replenishes Funding Cuts to Ohio Public Schools

by Jackie Stewart, Energy in Depth

It’s been a rough road for Ohio public schools. In February the Washington Post headlined a story entitled, “The education mess in Ohio under Gov. John Kasich,” outlining the fact that traditional public schools, which make up 90 percent of the schools, are receiving  $515 million less state funding than they did in 2010.  As result, school districts have been forced to invoke levies on their districts asking residents to pay more property tax to make up the shortfall.
But now, thanks to fracking and infrastructure projects coming online, such as the over $8 billion in pipelines and $7.8 billion in natural gas-fired power plants, local schools are about to receive $270 million (per year) – not from taxpayers – but from the oil and natural gas industry.
Utica Shale to the Rescue
According to an August 2015 report by the progressive think tank Innovation Ohio, public schools rely almost exclusively on property taxes. But with the cuts realized over the past five years, communities have been forced to levy the income their local residents to make up for the shortfall. In fact, according the report, the cost of local school levies has jumped 34 percent over the past five years, costing taxpayers $10 million more than they otherwise would have had to spend. Well, starting in 2017 for many Ohio school districts and local taxpayers, that landscape will be changing—thanks to the development of the prolific Utica Shale. As Superintendent Dr. David Quattrochi said,
“We are building a new school without going to the taxpayers for a levy.” (Emphasis added)
Last year EID produced a report with some projections on the amount of taxes that would go to local schools. At that time, we predicted conservatively that Ohio schools would see $256 million, per year, while the FERC regulated pipelines are in service.  However, many of the companies we projected had not issued reports with their final numbers.
At the same time, natural gas power plants have been sprouting up all over the state. Starting next year many of these companies will begin to pay local property tax. The updated numbers now show Ohio schools are slated to receive $270 million each year the pipeline is in service and for several years from the power plants as well.  (The yellow highlighted boxes represent formal announcements directly from the company.)
The vast majority of the schools receiving a hand-up are in rural areas and one rural school in particular is about to get a major boost. United Local Schools are slated to receive a $18.9 million over five years, which will make up 28.5 percent of their overall budget. This is significant as just a few years ago, the same school district had a levy rejected twice, as the local new station, WFMJ reported,
“United Local Schools were hoping to pass a bond to provide $9.75 million of local funds to match a 79% state contribution for renovations. It was defeated for a second time, and now the district must find a way to maintain a 60-year-old building. Without new levies, no new money would be coming in for 2012, despite deep cuts in state funding.” (Emphasis added)
After these two defeats, the school district gave up and has been living with a 60-year-old building ever since. Now, just a few years later, the school will receive millions, but not on the back of taxpayers this time.
In response to this new, Ohio State Representative Tim Ginter told EID,
“The NEXUS Gas Transmission project will provide an estimated $33,004,781 to Columbiana County in the first five years of operation. These funds will not only help the county, but also four of our local townships, the Columbiana County JVSD, and United Local Schools. The estimated tax revenue for United Local Schools in year one alone is $4,067,868. These funds will give United Local Schools a wonderful financial boost and the ability to continue to offer excellent educational opportunities for their students. This pipeline will provide the much needed infrastructure to ensure the successful transfer of oil and gas in our region. Columbiana County will play a crucial role in this project that will impact the economy of the entire state of Ohio.”
2017 is going to be a banner year for Ohio schools in areas where oil and gas are occurring. Of course pipelines and natural gas fired power plants are not possible without the prolific natural gas production we have coming out of the Utica Shale. So we can thank fracking for fueling our schools! Without shale, Ohio would still be suffering from budget cuts.

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Prepare for Significant Oil Policy Shifts Under President Donald Trump

From Bloomberg:
Some U.S. oil policies are likely to shift significantly when Donald Trump assumes the presidency next year. While details remain sketchy, he’s highlighted a number of areas where he differs significantly from current policy. 
Relations with the Middle East and OPEC 
Donald Trump has been critical of both Saudi Arabia and Iran during the campaign. He said that he was not a "big fan" of the Saudi government in a 2015 appearance on NBC’s "Meet the Press" and told the New York Times in March that he might stop buying oil from Saudi Arabia and other Arab countries unless they committed ground troops to combat Islamic State or reimbursed the U.S. for its efforts. 
Trump is also opposed to the nuclear deal with Iran that unlocked the country’s oil exports. He said in a speech to the American Israel Public Affairs Committee in Washington in March that his “No. 1 priority is to dismantle the disastrous deal with Iran.” While tearing apart the accord is "technically possible," it is “extremely unlikely” that the other world powers that negotiated with Iran alongside the U.S. -- China, France, Russia, the U.K. and Germany -- “would follow our lead," U.S. Energy Secretary Ernest Moniz said in April.
 Continue the article by clicking here.

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NEXUS Pipeline Not Changing Plans Despite Waterville Vote to Block It

From The Blade:
Waterville City Council will be asked Monday night to essentially ratify the will of its residents — or, if not that, make arrangements for it to be automatically done by a certification of votes cast for Issue 3 at Tuesday’s election. 
By a resounding 60-40 percent majority, voters approved a community bill of rights that calls for the city charter to be amended in such a way that forbids more natural gas infrastructure from being built within the city limits.
The article also continues later:
Adam Parker, NEXUS spokesman, said the ballot initiative does not affect NEXUS’s route or timeline. 
“NEXUS is a federally regulated interstate natural gas pipeline, and the Federal Energy Regulatory Commission has exclusive jurisdiction to approve the route of the project,” Mr. Parker said. “NEXUS remains on track to receive its final environmental impact statement from FERC on Nov. 30, 2016, and its FERC Certificate in the first quarter of 2017.
Read the entire article by clicking here. 

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Former Energy Secretary Steven Chu Touts Fracking

by Lily Emamian, Energy in Depth

In an interview for the Bulletin of the Atomic Scientists, Steven Chu, President Obama’s Secretary of Energy from 2009 to 2013, touted the environmental and energy security benefits of fracking. The Nobel laureate also easily debunked the politically motivated claims of the “Keep-It-In-The-Ground” movement.
When he was asked if he had wished he had helped to tighten regulations on fracking and made it “more difficult to produce natural gas” while he was at the Department of Energy, Chu said, “Well, I have a different view on fracking actually.” Chu went on to explain that natural gas is responsible for reducing our carbon emission in the United States.  As he put it,
“And then the question is: What would you want? Fracking and new natural gas resources have enabled us to switch from coal to natural gas – which is much cleaner, and decreases carbon emissions.”
Chu also signaled that he agrees with a comprehensive 2015 EPA groundwater study, which found “no widespread, systemic impacts” to water resources from fracking. As he said,
“most fracking is done at great depths, at about 4,000 or 5,000 feet. And you can really control how much you fracture. The issue is whether you allow a frack to go all the way to the surface and cause a leak – which is very, very unusual…There are other issues with fracking, having to do with the water that is being used, but the amount of water involved is very minor.”
In recent years, natural gas production in the United States has skyrocketed thanks to improved fracking technology. It has also led to job creation and increased energy independence – a key priority of the Obama administration given the volatility of oil prices and sometimes dubious oil trade partners.
“Now,” says Chu, “because of horizontal drilling and hydraulic fracturing, our oil production has gone up again. We’ve exceeded Russia. We’re second only to Saudi Arabia in oil production per year.”
The benefits of fracking, according to Chu, are numerous. It’s abundant, has contributed to a boost in the U.S. economy, and is an excellent, low-risk alternative fossil fuel that will enable the United States to reach its climate goals.

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Rig Count Climbs Again in the Utica Shale

The Ohio Department of Natural Resources reported that only two new permits were issued for Utica shale drilling last week.  Despite the slow permitting week, the rig count continued to rise for the second straight week.  This time it went up by three, from 16 last week to 19 on the latest report.

The cumulative total of permits for horizontal drilling in Ohio's Utica shale hit 2,300 with the two permits issued last week.  1,838 wells have been drilled, and 1,432 are producing.

View the report below or by clicking here.

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Wednesday, November 16, 2016

December Seminar in Columbus Will Look at Impact of Ohio Supreme Court's DMA Decision

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Monday, November 14, 2016

Seventy Seven Energy Continues to Lose Money After Re-Emerging from Bankruptcy

Seventy Seven Energy has released its 3rd quarter 2016 results.  Here is a portion of the company's press release:
Key information related to SSE for the one month ended July 31, 2016 and two months ended September 30, 2016 is as follows:
  • Emerged from bankruptcy on August 1, 2016, which reduced debt by $1.115 billion
  • Net Loss of $36.5 million and $11.6 million for the two months ended September 30, 2016 and the one month ended July 31, 2016, respectively
  • Consolidated Adjusted EBITDA of $8.5 million and $3.0 million for the two months ended September 30, 2016 and one month ended July 31, 2016, respectively
  • 29 rigs currently operating; 22 additional rigs under contract
  • Active rig count has more than doubled during the past six months
For the two months ended September 30, 2016 and one month ended July 31, 2016, SSE reported total revenues of $79.7 million and $40.4 million, respectively, a 13% decrease compared to revenues of $138.1 million for the three months ended June 30, 2016, and a 44% decrease compared to revenues of $213.5 million for the three months ended September 30, 2015. 
Net loss for the two months ended September 30, 2016 and one month ended July 31, 2016 was $36.5 million and $11.6 million, or $1.66 and $0.21 per fully diluted share, respectively, compared to a net loss for the three months ended June 30, 2016 of $84.5 million, or $1.53 per fully diluted share, and a net loss of $48.5 million, or $0.95 per fully diluted share, for the three months ended September 30, 2015. SSE’s adjusted EBITDA was $8.5 million and $3.0 million for the two months ended September 30, 2016 and one month ended July 31, 2016, respectively, compared to adjusted EBITDA of $31.5 million for the three months ended June 30, 2016 and adjusted EBITDA of $41.1 million for the three months ended September 30, 2015.
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Ohio Utica Shale Stands Out for Bucking National Gas Production Trend

From Bloomberg:
As U.S. natural gas production slows amid cost-cutting, one U.S. state is bucking the trend. 
Gas output from Ohio, home to the Utica shale formation, jumped 13 percent in August even as supplies dropped across the bulk of the U.S., including the neighboring Marcellus play in Pennsylvania. Chesapeake Energy Corp., Rice Energy Inc. and Gulfport Energy Corp. drilled most of the new wells in the state, data from Bloomberg Intelligence show. 
Producers are doubling down on Ohio amid speculation that gas flows from the Utica will eventually rival output from the Marcellus, America’s biggest shale reservoir. An energy price rout earlier this year strained explorers’ balance sheets, prompting drillers to refocus their efforts on regions that yield the most fuel at the lowest cost.
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Thursday, November 10, 2016

Remembering a Member of The Digger Family

Many of our readers may already be aware that we've lost a wonderful friend.  Richard Cope (or as we affectionately referred to him, "Digger Dick") passed away peacefully at Carroll Healthcare Center yesterday with his family by his side.

We know many of our advertisers and readers have known Dick for years, so we don't have to explain to them why he will be so sorely missed.  His positivity, generosity and sense of humor made him a great joy to spend time with.  And he loved interacting with people as he did sales work for us.  He continued to contact some of you about advertising from his room at the nursing facility, even renewing several ads just last week.  Even as his health was fading, you couldn't keep him down.

On a personal level, my thoughts may echo those of many.  Spending time with Dick always meant I'd come away feeling better.  I'll miss our conversations - which so often ended up centering on the joy of watching Mount Union play football (or the pain of watching the Cleveland Browns try to play football).  It was a privilege to work with him and get to know him over the years.

We want to express our heartfelt condolences to Dick's family and his many friends as they deal with this loss.

You can view his obituary by clicking here.

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Wednesday, November 9, 2016

Waterville Passes Amendment to Block Nexus Pipeline

From The Blade:
A proposed gas pipeline will not move forward in Waterville after voters approved a new community bill of rights that bans gas infrastructure within city limits. 
Citizen group Protecting Air for Waterville collected more than 400 signatures to place the issue on the ballot after a proposed NEXUS pipeline was to cross the Maumee River in Waterville, with a compressor station built in Waterville Township. 
Citizens have voiced concern over emissions, especially close to schools. 
NEXUS intended to build the project in collaboration with Texas Eastern Transmission, which operates major pipeline in several states. They wanted to pump natural gas from the Utica and Marcellus shale regions in eastern Ohio and West Virginia to markets in Ohio, Michigan, and Canada. Both companies are subsidiaries of Houston-based Spectra Energy Corp.
Read the article here.

This ban, like others that have been passed in Ohio, will likely face a legal challenge.  So far all indications are that such bans will fail in that setting because they violate the state constitution.  If that is the case, last night's vote could end up costing Waterville taxpayers a chunk of change in legal fees and still living with a pipeline and compressor station they didn't want.

The Community Environmental Legal Defense Fund (CELDF) is an organization that actively stirs local organizations up by promoting these community bill of rights charters, and assists in preparing them.  But by the time any of these measures get approved by voters and a court case ensues, the CELDF has moved on, leaving the towns to pay for the expenses on their own.

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Ohio Voters Thoroughly Reject Anti-Fracking Bill of Rights for Sixth Consecutive Time

by Jackie Stewart, Energy in Depth

Tonight, voters in the City of Youngstown soundly rejected an ill-advised “Community Bill of Rights” charter amendment that threatened the city from regaining its status as the economic powerhouse it once was. The final vote tally shows the charter amendment was handily defeated, by over ten points.
Community Environmental Legal Defense Fund (CELDF) and Frack Free Mahoning have now put this measure on the ballot six consecutive times – and taxpayers have had to foot the bill. In fact, the City of Youngstown taxpayers, prior to this most recent election, have already spent $80,000 just to put the measure of the ballot. Given that it will cost the city at least another $15,000 (and likely a lot more due to voter turnout of a presidential year) means that the City of Youngstown taxpayers have spent $95,000 minimum rejecting the so-called Community Bill of Rights.
Thankfully after a thorough review of the disastrous “rights of nature” language incorporated in the ballot measure, Youngstown voters saw this effort for what it truly is—an attempt to stifle economic development in the city, which would be entirely unenforceable. For this reason, many stakeholders from local chambers of commerce to local union organizations rallied to defeat the measure.
Ohio Vote an Indicator of “Unpopular” Keep It in the Ground Movement
It’s certainly fair to say that the people of Youngstown have grown weary of the onslaught of abuse they have received from CELDF. Even in a hotly contested presidential year, this anti-fracking measure was strongly opposed by both Republicans and Democrats.
A case can certainly be made that what’s happening in Youngstown is a microcosm of how voters feel nationwide, as the rhetoric and increasing levels of civil disobedience found among the environmental extremists has quickly become “not completely popular” among both parties.
Case-in-point would be the Senate race in Ohio where incumbent U.S. Senator Rob Portman handily beat U.S. Senate hopeful Ted Strickland, a candidate largely backed by anti-fracking money from California billionaire Tom Steyer.
Remember that early on in that race, ban-fracking environmental groups tried to make the case that “this Senate race shows how climate action is gaining support in the Midwest.” Then, just weeks before the election, leading national anti-fossil fuel activists descended on Ohio for the “After Fossil Fuels: The Next Economy” conference in an apparent attempt to revive their failed campaigns to ban fracking in the state.
As the election results have shown time and time again, when it comes to homegrown natural gas development in the Buckeye State, fracking is an issue that has Democrats, Republicans, unions, business, and an overwhelming number of Ohioans saying, “We’re not standing on a natural resource, we’re standing on jobs.”
There’s simply no question that over the past five years shale development in Ohio has transformed the state’s economy. Shale has driven down the state’s unemployment rate; boosted local and state tax revenues and gross domestic product; helped keep the cost of utilities low; and has contributed to millions spent on road and bridges, thanks to billions of investment that has poured into the Buckeye State.
So it should come as no surprise that more than 83 percent of anti-fracking ballot measures have failed or been ruled invalid in Ohio; candidates who have run anti-fracking campaigns have lost; and both Republican and Democrat elected officials have stood up to embrace the overwhelming benefits of natural gas development.

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What Will Donald Trump's Presidency Mean for the Energy Industry?

Now that Donald Trump has been elected as the next President of the United States, what is next for the energy industry?

S&P Global Platts takes a look at that question in this video.

You can view this video in its original location by clicking here. 

Please note that we uploaded this video to YouTube to share it here because for some reason we just could not get the embed code from Platts to function correctly.  If you would like to share this video, please do so directly from Platts by visiting the link rather than sharing it from our YouTube video page, which will be removed if we can get the Platts embed to work.

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Tuesday, November 8, 2016

Ohio Supreme Court Declines to Settle Issue of Post-Production Deductions

From NGI:
The Ohio Supreme Court has decided that landowners that challenge natural gas producers about post-production costs deducted from royalty checks will have to keep heading to trial courts to resolve the issues on a case-by-case basis. 
The high court's long-awaited decision came on Wednesday after it accepted a certified question last year about whether the state follows the "at the well" rule, which allows post-production deductions, or if it follows some version of the "marketable product" rule, which limits post-production deductions, such as those for compression, dehydration and transmission. 
"Under Ohio law, an oil and gas lease is a contract that is subject to the traditional rules of contract construction," the court wrote in its opinion. "Because the rights and remedies of the parties are controlled by the specific language of their lease agreement, we decline to answer the certified question." 
So, any hope that this issue passing through the state's Supreme Court would lead somewhere has been extinguished.  Landowners who feel they are being cheated out of royalties are still in the same position they were in before the court accepted the question.

Click here for the rest of the article.

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ODNR Releases November 2016 Shale Activity Maps

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Utica Rig Count Ticks Up on Latest ODNR Report

After dipping to 15 a week ago, the Utica shale rig count is back up to 16 on the latest weekly permitting report from the Ohio Department of Natural Resources.

There were 11 new permits listed on the report.  Every single one of them was issued to Hilcorp Energy for Columbiana County well sites.  This brings the cumulative total of permits issued to 2,298.  1,834 wells have been drilled and 1,433 are producing.

The report can be viewed below or by clicking here.

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