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Thursday, September 21, 2017

Ohio EPA Still Going After Energy Transfer Over Rover Pipeline

From NGI:
The Ohio Environmental Protection Agency (Ohio EPA) still wants Rover Pipeline LLC to submit a stormwater permit application and pay $2.3 million in fines, and the regulator has asked the state attorney general (AG) to assist in enforcement, Director Craig Butler said Wednesday. 
Butler said during a conference call with media that he sent a letter Wednesday to Ohio AG Mike DeWine asking for help in pursuing a stormwater permit from Rover. But with Rover and Ohio EPA at an impasse in negotiations, the dispute could end up in court, he said. 
While Rover has completed Ohio EPA’s clean-up requirements following a drilling fluids spill earlier this year, the state regulator still wants the pipeline to apply for a National Pollutant Discharge Elimination System (NPDES) stormwater permit, part of a series of unilateral orders issued in July. 
Ohio EPA took the "unfortunate, unprecedented step" to issue those unilateral orders after the agency and Rover could not agree on a consent order to resolve numerous alleged environmental violations occurring during the project's construction, which began earlier this year. 
As for the proposed $2.3 million fine, that total includes about $2 million in civil penalties, with the rest covering Ohio EPA's monitoring, oversight and emergency response costs, Butler said.
Read the whole article by clicking here.

We received an email containing the following statement in response to Butler's comments from Craig Stevens, spokesperson for the Grow America’s Infrastructure Now (GAIN) Coalition:
“Regulations are put into place to create a predicable set of rules for companies to follow; and the Rover Pipeline project has been planned, vetted, and approved after an exhaustive regulatory process that has lasted more than three years. Stakeholders should want to see the safe, successful completion of the Rover Pipeline. Bullying industry through the media is not the way to achieve that goal.”

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How Much Rover Volume is Taken From Other Pipelines?

From BTU Analytics:
It has been a bumpy ride, but the Northeast has finally begun flows on the first major greenfield project to come to market in almost a decade – Energy Transfer’s Rover. This begins a major shift in Marcellus and Utica production dynamics, with implications for the future of Dominion South and Henry Hub pricing– but what is changing in the here and now? 
Rover received a notice-to-proceed yesterday for horizontal directional drilling activity which will bring critical capacity to market (we expect a November start-up for the next tranche of Rover capacity), as of today, Rover is receiving volumes only at two points along the Cadiz lateral: MarkWest’s Cadiz processing plant and the Ohio River System. Today we’ll take a granular approach and look at receipts only around those two points. We can see in the graphic below, which compares Rover receipts from the Ohio River system with declines seen on other pipelines, that while Rover has been flowing full at its current 700 MMcf/d capacity, that gas is coming at the expense of other pipes, mainly TETCO. 
So now we can answer one of the market’s big questions: how much new production will come online with Rover? To date, we have seen about 150 MMcf/d of new production directly attributable to Rover, which is in-line with our Northeast production forecasts.
But what about the other end of Rover? Where is that 700 MMcf/d of gas actually going? Currently, almost all of Rover’s volumes are being delivered to ANR, but again, a good amount Rover volumes are displacing volumes from other pipes. Rover deliveries are displacing REX deliveries to ANR. Because of this displacement, REX deliveries to ANR are moving southbound and more gas is moving further west on REX.
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Wednesday, September 20, 2017

Local First Responders Say Oil & Gas Companies Keeping Them ‘Well-Informed’

by Jackie Stewart, Energy in Depth

For years, Energy In Depth has reported on how Ohio anti-fracking activists have tried to slow down first responders with added bureaucracy and misinformation campaigns based on dubious assumptions regarding regulatory exemptions. Meanwhile, Ohio oil and gas operators continue to lead in terms of streamlining information access for first responders with aggressive training and communication strategies. Those efforts are paying off, as first responders are reporting,
“[T]he companies will email us weekly updates of what’s going on in their company and locations. That way, in the event that something’s going on, we’ll have up-to-date information. They usually keep us pretty well informed.”
This first-hand report from Cumberland Trail Assistant Fire Chief Tim Hall is yet another example of how out-of-state Keep It In the Ground activists are misrepresenting the reality of what actually is occurring in oil and natural gas producing states. In fact, training and communication between the oil and gas industry and Ohio first responders has been ongoing for years and comes at no cost to the public, thanks to a bi-yearly fire academy hosted by the Ohio Oil and Gas Energy Education Program (OOGEEP). Last year marked the 15th anniversary of free training for firefighters, and to date the program has trained more than 1,400 first responders who have participated in the Responding to Oilfield Emergencies workshops. In fact, almost all of the volunteer fire departments across the state have participated in the free training.
The free fire academy training is vital, especially when you consider that more than 70 percent of Ohio’s fire departments are volunteer. The reason that the fire academy is free is because the Ohio Revised Code 1510 requires all oil and natural gas producers in the state to pay five cents per gross barrel of crude oil (including condensate) and a half cent per gross Mcf (thousand cubic feet) of natural gas. This is just one tax  paid by oil and gas operators, the most significant being ad valorem or property taxes paid on production, which have yielded (to date) more than $45 million and also directly support local communities.
Here’s what some of Ohio’s first responders are saying about the free fire academy,
“It’s very pertinent to our area. We go out and fight these fires, and it’s very enlightening. … There’s so many gas well simulators. It’s probably one of the best in the Midwest.”
In addition to the training with OOGEEP, individual companies are continuing to reach out to local first responders for live exercises as well. Numerous upstream and midstream companies host live exercises at no cost to first responders and provide extensive hands-on training. More importantly, the exercises provide an open line of communication between local communities and companies who operate in their backyards.
Ironically enough, the Ohio Environmental Council has stated,
“Emergency responders have a huge responsibility to the public, and carry this responsibility bravely despite the risks. We should be striving to make their jobs easier, not putting barriers between them and the information they need to protect themselves and us.”
We agree! Which is exactly why Ohio’s oil and natural gas industry continues take steps to ensure that shale development can occur while protecting the health and safety of our people and our environment — and do so without creating unnecessary bureaucratic red tape.

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Oil and Gas Industry Looking to Settle Down After Being Shaken by Hurricanes

From Forbes:
The approach of the final quarter of 2017 seems an opportune time to check on the state of the U.S. oil and gas industry, and its outlook for the remainder of the year. While Hurricanes Harvey and Irma definitely caused significant disruptions in the nation's oil and gasoline delivery systems, the reality is that those disruptions will be rapidly resolved and the storms really will not make any lasting impact on the global oil and gas markets. 
This year has been amazingly stable overall, especially when compared with the rampant instability during 2015 and 2016, and the various determining factors would appear to indicate that the industry is in for a good deal more stability ― some would call it stagnation ― for the year's final 100 days. 
Corporate Processes Continue to Prevail 
As I've discussed a couple of times since June, so much of this seeming stability is in fact dictated by the nature of internal budgeting processes, especially within the mid-size-to-large corporate independent producers that dominate drilling markets in the United States. These big producers set their budgets for the second half of the year back in April and May, with an expectation of West Texas Intermediate (WTI) crude prices hovering within a range of $44 to $48 per barrel, and a natural gas price of ~$3.00/mmbtu.

Because these dominant companies began executing on those second-half budgets on July 1, the overall rig count initially stagnated for a few weeks, and it has now slowly fallen by ~25 rigs over the last five weeks. A variety of factors have combined to move the crude trading range up slightly, to a range of about $47 to $50/bbl, but that's not enough of an increase to create momentum within these companies to significantly increase their capital budgets for the remainder of the year.
Read the rest of this article by clicking here.

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Communities Are Preparing for Impact of Shell Cracker Plant

From Business Journal Daily:
Royal Dutch Shell’s decision to build a $6 billion ethane cracker plant less than 20 miles from here should have an impact that reverberates all across western Pennsylvania, and the commonwealth wants to be prepared. 
“We need to make sure we have property that’s prepared for development,” said Dennis Davin, secretary of community and economic development for Pennsylvania. “The issue we’ve always faced is that companies that want to come here don’t want to wait two years before property is developed.” 
The solution was to infuse the commonwealth’s Business In Our Sites program with $75 million that would be used to fund economic development agencies and developers so they could prepare sites for new business. 
“That money is paid back once something lands on that site,” Davin said.
Read more by clicking here.

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House Vote Blocks Funding for Obama-Era Methane Pollution Rule

From The Hill:
Lawmakers voted Wednesday to block implementation of a key Environmental Protection Agency (EPA) pollution rule. 
The House voted 218-195 to strip funding for an Obama-era EPA effort to limit methane emissions from new oil and gas drilling sites. Eleven Republicans voted against the amendment, and 3 Democrats voted to block funding for the regulation. 
“This rule is currently facing litigation and uncertainty, and Congress must act to block this job-killing regulation estimated to cost the U.S. economy $530 million annually,” Rep. Markwayne Mullin (R-Okla.) said during debate on the measure last week. 
“Methane emissions from oil and natural gas have significantly declined in recent decades without multiple, overlapping federal regulations, and this is no exception.”
The rest of the article can be read by clicking here.

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Antero Resources Facing Lawsuits Over Post-Royalty Deductions

From MDN:
Lawsuits filed against Antero Resources in both Ohio and West Virginia seek class action status. Both lawsuits make similar claims: Namely that Antero has improperly deducted post-production expenses from royalty checks (not allowed under lease terms), and that Antero has avoided, with creative accounting, paying royalties on natural gas liquids (NGLs) produced. The OH lawsuit was first filed in January of this year, followed by a lawsuit filed in WV in May. We have copies of both complaints below, so you can read the language for yourself. In the case of the OH lawsuit, Antero filed a motion to dismiss. The landowners amended the complaint and Antero dropped their motion to dismiss. The OH lawsuit, and as near as we can tell, the WV lawsuit, are both moving forward. Here’s our summary of both lawsuits–the MDN Cliffs Notes version…
Click here to view the rest of the article on MDN.

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After Short-Seller Bashes Shale Companies, Harold Hamm Strikes Back

From CNBC:
Continental Resources Chairman and CEO Harold Hamm on Thursday fired back at renowned short-seller Jim Chanos after he revealed he is betting that shares of Hamm's Oklahoma-based drilling company will fall. 
"Well, first of all, I can say almost, who is this guy?" Hamm told CNBC's "Squawk on the Street." 

Hamm speculated that Chanos — who is known for shorting stocks, or betting that their price will decline — got caught on the wrong side of the trade and is trying to mitigate the damage by talking down shale oil drillers.

Company executives are held to a higher standard of honesty by the Securities and Exchange Commission than short-sellers like Chanos, Hamm claimed. 
"For anyone to even put forth the suggestion that we haven't had great expansion and wealth creation in this industry with horizontal drilling and all the technology that's come about the last 10 years, I mean, it's totally ridiculous for anybody to make those types of statements," he said.
Click right here to view the entire story.

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Utica Rig Count Down for Second Straight Week on Latest ODNR Report

New permits issued last week: 15  (Previous week: 16-1
Total horizontal permits issued: 2620  (Previous week: 2604+16
Total horizontal wells drilled: 2123  (Previous week: 2118+5
Total horizontal wells producing: 1683 (Previous week: 1678+5
Utica rig count: 23 (Previous week: 24)  -1

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FERC Opens Up Permission for Drilling on Rover Pipeline

From Energy Business Review:
Energy Transfer Partners (ETP) has secured an approval the US Federal Energy Regulatory Commission (FERC) to resume horizontal directional drilling (HDD) operations along the $4.2bn Rover pipeline project. 
Following the FERC approval, ETP expects to start drilling operations on nine HDD locations soon, with a focus on the Captina Creek HDD in Belmont County, Ohio. 
The completion of the Captina Creek HDD operations will enable the company to put the full phase 1 portion of Rover pipeline project into service by the end of the year. The phase 1 portion runs from Seneca, Ohio, to Defiance, Ohio. 
ETP has already put into service the phase 1a of the Rover project from Cadiz, Ohio, to Defiance, Ohio. 
Upon completion, the 1,147km pipeline is expected to transport up to 3.25 billion cubic feet of natural gas per day from the Marcellus and Utica Shale production areas to markets across the US.
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Monday, September 18, 2017

Early Rover Pipeline Volumes a Sign of Growth to Come as ETP Presses for Permission to Drill

From NGI:
Now that Energy Transfer Partners LP's (ETP) Rover Pipeline is officially up and running, offering more than 700 MMcf/d out of eastern Ohio, the market is getting its first taste of the project's potential impact on Appalachian production and pricing. 
After receiving in-service authorization late last month and starting up its Phase 1A segment over Labor Day weekend, Rover was flowing just over 700 MMcf/d Tuesday from Cadiz, OH, to interconnects with Panhandle Eastern and ANR in Defiance, OH, according to NGI calculations using information from ETP. 
To help keep tabs on the evolving Marcellus/Utica shale takeaway picture as Rover ramps up to its full 3.25 Bcf/d of designed capacity in the coming months, NGI is debuting its new daily Rover Tracker. The Rover Tracker gives an up-to-date snapshot of receipts and deliveries on the project and will continue to expand as new segments enter service. 
Scheduled for full service by the fourth quarter, the producer-push Rover, a massive $4.2 billion, 710-mile greenfield project, would go a long way toward uncorking the Appalachian bottleneck. With Northeast production already ramping up in 2017, Rover -- along with a number of other takeaway expansions set to hit the market soon -- appears poised to unleash a new wave of Appalachian output.
Click here for the full article.

Also from NGI:
Rover Pipeline LLC continues to press FERC on a request to restart horizontal directional drilling (HDD), filing supplemental information and third-party analyses to persuade the Commission to lift a May moratorium. 
Meanwhile, the Ohio Environmental Protection Agency (Ohio EPA) and Rover remain at odds over the state agency's jurisdiction over the project and the timing of the HDD restart the company has requested. 
On Tuesday Rover submitted a series technical analyses to the Federal Energy Regulatory Commission for several remaining project HDDs. Rover urged the Commission to “continue to consider its request to restart HDDs for which the analyses have been provided as soon as practicable.” The technical information was prepared by GeoEngineers Inc., an HDD specialist which is reviewing Rover’s operations after a 2 million gallon drilling fluids spill in April near the Tuscarawas River in Stark County, OH. 
In a separate filing last week, Rover submitted a series documents to FERC in response to the Commission's Aug. 22 letter detailing additional requirements before it would reauthorize HDDs on the 710-mile, 3.25 Bcf/d pipeline. Rover said the filings should be considered "a complete response to the recommendations presented" and the associated recommendations from a separate independent HDD engineering review conducted by J.D. Hair & Associates Inc., the firm FERC selected to examine the Tuscarawas incident.
Read more by clicking here. 

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Decision to Be Made on Belmont County Cracker Plant by End of Year

From the Weirton Daily Times:
An ethane cracker with a cost estimate as high as $6 billion could be confirmed before the end of 2017, a project Belmont County Port Authority Director Larry Merry said would allow the Upper Ohio Valley to export finished products instead of young natives who cannot find careers. 
“I can’t think of a single reason they wouldn’t come here,” Merry said of the proposed Dilles Bottom PTT Global Chemical ethane cracker, while speaking during a Thursday forum at the Ogden Newspapers Printing & Technology Center in Wheeling. Ohio Valley Construction Employers Council Executive Director Ginny Favede, who previously served eight years as a Belmont County commissioner, organized the event. 
“We are optimistic,” added Mike Jacoby, who serves as vice president of business development for Appalachian Partnership for Economic Growth. “We see no problems.” 
Officials with Thailand-based PTT have said they plan to make a final decision on the project by the end of this year. If the massive endeavor comes to fruition, it could generate thousands of construction jobs, as well as hundreds of permanent petrochemical jobs once the plant enters operation. Thousands of “spin-off” jobs could result from the ethane cracker’s presence, officials have said.
Click here to read more.

Meanwhile, those in the area are anticipating the economic benefits that would follow the construction of the plant.  From The Intelligencer:
Although Wheeling is about 13 miles north of the proposed PTT Global Chemical petrochemical plant, Mayor Glenn Elliott said the Friendly City could become a “corporate headquarters” for some of the companies that may follow the development. 
“It’s almost all going to be a net positive,” Elliott said after listening to speakers during a forum about the potential ethane cracker held Thursday at the Ogden Newspapers Printing & Technology Center in Wheeling. 
“It is in our interest that this project be built in Belmont County,” he added. “We have to forget about arbitrary lines and boundaries.” 
The proposed giant plant would accept ethane pumped from Marcellus and Utica shale wells, which remains in overabundance because there is still no cracker in the region. The technology would transform this material into ethylene, which can be used to make plastics, textiles and pharmaceuticals.
Read the whole article by clicking here. 

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Tuesday, September 12, 2017

Rig Count Drops as Permitting Rebounds on Latest Utica Permitting Report

New permits issued last week: 16  (Previous week: 3+13
Total horizontal permits issued: 2604  (Previous week: 2591+13
Total horizontal wells drilled: 2118  (Previous week: 2111+7
Total horizontal wells producing: 1678 (Previous week: 1680-2
Utica rig count: 24 (Previous week: 27)  -3

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Super Laterals Are Getting More Out of Utica Shale

From E&P Mag:
In 2013 the company drilled its first operated horizontal shale well—the Tippens No. 6HS—in the Utica Shale dry gas window. That well featured a lateral of 1,783 m (5,850 ft) at a total vertical depth of 3,017 m (9,900 ft) drilled in 49 days and was completed in 19 fracture stages, according to a corporate filing with the U.S. Securities and Exchange Commission. 
Data from the Tippens well and others played a key role in paving the company’s way to successful drilling campaigns in 2016 and 2017, according to Benjamin W. Hulburt, Eclipse chairman, president and CEO. 
“Between our drilling and other operators involved in the effort we had a couple hundred wells that had varying lengths, from probably as short as 5,000 ft [1,524 m] up to about 11,000 ft or 12,000 ft [3,352 m or 3,657 m] before we really started the super-lateral program,” Hulburt told E&P. “In analyzing that database we could not detect a drop-off in recovery per foot as we went longer. It also was easy to see cost efficiencies by going longer.” 
Those cost efficiencies, along with the market decline, were key to going longer. 
“We kept pushing out the lateral length to determine if we saw a drop-off in recovery per foot and where the law of diminishing returns would be among the laterals in the Utica,” he said.
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Utica Production Places Ohio in Starring Role of Shale Revolution

From Forbes:
Thanks to the Utica and even part of Pennsylvania's Marcellus shale plays (map here), Ohio is now one of our of major natural gas producing states. Despite low prices in the $3.00 range, producers in the Utica have added 10 rigs since early-March to now total 29. The Ohio Department of Natural Resources reports that 2Q gas production hit 4.3 Bcf/d, up 5% or so from the prior quarter and up 16-17% from the 2Q 2016. Four counties - Belmont, Harrison, Monroe, Carroll, and Jefferson - account for nearly 90% of the state's output, with Belmont leading at 1.9 Bcf/d. 
Looking forward, Ohio has many more gas opportunities: I've already documented the Northeast gas pipeline build-out primed to bring gas to more markets, here. Delivering over 0.6 Bcf/d in recent days, the massive $4.2 billion, 713-mile greenfield Rover pipeline (map here) finally started Phase 1 operations Friday, September 1. Rover's Phase 2 will lift the project to its full 3.25 Bcf/d capacity and could come online by early-December. Rover will ship Appalachia Basin gas to markets in the Midwest, Gulf Coast, and eastern Canada.

With construction slowed by multiple delays and pressure from regulators, the gas market has been excitedly waiting for Rover's arrival. This is the largest pipeline project since the beginning of the shale boom, so vital that regulatory policies surrounding it move the needle for the U.S. gas market, here
Rover will have major effects on regional Northeast basis gas pricing, such as Dominion South. But be careful how you view new pipelines on gas prices, since they have a dual impact: pipelines can lower basis by increasing gas-on-gas competition but they can also increase production. Meaning that to a large degree, the price impact of gas pipelines for prices isn't certain. For example, now that Rover is up and running, Northeast gas production has ramped up past the 25 Bcf/d.
Read the whole article by clicking here.

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Rover Pipeline Gives Natural Gas Prices a Boost

From NGI:
Energy Transfer Partners LP's Rover Pipeline was flowing just above 600 MMcf/d out of eastern Ohio Wednesday after ramping up over the holiday weekend, helping to lift Appalachian Basin prices amid recent weakness at regional hubs. 
After receiving its in-service authorization from FERC last week, Rover began flowing last Friday, delivering 258 MMcf/d from the Ohio River System (ORS) in Cadiz, OH, to interconnects with Panhandle Eastern and ANR in northwest Ohio, according to data from PointLogic Energy. 
As of Wednesday, Rover had ramped up to more than 600 MMcf/d, delivering volumes received from the Ohio River System and from MarkWest's Cadiz processing plant to ANR and Panhandle, PointLogic data show. 
Genscape Inc. reported similar volumes and said in a recent note to clients that it has observed "continuing growth in ORS deliveries to Rover, while ORS deliveries to REX and Tetco have flattened/declined, suggesting that incremental growth of the system will continue to be seen via Rover volumes. The vast amount of Rover volumes are rerouted from REX and Tetco, though there is a small amount of incremental production growth evident in the ORS based on overall aggregate volumes being delivered."
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Keep It In the Ground Epic Fail: “Massive Ohio Wide” Anti-Fracking Rallies are Huge Busts

by Jackie Stewart, Energy in Depth

National anti-fracking groups spent weeks advertising the “three massive rallies against fracking” held this past weekend in Cleveland, Columbus and Marietta. But EID was on the ground in all three locations and can confirm the entire “Ohio-wide” effort garnered a total of just 47 protesters, despite being hosted by major national Keep It In The Ground groups such as, Sierra Club, Earthworks, Food & Water Watch, Friends for Environmental Justice, Foundation for Economic Democracy and Appalachia Resist!.
In fact, according to an eyewitness account, the showing was so dismal that one of the protestors said,
“It’s sad there’s only 12 people here. It’s a small group because not a lot of people know about fracking.”
The pathetic turnout is all-the-more notable considering Earthworks and the Sierra Club flew campaign organizers across the country a few weeks ago to help motivate and organize protestors for these “massive” Ohio rallies. Earthworks campaigner Ethan Buckner even flew in all the way from Oakland, Calif., in July in an attempt to motivate the base to show up for these rallies, no doubt burning a lot of fossil fuels in the process, as the following map illustrates.
But such efforts proved fruitless, and coming on the heels of a string of similar disappointing events in the Buckeye State this year, this weekend’s events were no doubt the biggest epic fails of the Ohio anti-fracking movement to date.
Don’t believe the social media hype
Back in July, Earthworks — one of the most aggressive “ban fracking” groups nationwide — posted this picture on social media to launch its “massive” #stopetp campaign, which included rallies in Cleveland, Columbus, and Marietta Sept. 8 and 9.
Shortly after the organizing event on July 30 (which was attended by 15 people), The Mockingbird Paper portrayed the planned September rallies this way:
However, the only thing that was “massive” about this rally was the level of disappointment the organizers must have felt about the turnout.  As you can clearly see, there were a total of 12 people who attended the “massive” Columbus rally.
In an effort to further misrepresent their failed Ohio events — and likely to use the footage as a fundraising tool to pretend their efforts are actually relevant (no actual media covered the event) — the activist photograph pictured above had no choice but to incorporate Columbus tourists on Segways into the picture below to try to give the appearance of a larger turnout.
Photo posted publicly on Facebook by Ralph Orr.
The following activist social media post would have you believe that 42 people “went” to the Columbus event, but the reality is that this inflates the rally’s actual attendance by more than 70 percent.
The second “huge” rally was held outside of PNC Bank in Cleveland and was even more pathetic than Columbus.  In fact there were only three protestors at the rally most of the time, with attendance eventually swelling to a whopping 10 protestors at its peak. Take a look at the following photo and video captured by onlookers to clearly see just how dismal this anti-fracking protest was in northeast Ohio.
The third “massive” rally took place on Saturday afternoon at the Wayne National Forest Ranger Station in Marietta. This protest of the upcoming federal mineral lease sale later this month featured a whopping 25 people. The reason this protest had the most participants of the three weekend events has a lot to do with the fact that Sierra Club flew in organizers to boost attendance.
The event was planned by the same fringe environmental activists group that welcomed the aforementioned Earthworks organizer from California to prepare for the protest.  However, despite those efforts, the majority of the protesters at this rally were out-of-state activists.
In fact, Sierra Club had organizer Lydia Green travel 1,338 miles to attend the protest in Marietta where she boldly explained,
“I just came back from the Pine Ridge Indian Reservation (in South Dakota)…”
To put into perspective just how far Green travelled, take a look at the map below.
An actual Ohio resident and onlooker of the protest reported to EID that the 25 protestors were “largely behind the Wayne National Forest Ranger Station” and not visible from the highway, and they “looked like homeless people with all of their backpacks, duffel bags and clothing they wore. Personally I don’t think it was a huge success.”
As the documented reality these three “massive” events illustrates, the social media hype and smoke and mirrors fundraising campaign being perpetuated by the anti-fracking movement to try to make the case that Ohioans are protesting oil and gas development is a farce.
The fact is that for the first time in years, union halls are reporting “empty” because they have so much work (largely driven by pipeline construction) and schools and local governments are seeing millions from oil and gas taxes, lifting up the Appalachian region in ways that most people did not ever think would be possible. And most importantly, three Ohio-based academic studiesconducted by the University of Cincinnati over the past six years have found no evidence that natural gas extraction has led to groundwater contamination or air quality issues in Ohio exceeding U.S. EPA levels of health concern.
United States energy dominance is real, and it’s happening right now in the Buckeye State, where it is a win for the environment and the economy.

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Thursday, September 7, 2017

How Did U.S. Shale Drilling Derail the OPEC-Orchestrated Oil Recovery Plan?

From Forbes:
Last fall, it seemed the end of the global oil glut was already at hand, when optimism soared after OPEC’s commitment to speed the process by limiting production. Oil prices were expected to quickly move to $55 and $60 per barrel, and then continue climbing in 2017. The rig count rose, and jobs began to return throughout the oil patch. 
But it has since become another false start for oil markets. Oil prices remain mired between $45 and $50 per barrel, and price expectations – measured by the futures market for West Texas Intermediate – have fallen back to levels well below those that prevailed before the OPEC accord. The domestic rig count has peaked for now, and the big investment houses forecast a decline in domestic drilling through the second half of this year. 
What happened? American fracking ran the recovery off the rails. A competitive industry that – in principle -- should move oil output and price to stable long-run levels, fracking is once more living too high on large subsidies to its capital base and operating costs. This leaves oil markets locked in a destructive cycle that has again reached the stage of over-production and depressed price. It has brought us to the brink of yet another pull-back in U.S. drilling activity, and another round of financial stress for many producers.
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Chesapeake Energy CEO Doug Lawler Provides Update at Energy Conference

From Seeking Alpha's transcript of comments by Chesapeake Energy CEO Doug Lawler at Barclays CEO Energy-Power 2017 Conference:
Moving up to Appalachia. This is a very, very strong producing area for the Company. When you think about the Marcellus, the stability of that asset, the cash flow it generates, it’s world class. Also in Appalachia is our Utica asset. We’re looking for several different completion techniques to generate better performance from the Utica. Then, what we’ve seen, it also is a very attractive asset for us in the portfolio and we’ll deploy more capital to the Utica as we see the opportunity in the next year. 
Just highlighting again, this McGavin well, 61 million cubic feet a day; at present it’s doing 55 million cubic feet a day. So, it’s very strong performer; it continues to perform well. The 30-day IP was 55 and it’s still doing 55. So, we’re really encouraged by what that well looks like. We estimate that this 10,000 plus foot lateral that we have somewhere between 600 or 700 opportunities for drilling and completion in the Marcellus. So that’s a very, as you could expect, a very strong capital efficient place for us to deploy our investments and our capital. 
Very good returns. We anticipate 2017 to generate free cash flow of about $315 million over capital spend of about $125 million. As we’ve shared before with you, we can spend roughly $100 million a year. The performance of this McGavin well highlights it yet further that for about $100 million a year or less, we can maintain an asset at 2 to 2.2 BCF a day gross. As I noted, we’ve got a long runway, estimate almost 3,000 locations total and about, as I said, 750, 10,000 foot laterals. So, very strong production profile. And then we also have an expansion area in the Utica, up in the northeastern part of Pennsylvania, about 70,000 net prospective acres there that we believe to -- that will be very efficient for us to develop as well. What’s important about that is we have not drilled a Utica well up there. And utilizing Chesapeake’s experience and expertise with the longer laterals and improved completion techniques, this presents another opportunity for potential growth and return for us. 
Looking at the Utica. There are several pads that we’ve brought on line here in the past few months and we’ll continue to look for opportunities to invest additional capital here. We’re seeing very good improvements in our capital efficiency here, carrying out many of the same modifications to the drilling and completion program as we’ve recognized elsewhere. In the next few weeks, we’ll be bringing on line roughly eight new Utica dry wells. So, we’re continuing to focus there; it should deliver somewhere in the 120 million cubic a feet from those wells. This is a very strong area and you can see with how we’re deviating from our type curve on the bottom left, as you look at how some of these enhanced completions have added additional value for the company contributing further to our capital efficiency.
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United Local School District Among Those to Benefit from NEXUS Pipeline

From the Morning Journal:
The financial benefits from the NEXUS pipeline could be substantial for some Columbiana County government bodies, especially the United Local school district. 
A fact sheet issued last September by NEXUS estimates United Local could receive $4 million in additional property taxes from the pipeline during the first year of operations, dropping to $3.5 million by the fifth year. All total, the district would receive an estimated $18.9 million over five years. 
That is part of the $33 million in additional property taxes generated by the project over its first five years, according to NEXUS. The other beneficiaries would be Franklin, Hanover, Knox and West townships, the county joint vocational school and county commissioners.
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For Now, Youngstown Fracking Ban Measure Will Not Appear on Ballot For Seventh Time

by Jackie Stewart, Energy in Depth

After six consecutive defeats at the ballot box, the Mahoning Count Board of Elections voted unanimously Wednesday to reject a Pennsylvania-based anti-fracking group’s seventh attempt to get a so-called “Community Bill of Rights” measure aimed at banning fracking in Youngstown on the November ballot.
The election board found the Community Environmental Legal Defense Fund’s (CELDF) ballot measure conflicts with state laws that clearly articulate that local governments in Ohio cannot regulate fracking and therefore ruled the measure to be “invalid.” In anticipation of defeat, CELDF brought in its team of lobbyists and lawyers to sign petitions to immediately challenge the decision, and it plans to file a suit with the Ohio Supreme Court in response to the county board’s decision, prolonging the CELDF’s well-documented litigious war on local Ohio communities. For now, the taxpayers of the City of Youngstown will be relieved of additional charges incurred from the ongoing Community Bill of Rights defeats, which a recent EID investigation revealed has already cost the city over $185,000.
David Betras, Mahoning County Democrat Chairman and member of the Mahoning County Board of Elections explained his vote by saying,
“I took an oath to follow the law and the constitution of the state of Ohio.”
On the other side of the political aisle, Mark Monroe, Republican County Party Chairman and member of the Mahoning County Board of Elections, said,
“Upon our review, it certainly appeared that both the anti-fracking issue and the so-called ‘fair elections issue’ both contained provisions that were outside the authority of the city of Youngstown. So under the provisions of House Bill 463, we really had no choice but to not certify those issues to the ballot.”
Do as I say not as I do At the Mahoning County Board of Elections meeting, a protestor said,
“We have seen nothing but big business money thrown at the drinking water protection community bill of rights to defeat it — over and over again.”
The statement is unbelievably ironic, as for years we’ve known that CELDF has been a cash cow for lobbying policy and a factory of unsuccessful litigious battles to drive regulation in Ohio. In 2015 alone CELDF reported over $1.4 million in assets, swelling its coffers by over 75 percent in just the past few years. CELDF has also taken to the social media and CrowdJustice to attempt to raise more money to provide “free legal advice as well as legal challenges” across the state.  The “free legal advice as well as legal challenges” will include the lawsuit filed with the Ohio Supreme Court in response to the Mahoning County Board of Elections decision. Ahead of the unanimous vote to reject the so-called Community Bill of Rights, local anti-fracking activist Susie Beiersdorfer was caught by EID actively fundraising for CELDF on her social media page. As you can clearly see, CELDF has been, and still is, the driving force behind a very small group of environmental activists targeting Ohio.
Beiersdorfer’s comments after the Board of Elections decision echoed familiar CELDF talking points,
“We are no longer just the anti-fracking activists; we are also the pro-democracy activists,”
However, democracy has occurred in Youngstown six consecutive times and in all six votes, the people spoke and rejected the anti-fracking Community Bill of Rights local ban. In the world of the most extreme fringe environmental activists, like CELDF and Beiersdorfer, “democracy” is defined as taking people’s private property and bankrupting local communities.  Recall that in 2015, the founder of CELDF said,
 “If you are going to put all that work into a ballot initiative, why not do a ballot initiative that bans all finance companies in New York City from funding new projects that exasperate climate change? Why not do something real…why not do something real…cause people are saying to themselves, ‘it would be illegal, it would be unlawful, it would be unconstitutional, because you are taking their property’ well..(expletive), it’s time.”
And while CELDF continues to raise more cash to fund their litigation factory, taxpayers will continue to foot the bill.  For example, there’s no doubt the Mahoning County Board of Elections will have to incur costs to defend itself against CELDF’s legal challenge of the unanimous, bipartisan decision made Wednesday. But according to CELDF leadership, bankrupting cities is not only fine by them, but may actually be necessary to advance a broader anti-fracking agenda:
“If a town goes bankrupt trying to defend one of our ordinances, well, perhaps that’s exactly what is needed to trigger a national movement.” (emphasis added.)

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Wednesday, September 6, 2017

Digging Deep into the Utica Shale Production Data from Quarter 2 of 2017

The Ohio Department of Natural Resources has now released the production data from the Utica shale for the second quarter of 2017. As always, we are going to give you a look at how the numbers compare to past quarters, past years, and how they break down among the various drillers who are active in Ohio and the counties where they are drilling. We also have the top 10 oil and gas wells detailed below.


First up, let's take a look at how the quarterly data compares from the 1st quarter of 2014 through the second quarter of 2017. As a reminder, all oil figures are 42-gallon barrels, and all gas production is measured in MCF:

So, after four consecutive quarters of declining oil production, the first two quarters of 2017 have seen a back-to-back rise in total oil production.  Production rates dropped off in comparison to the first quarter of the year, though.

Gas production hit a new single-quarter peak for the second straight quarter.

The next table shows the production comparison year-over-year, as well as a look at where 2017 production is on pace to end up based on the first two quarters.

The oil production results continue to suggest that production could be on the decline for the year of 2017. If oil production continues at its current pace, over 2,000,000 less barrels would be produced from the Utica shale in Ohio in 2017 than in 2016.

Gas production continues to be on the pace to increase year-over-year yet again.  After quarter one the pace suggested an increase of 117,000,000 MCF, but with an uptick in gas production during quarter two the Utica is now on pace to produce over 150,000,000 more MCF in 2017 than last year.


Here are the top 10 oil-producing wells in quarter two of 2017:

And here are the top 10 gas-producing wells:


Here is the production data broken down by county:


And here are the results broken down by operator:

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