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Wednesday, November 15, 2017

IEA Predicts That U.S. Will Dominate Global Oil & Gas Markets During Biggest Boom in History

From Bloomberg:
The U.S. will be a dominant force in global oil and gas markets for many years to come as the shale boom becomes the biggest supply surge in history, the International Energy Agency predicted.

By 2025, the growth in American oil production will equal that achieved by Saudi Arabia at the height of its expansion, and increases in natural gas will surpass those of the former Soviet Union, the agency said in its annual World Energy Outlook. The boom will turn the U.S., still among the biggest oil importers, into a net exporter of fossil fuels. 
“The United States will be the undisputed leader of global oil and gas markets for decades to come,” IEA Executive Director Fatih Birol said Tuesday in an interview with Bloomberg television. “There’s big growth coming from shale oil, and as such there’ll be a big difference between the U.S. and other producers.”

The agency raised estimates for the amount of shale oil that can be technically recovered by about 30 percent to 105 billion barrels. Forecasts for shale-oil output in 2025 were bolstered by 34 percent to 9 million barrels a day.

The U.S. industry “has emerged from its trial-by-fire as a leaner and hungrier version of its former self, remarkably resilient and reacting to any sign of higher prices caused by OPEC’s return to active market management,” the IEA said.
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School Districts Approve Tax Abatement for Natural Gas Pipeline

From the Star Beacon:
Two school districts in northeast Ashtabula County have approved 15-year tax abatement packages that will assist a $70 million natural gas pipeline construction project scheduled to start next year. 
At separate meetings last week, members of the Conneaut and Buckeye Local school boards accepted plans on behalf of RH Energytrans LLC of Erie, Pennsylvania, that would abate 75 percent of the property tax the districts would collect from the project over a 15-year period. Even when the abatement is applied, the districts will still see annual tax revenue gains approaching $100,000, officials said. 
At issue is a 30-mile stretch of new pipe that would originate in western Pennsylvania, pass through a portion of Conneaut and end at a location in North Kingsville, said Dennis Holbrook, a company spokesperson. As planned, the 12-inch pipe would be attached to an existing stretch of line, creating a 60-mile transport system, he said.

The new pipe would be evenly split between the two states, Holbrook said.
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Tuesday, November 14, 2017

Wells Producing in Utica Shale Drop for Second Straight Week; Rig Count Holds Steady

New permits issued last week: 9  (Previous week: 3+6
Total horizontal permits issued: 2674  (Previous week: 2665+9
Total horizontal wells drilled: 2174  (Previous week: 2166+8
Total horizontal wells producing: 1713 (Previous week: 1715-2
Utica rig count: 24 (Previous week: 24)  +-0

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Monday, November 13, 2017

Links of the Day: Rover Pipeline Progressing, Bowling Green Anti-Drilling Measure Flops, and More

Energy in Depth:  Anti-Fracking Antics in 2017 Have Been So Ridiculous It’s Scary   -   "The “Keep it In the Ground” movement has been a reliable source of ridiculous antics over the years, and 2017 has been no exception. In fact, anti-fracking stunts have been so absurd this year it’s downright scary..."

RBN Energy:  Back On Top - Marcellus/Utica Natural Gas Production Breaking Records Again   -   "A year ago, Lower-48 natural gas production was in steep decline and averaging less than 71 Bcf/d by the fall, down from nearly 74 Bcf/d in February 2016. The oil-price crash of 2014 had taken a toll on gas output, led by a drop in Texas. To add to that, Marcellus/Utica gas supply — which had helped prop up overall domestic gas production volumes — was no longer growing enough to..."

MDN:  FERC Gives Rover Pipe OK to Use Different Tech to Speed Up Drilling   -   "This story necessarily gets into the weeds of pipeline construction. But so you have the essential story line up front, this is it: On Monday Energy Transfer asked the Federal Energy Regulatory Commission (FERC) for permission to dump something called annular pressure monitoring (APM) when drilling..."

Bloomberg:  The Fracking Boom's Midlife Crisis   -   "Crude prices bouncing around $50 to $60 a barrel have kept U.S. shale producers stuck on the edge of profitability. That hasn’t been enough to shut down the oil boom in places such as North Dakota, Texas, and New Mexico—at least not yet. Drillers are heading into 2018 on the defensive as they face skepticism from shareholders who want to see..."

Vorys Energy & Environmental Law Blog:  Supreme Court of Ohio to Hear Landman Licensing Case   -   "In March, we posted about Dundics v. Eric Petroleum Corp., a decision by Ohio’s Seventh District Court of Appeals ruling that landmen were required to obtain real estate broker’s licenses in order to sue for compensation for brokering deals between landowners and oil and gas companies. Today, the Supreme Court of Ohio agreed to review the following..."

Seeking Alpha:  Chesapeake Energy (CHK) Q3 2017 Results - Earnings Call Transcript   -   "We're really excited about the program just continuing to evolve. As Doug mentioned, one of our strengths is the way that we use data and information across the company to optimize the asset and each technology from Haynesville and Utica and Eagle Ford and transfer those to these new..."

Seeking Alpha:  Gulfport Energy's (GPOR) CEO Mike Moore on Q3 2017 Results - Earnings Call Transcript   -   "On the operations front, in the Utica during the first nine months of 2017 we spud 77 gross wells utilizing six operating rigs, the wells release as an average drilled lateral length of approximately 7,882 feet and were normalized into an 8,000 foot lateral as assumed in our public type curve, we average the spud rig release of..."

Pittsburgh Business Times:  Rice Sees Production Increase — and Coins New Word — in Final 3Q Results   -   "Rice Energy Inc.’s final full quarter as a publicly traded company saw a production increase and the creation of a new word. Production in the third quarter was 131.2 billion cubic feet up from 68.7 million cubic feet in the same period a year ago with 32 wells drilled and 30 completed in the Marcellus and Utica..."

Associated Press:  Ohio Sues Gas Pipeline Developer Over Pollution Violations   -   "Ohio is suing the company building a $4.2 billion natural gas pipeline from West Virginia to Michigan over what it says are numerous water pollution violations during construction. The lawsuit filed Friday says work on the Rover Pipeline flooded a protected wetland with drilling mud and has damaged..."

Natural Gas Now:  Fracking is Killing Greenhouse Gas Emissions with Technology   -   "The EPA has a neat website tracking greenhouse gas emissions from onshore petroleum and natural gas production. The data shows they’re way down over the last five years in the Marcellus/Utica Shale region even though production is up and more data is being reported. Given that we know the substitution of natural gas for coal power generation has already..."

Business Wire:  Carrizo Oil & Gas Announces Third Quarter Results   -   "Over the past several months, Carrizo entered into agreements to sell its assets in the Utica Shale and Marcellus Shale. Both divestitures are currently expected to close during November; the impact of these divestitures on the Company's fourth quarter of 2017 production is estimated to be a reduction of approximately 3,050 Boe/d (2% oil) relative to..."

CNBC:  US Shale Oil Will Dominate the Market in Coming Years, OPEC Forecasts   -   "The American shale drillers that have upended the energy industry will capture much of the growth in oil demand in the coming years, OPECforecasts in a new report. But after years of booming U.S. production and flat output from OPEC, the tables will turn, the producer..."

Seeking Alpha:  Energy Transfer Partners LP (ETP) Q3 2017 Results - Earnings Call Transcript   -   "Growth on our Ohio River System in the Northeast continues to exceed our expectations, driven by greater than anticipated results from our anchor shippers on this pipeline in the dry Utica. We continue to see volumes fill up on our processing plants in the..."

The Blade:  Bowling Green Residents Reject Initiative That Would Ban Future Pipelines   -   "A citizen-led ballot initiative that calls for a ban on more pipelines transporting natural gas and other fossil fuels through city-owned property was soundly rejected by Bowling Green voters. The measure lost by a 61-39 percent margin. “I don't feel like it's an obituary,” said Terry Lodge, a Toledo attorney who represents citizens who successfully got the petition on the ballot. He added it has laid the groundwork for..."

World Oil:  Crude Tumbles After Shock Increases in Stored Oil and Production   -   "Traders dumped oil futures after a surprise increase in U.S. crude stockpiles and surging output dashed confidence that a worldwide glut is fading. Oil fell as much as 1.4% in New York after a U.S. government report on Wednesday found swelling crude stockpiles, shrinking overseas demand and skyrocketing output from American wells. The futures were on track for the first two-day decline in more than..."

Canton Repository:  Oil and Gas: Fuel for Business Growth   -   "From drilling to cheap energy to petrochemicals, oil and gas development can be an economic engine. Canton didn’t have a grand plan to become Ohio’s Utica Capital. Sure, local leaders cooked up the name and logo, but that was after the oil and gas industry had its sights on the energy-rich Utica Shale beneath eastern..."

EQT:  EQT Shareholders Approve Rice Energy Acquisition   -   "EQT Corporation (NYSE: EQT) today announced that, based on the final tabulation provided by its proxy solicitor, EQT shareholders have approved the pending transaction with Rice Energy Inc. (NYSE: RICE) at the Company’s special meeting held earlier today. Of the total shares cast, approximately 84% percent voted..."

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Thursday, November 9, 2017

Court Battles Continue Over NEXUS Pipeline

From The Canton Repository:
NEXUS Gas Transmission has federal approval to build its pipeline across Ohio, but it doesn’t hold rights to all of the land on the route. 
So, the company has gone to court, where a group of landowners hit back this week with their own lawsuit against the pipeline. 
NEXUS sued earlier this month to take temporary or permanent easements through eminent domain on 42 pieces of land in Stark, Summit, Wayne, Medina, Lorain, Sandusky, Wood and Erie counties. 
In its federal lawsuit, NEXUS said it negotiated easements on 97 percent of some 2,000 properties and made final offers to holdouts in September, but those landowners rejected or failed to respond to the company’s proposals. 
Many of the defendants are in Green, where landowners and the city have opposed the NEXUS project. 
NEXUS asked the court to let it immediately take the easements and start construction. Under the company’s plan, a three-person commission would decide later how much the company owes landowners. NEXUS said it would post a bond to ensure the property owners are paid.
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From WKYC:
An Ohio city is refusing to end its legal fight to move a high-pressure natural gas pipeline away from a community of 25,000 people. 
Officials in Green in southern Summit County are waging battles on different legal fronts against a partnership that has federal approval to begin construction of the $2 billion NEXUS pipeline. 
The partnership of Calgary, Canada-based Enbridge and Detroit's DTE Energy is poised to build a 255-mile-long pipeline capable of transporting 1.5-billion cubic feet of gas per day from Appalachian shale fields across northern Ohio and into Michigan and Canada. 
Green Mayor Gerard Neugebauer says he'll keep fighting to get the pipeline moved "as long as there is hope."
Click here to read that original article. 

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Chesapeake Energy Trying Some New Techniques in Utica Shale

From The Independent:
Chesapeake Energy has used new well-completion techniques to coax more production from its Utica Shale holdings. 
Oklahoma City-based Chesapeake has drilled 735 Utica wells in Ohio, the most of any company. 
In July, the company’s eight-well Ellie pad in Carroll County’s Orange Township began producing at an initial rate of 1,100 barrels of oil equivalent per well per day. Sixty-five percent of the production came from liquids, the company reported Thursday before a conference call with investors to discuss third-quarter results. 
In the dry-gas part of the Utica, the three-well Schiappa Trust A pad in Jefferson County had an initial production rate of 20 million cubic feet of gas per well per day. 
The company said new completion techniques improved 120-day Utica well results by 25 percent, and it planned to continue testing new completions designs in the Utica and Marcellus shales.
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Wednesday, November 8, 2017

November 2017 Activity Maps Published by ODNR

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Rig Count is Up in Utica Shale, Number of Producing Wells is Down

New permits issued last week: 3  (Previous week: 6-3
Total horizontal permits issued: 2665  (Previous week: 2662+3
Total horizontal wells drilled: 2166  (Previous week: 2157+9
Total horizontal wells producing: 1715 (Previous week: 1717-2
Utica rig count: 24 (Previous week: 23)  +1

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Justice Department Gives Chesapeake the Go-Ahead to Continue Slashing Royalties

From Reuters:
The U.S. Department of Justice ended a three-year probe of Chesapeake Energy Corp’s (CHK.N) royalty payment and land purchase practices without taking action, the natural gas producer said in a securities filing on Thursday. 
The department subpoenaed documents from the company in 2014 after dozens of landowners and others accused it of short-changing them on royalties for natural gas and other fuels. 
Chesapeake said in the filing with the U.S. Securities and Exchange Commission that the Justice Department advised it on Sept. 19 that it had concluded the probes. The company remains in discussions with the U.S. Postal Service and various states, which separately sought information about the practices, the filing said. 
A spokesman for the Oklahoma City, Oklahoma, company declined to comment further.
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Pipelines Primed to Pump Up Appalachian Economy

From Bloomberg:
David Rheinlander used to dream of building a cabin in the woods behind his house in southwestern Pennsylvania. Now when the 57-year-old looks across his backyard, he sees a line of cut trees, piles of dirt, and stacks of steel pipe where he once envisioned a tiny cabin. For the past six months, construction crews carved their way through the back of his property. The roughly 100-foot-wide path they’re cutting through the rolling hills extends about 700 miles to the west, running through neighboring Ohio and all the way up into Michigan. 
The pathway is for a pipeline that will bring huge amounts of natural gas out of sparsely populated Appalachia and into big cities across the Midwest. The pipeline, called Rover, is being built by Energy Transfer Partners LP, of Dallas, which has spent three years and a total $4.2 billion on the painstaking process of winning permits, clearing miles of rugged terrain, and fighting a pitched legal battle against environmental groups and landowners.

Rover is scheduled to begin shipping as much as 3.25 billion cubic feet of natural gas a day in early 2018. When fed through a natural gas-fired power plant, that’s enough to power about 30 million homes. Rover is one of a handful of pipelines set to open next year that will begin moving natural gas from the massive Marcellus and Utica shale formations that lie beneath parts of Ohio, West Virginia, Pennsylvania, and New York.
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Thursday, November 2, 2017

Utica Rig Count Holds Steady for Second Straight Week

New permits issued last week: 6  (Previous week: 10-4
Total horizontal permits issued: 2662  (Previous week: 2657+5
Total horizontal wells drilled: 2157  (Previous week: 2150+7
Total horizontal wells producing: 1717 (Previous week: 1716+1
Utica rig count: 23 (Previous week: 23)  +-0

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Tuesday, October 31, 2017

EQT Provides 3rd Quarter Update, Mulls Changes After Rice Merger Goes Through

From Seeking Alpha's transcript of EQT's 3rd-quarter earnings call:
Now for the operational update. On October 13, FERC issued the Certificate of Public Convenience and Necessity for the Mountain Valley Pipeline or MVP. The FERC Certificate is a significant step in the regulatory process and keeps us on track to achieve our targeted 2018 in-service date. The MVP team is working hard to secure the remaining federal and state permits and approvals over the coming weeks. We expect to receive the FERC notice to proceed by the end of this year and commence construction soon after. In addition to the progress we've made on the regulatory front, we've also made significant progress on the project management side. We recently awarded contracts for about 80% of the construction work and we expect to have the remaining construction work awarded soon. 
Moving on to an update of the HammerHead project. As a reminder, HammerHead is a gathering header pipeline, which will feed gas to the Mobley hub in West Virginia from Pennsylvania. In addition to the return on capital from the HammerHead investment, we think the expansion prospects for Ohio Valley Connector, OVC, and Mountain Valley Pipeline are greatly enhanced by delivering an additional 1.2 Bcf per day of supply into West Virginia, which is where OVC and MVP originate. We've been working closely with EQT production on the details of the project to ensure an optimal final design and expect that the vast majority of the capacity will be subscribed by EQT under our firm reservation agreement. The current capital estimate is approximately $460 million and we anticipate the pipeline being in service in Q3 2019. 
On the gathering side, we continue to collaborate with EQT production on the development plans across EQT's core Marcellus acreage position. During the quarter, we installed two compressor units adding 10,000 horsepower to our Northern West Virginia gathering system. Last quarter, we provided some detail around the benefits we expect from EQT's proposed acquisition of Rice Energy. Including the $130 million of drop-down EBITDA in 2018, the increased opportunity to build out the supply hub with projects like HammerHead, the potential acceleration of OVC and MVP expansions and a more efficient build out of the gathering systems. EQT's acquisition of Rice is expected to close shortly after their respective shareholder meetings, which are both set for November 9. As soon as the transaction closes, we'll be back -- getting back to work to put these opportunities into action. 
In summary, it was another solid quarter from both a financial results and operating perspective, we look forward to executing on the opportunities set in front of us and ultimately creating significant value for our unitholders.
Click here to read the whole transcript.

With a closer look at some of the comments from EQT, here is the Pittsburgh Business Times:
EQT Corp. executives don’t expect that a committee that will study future options for the natural gas producer will recommend keeping the company the way it is, E&P and midstream divisions together. 
That’s the word from EQT CEO Steve Schlotterbeck, who spoke Thursday morning during the company’s conference call discussing third-quarter results and providing an update on its planned $6.7 billion merger with Rice Energy(NYSE: RICE). In response to shareholders’ concerns about the value of EQT (NYSE: EQT) holding both drilling and pipeline divisions, EQT earlier this year created a board committee that will address what is called the “sum of the parts discount.” 
EQT, which committed to making the committee’s decision public by the end of the first quarter, has repeatedly said that no decision yet been made and that the company could be split or sold. Schlotterbeck, on the conference call Thursday, said that the committee had to do the work but in response to a question seemed to say that keeping the company together the way it is now isn’t a likely option. 
“(What) should be a clear indication is that our expectation is that the status quo is highly unlikely to be the best answer for addressing the sum of the parts,” Schlotterbeck said.
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Average U.S. Shale Breakeven Oil Price Has Dropped 42 Percent in Four Years

by Matt Mandel, Energy in Depth

The World Bank released its October 2017 Commodity Markets Outlook last week, finding the average U.S. shale breakeven oil price has dropped more than 42 percent since the beginning of 2013, thanks to technological improvements. Advances in technology and drilling techniques such as hydraulic fracturing, coupled with resource rich domestic shale plays, means American producers are continuing to thrive despite lower commodity prices.
Of course, technologies such as horizontal drilling and fracking have opened a wealth of oil resources that were previously unreachable just over a decade ago. In the latest data from the U.S. Energy Information Administration (EIA), shale production accounted for over six million barrels per day (b/d) in October of this year, up from about 1.5 million b/d at the start of 2010 – a 400 percent increase. In fact, EIA estimates producers will best the previous total U.S. crude production record set in 1970 next year, thanks in large part to shale development. As EIA states:
“EIA forecasts that most of the growth in U.S. crude oil production through the end of 2018 will come from tight rock formations within the Permian region in Texas and from the Federal Gulf of Mexico.”
While a combination of factors helped shale oil production skyrocket over the past several years, innovation in development has had the largest impact on overall efficiency, the World Bank Outlook states:
“Despite lower oil prices, shale producers have been able to raise production through cost reductions (mainly for services, equipment, and labor), technological improvements, and better planning decisions as knowledge expands in a relatively young sector.”
The Outlook continues,
“Advancements include longer horizontal pipe laterals, shorter drilling and completion times, greater proppant intensity, and the use of multiple wells at a single location. Well productivity continues to rise.” (emphasis added)
This continued increase in production efficiency in the face of low oil prices has allowed the United States to become an increasingly important player in the global oil market. Now the largest oil and natural gas producer in the world, topping OPEC countries such as Saudi Arabia, America is not only competitive thanks to advances in shale development, it’s dominating.

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Monday, October 30, 2017

Court Rules That Ohio Law Allows Chesapeake Energy to Cut Landowner Royalties

From Reuters:
A U.S. District Court in Akron has ruled that Ohio law allows energy companies to deduct fees from payments to royalty holders whose contracts set a value at the well site, settling a widely-followed case involving Chesapeake Energy. 
The decision defined for the first time what Ohio law means when it says value of energy in such contracts is established “at the well.” Plaintiffs in the lawsuit had sought class action status and other royalty cases have alleged improper deductions based on the ‘at the well’ language.

Ohio has become the sixth largest natural gas producer in the United States because of the discovery in recent decades of shale gas in what has become known as the Utica shale field. 
In 2009, Regis Lutz and other royalty holders sued Chesapeake, Columbia Energy Group and NiSource Inc alleging breach of contract and fraud over deductions for services that took place after the fuel left the wells on their properties. Columbia Energy Group and NiSource were subsequently dismissed from the lawsuit. 
Their contracts specified royalties would be paid based on a percentage of the value at the well, and plaintiffs argued that the energy companies improperly took deductions for costs such as processing and marketing that were incurred far from the well.
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To learn more about the creative accounting that Chesapeake uses to slash landowner royalties as much as possible, click here to read ProPublica's investigative report from 2013.

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Natural Gas Prices May Go Up a Little Bit This Winter

From the American Gas Association:
The American Gas Association (AGA) said today that natural gas customers nationwide may experience a five percent increase, on average, on their heating bills this winter compared to last year. Following two unseasonably warm winters for much of the country, residential customers are likely to use an average of three percent more natural gas this winter due to colder temperatures, which may result in a moderate increase in overall bills. 
Natural gas will continue to be the most affordable option for home heating in the United States. 
“Americans may use slightly more natural gas this winter to heat their homes, but due to the excellent energy value provided by natural gas, people are not likely to see a very different bill than what they have seen over the past seven years,” said Chris McGill, vice-president of Energy Analysis and Standards at AGA. “We are entering the third winter heating season following the extreme cold of 2013-2014 which included the polar vortex. We expect to see temperatures this winter that are more near normal – not as cold as three winters ago, but not as warm as last year. This accounts for an expectation of three percent more consumption and an estimated five percent increase in overall bills.” 
AGA held their annual Winter Outlook event today where they presented analysis of supply, demand, temperature, weather events and pipeline capacity, and how these factors may impact customer bills. The results are based on a survey of 42 local gas utilities throughout the nation.
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Rover Pipeline Runs Into More Trouble in Michigan

From Livingston Daily:
State environmental officials cited a pipeline company Friday for releasing gasoline into a wetland near Pinckney.

Michigan Department of Environmental Quality received reports from residents Tuesday about the smell of gasoline coming from a site where Energy Transfer's Rover 42-inch natural-gas pipeline crosses wetlands east of Silver Lake near the 11000 block of Cedar Drive in Dexter Township.

The multi-state natural-gas pipeline, which is not in operation, will pass through 15 miles of Livingston County, coming from the south through Washtenaw and Lenawee counties. 
MDEQ analysts visited the site, noticed the smell of gasoline and collected water samples, Rebecca Taylor of the MDEQ Remediation and Redevelopment Division said Friday.
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Friday, October 27, 2017

Pipeline Worker from Wooster Dies in Metering Station Accident

From the Record-Courier:
A pipeline worker, killed Monday when a natural gas line blew, was thrown into a fence and died instantly, the Stark County Coroner’s Office said.

Coroner’s Office Investigator Rick Walters said Wesley J. Johnson, 60, of Wooster, was standing near the pipe while he and another Columbia Gas Transmission worker were completing maintenance at a metering station.

The cause of the incident, in the 8500 block of Beth Avenue SW, remains under investigation, line owner TransCanda said.

Investigators believe the end cap came off the pipe, spewing natural gas and other materials used in the transmission line. The pressure of the materials threw Johnson backward into the fence, Walters said.

An autopsy was conducted Tuesday, with Walters saying beforehand the cause of death was massive trauma to Johnson’s chest.
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Is U.S. Shale Heading for Higher Heights or a Crash? Depends on Who You Ask

Much like the predictions from analysts about oil prices, the predictions for whether good times or difficult times are coming for U.S. shale drillers are all over the map.  Here is a sampling of the recent articles discussing various predictions about shale.

From Platts:
US shale oil production is unlikely to peak before the middle of next decade, but current fracking techniques may be risking the prospect of faster decline rates from tight oil than many are forecasting, a top oil industry event was told this week. 
As the US shale industry continues to chase lower breakevens and boost productivity in the wake of the 2014 price downturn, shale players have turned to pumping much larger volumes of sand and water into horizontal wells. 
In addition to "bigger fracks", drillers have also increased the density of their fracking stages in a bid to boost the volumes of tight oil drained from each well. 
Although the techniques have raised initial flows rates by up to 30% in some wells, the intensive fracking is depleting the source rocks faster risking a sharp rise in future decline rates, according to Bernand Duroc-Danner, the former CEO of Weatherford International.
But then there's this, from MarketWatch:
A sharp rebound in U.S. shale-oil production is showing no signs of tapering off —and that looks likely keep a lid on oil prices in coming years, even as OPEC and its allies continue to cut production. 
That’s the view of several industry experts, gathered for the Oil & Money conference in London this week. It was a recurring theme throughout the sessions, as oil experts and industry players across the board forecast yet more rises in production to come. 
”U.S. shale is in a turnaround, and I think that you have a second peak coming,” said David Knapp, chief energy economist at Energy Intelligence. 
“It won’t be quite as high [as the first one]. But you’ll have a local peak for Eagle Ford, and I think the Permian has a decade or more left before we are really draining it,” he said.
But wait, here is this from The Fuse:
Cracks in U.S. shale emerged earlier this year, with evidence pointing to a slowdown in the three-year efficiency campaign that began when prices collapsed in 2014. Cost cutting and new drilling techniques have helped U.S. E&Ps dramatically lower their breakeven prices, but headwinds for the industry are gaining in strength. A rebound in costs—for equipment, fracking services, rig rates, labor, etc.—started to undercut the progress achieved by the industry over the past year. U.S. oil production, however, continued to grow anyway. 
More signs of trouble have continued to crop up. Rig productivity is falling, shale companies are no longer making headway on drilling times, and cash flow continues to disappoint investors, who are demanding change and questioning the bullish growth forecasts for U.S. shale. 
Rising Costs 
U.S. shale ramped back up after the OPEC deal was announced about a year ago, when WTI returned to above $50 per barrel for a period of time. With many shale drillers having successfully lowered their breakeven prices, analysts assumed that the rebound in production would be swift and overwhelming. The rig count soared and U.S. oil production has climbed by about 1 million barrels per day (mbd), from 8.55 mbd in September 2016 to roughly 9.5 mbd a year later. An uptick in drilling costs was a consequence of a tighter market for rigs, capital and labor, but analysts believed this development would not derail the rosy projections for the shale industry. The EIA still expects the U.S. to average 9.9 mbd in 2018.
But WKSU says a shale "re-boom" is coming:
Now, Hecht says the adjusting he did to keep the business going is about to pay off. Advanced bookings are coming in from drillers again and he believes that’s a sign energy companies are gearing up for a new run at the Utica Shale.

Andrew Thomas, executive-in-residence of Cleveland State University’s Maxine Goodman Levin College of Urban Affairs, agrees. The university just finished a study of Ohio‘s shale play and he says it has unique economic factors to carry it forward. 
For one, Ohio is not what's called an extractive economy. 
“We are not like Oklahoma where we make our living off oil and gas upstream business. The Ohio economy uses oil and gas, especially natural gas. So, the fact that we have these depressed prices is spurring a lot of that economic activity in Ohio.”
From CNBC, though, comes this more gloomy assessment from one OPEC producer (although it's not gloomy for him):
Saudi Aramco's Amin Nasser, CEO of the world's largest oil company, says he does not spend much time worrying about booming production from U.S. shale fields. 
One reason, says Nasser, is that shale drillers will eventually deplete the low-cost, high-quality "sweet spots" they've focused on throughout much of the three-year oil price downturn. American energy companies have driven down the cost of producing a barrel of crude, staved off bankruptcy and prevented output declines by tapping their best oil fields first. 
"The concentration that we are seeing today is on the sweet spot of shale, and this will not last forever," Nasser said in an exclusive interview on CNBC's "Squawk Box."

"You can concentrate for some time on the sweet spots and produce more oil. But ultimately you need to venture downward, and that's where you have less quality and you require more cost to produce these barrels," Nasser said Sunday from the command center at Saudi Aramco headquarters in Dhahran.
All of this can't help but make me think of this classic rant from former NFL coach Jim Mora.


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Ohio EPA Chief: ‘Communication is Key’ to Agency’s Proactive Approach to Shale Development

by Jackie Stewart, Energy in Depth

The Ohio Environmental Protection Agency (OEPA) hosted a first-of-its-kind oil and gas open house on Tuesday to discuss the importance of communication between regulators and industry, and provide an update on regulatory requirements and legislative changes for horizontal shale well drilling. The Ohio Department of Natural Resources (ODNR) also participated in the open house, as well as the Ohio Oil and Gas Association (OOGA), Ohio Oil and Gas Energy Education Program (OOGEEP) and Energy in Depth (EID). Ohio EPA Director Craig Butler began the open house by stating:
“We knew horizontal drilling was likely to be game changer for Ohio. Ohio EPA, ODNR, and ODH were given a directive to keep the public trust and communicate with the industry and we feel we have developed one of the best programs in the country.”
Caption: Ohio EPA Director Craig Butler and staff, Ohio Department of Natural Resources staff, Ohio Oil and Gas Energy Education Program, and EID.
Ohio Still Looks to ‘Do It Right’
In 2012, headlines rang out that “Ohio Looks to ‘Do It Right’ as Shale Boom Revives Steel.” As Director Butler and his team at the OEPA echoed during the open house, Ohio regulators have been on a mission since 2010 to develop Ohio’s shale resources while protecting the health and safety of its residents and the environment.
The OEPA’s record speaks for itself and the agency is continuously looking at new rules and regulations to safeguard Ohio’s environment. In a very short period of time, Ohio has completely overhauled its oil and gas laws to specifically address horizontal drilling and hydraulic fracturing, with SB 165SB 315 and HB 59 being specific examples of how Ohio is taking a proactive approach to shale development. From 2013 to today, these state laws and interagency actions continue to address new rules and regulations to address modern shale development. Director Butler reinforced this, stating:
“The oil and gas is a significant industry for the state of Ohio and it’s our job to protect public health and the environment. We’ve gotta have regulatory programs and strong technical assistance programs. We need to protect our natural resources and our public health.”
The proactive approach to shale development was a key component of the open house, as the primary purpose was to address horizontal well regulations and best practices for acquisitions of producing wells. The OEPA encouraged operators to notify the agency within 30 days after a well is purchased. Operators who purchase a well and the permit are then responsible to comply with the provisions outlined in the permit. The agency recommended that operators communicate “early and often” during any acquisitions of wells, stating, “Meet with us. Read your permit when you get it, as you are going through the process ask the questions. Communicate up front.”
When asked if the oil and gas industry has done a good job of communicating with the OEPA and ODNR so far, the collective response from the agencies was “yes.” But the agencies’ representatives were quick to encourage more communication with their offices.
During the meeting, OEPA officials went through the considerable number of major federal and state air rules that the oil and gas industry must comply with. While misinformation campaigns would have the public believe otherwise, the oil and natural gas industry is subject to a litany of federal and state air emission regulations.
The result of Ohio’s proactive regulatory approach to shale development? One day after the Ohio EPA hosted oil and gas open house, Ohio University held a Shale Innovation Project webinar entitled, “Methane Regulations: Federal, State, and Local Trends” which included OPEA Division of Air Pollution Control Chief Robert F. Hodanbosi. According to Hodanbosi, when his inspectors have gone out to investigate complaints, the Ohio EPA “haven’t found the issues described by the residents.”
In other words, while some groups may still be out there fearmongering, the OEPA’s regulations are proving effective, and investigations conducted by the Ohio EPA have concluded reported concerns are not a risk to human health. Multiple academic studies conducted in Ohio have confirmed that as well.
As a reminder, for its latest study, the University of Cincinnati (UC) gathered air samples near production sites in three of the top producing oil and natural gas counties in Ohio — Guernsey, Noble and Belmont — to examine air quality near natural gas extraction. And according to a media report, lead researcher Dr. Erin Hayes told local elected officials during a recent presentation on the study that “none of the air sample averages exceeded EPA levels of health concern” after being evaluated for 63 volatile organic compounds (VOCs) and formaldehyde.
In addressing another area where activists continue to miss the mark, the OPEA also reminded open house attendees how the various agencies coordinate if an incident occurs. Executive Order 2016-04K went into practice last year, mandating the OEPA, ODNR, Ohio State Fire Marshalls, and the Public Utilities Commission of Ohio join forces to create a one-call emergency notification system for oil and natural gas emergencies so that these agencies work side-by-side and in tandem with each other and have someone on call 24-7. The regulators also have a new FLIR infrared camera on hand to assist them with methane leak detection, which can trace gases to their root source. In other words, the Ohio EPA takes fugitive methane emissions very seriously.
Ohio is a great example of how methane emissions from oil and natural gas systems have been reduced in the U.S. Case in point: the Appalachian Basin, which includes the Marcellus and Utica shales, saw methane emissions fall 3.5 percent in 2016, according to the latest U.S. EPA Greenhouse Gas Reporting Program (GHGRP) data on large oil and gas facilities. From 2011 to 2016, the Appalachian Basin has reduced methane emissions by a whopping 63 percent, while at the same time being the “main driver of growth in total U.S. shale gas production and the main source of total U.S. dry natural gas production,” according to U.S. Energy Information Administration.
The latest U.S. EPA Greenhouse Gas Inventory shows overall methane emissions from oil and natural gas systems have decreased 19 percent since 1990 (249 million metric tons to 202 mmt) at the same time natural gas production has increased 52 percent and oil production has increased 28 percent.
So what have we learned from this Ohio EPA Oil and Gas Open House? We learned that communication is key and that shale can in fact be developed while protecting the environment. And we certainly appreciate the opportunity to have been included in the event.

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Wednesday, October 25, 2017

FERC Approves Horizontal Directional Drilling at More Sites for Rover Pipeline

From NGI:
FERC on Friday authorized Rover Pipeline LLC to resume horizontal directional drilling (HDD) at two additional locations where work had been stopped following an April drilling fluids spill near the Tuscarawas River in Ohio. 
In a letter Friday, Federal Energy Regulatory Commission staff said Rover has "developed and filed specific measures to address the recommendations" provided by J.D. Hair & Associates, the engineering firm brought in to review the Tuscarawas incident
Based on a review of site-specific plans, FERC said Rover may resume HDDs at the Black Fork Mohican and Highway 42 crossings. 
Momentum continues to build for the 713-mile, 3.25 Bcf/d Rover, which has seen its share of regulatory setbacks since beginning construction earlier this year. Afterissuing a moratorium in May that halted all new HDDs for the pipeline, FERC has reauthorized 15 since mid-September.
Read the whole article by clicking here.

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ODNR Posts October 2017 Utica and Marcellus Shale Activity Maps

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Utica Shale Producing Wells Up by 21 on Latest ODNR Report

New permits issued last week: 10  (Previous week: 14-4
Total horizontal permits issued: 2657  (Previous week: 2647+10
Total horizontal wells drilled: 2150  (Previous week: 2145+5
Total horizontal wells producing: 1716 (Previous week: 1695+21
Utica rig count: 23 (Previous week: 23)  +-0

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Friday, October 20, 2017

API Foresees Growing Demand for STEM Workers as Shale Expansion Continues

From TribLIVE:
The continuing development of the Marcellus shale play, plus the expected retirement of skilled oil and gas tradesmen, will drive the need for STEM workers in Southwestern Pennsylvania into the next decade, a study said. 
A steady supply of workers with skills in science, technology, engineering and math (STEM) is needed to offset predicted shortages in skilled labor in the energy and advanced manufacturing industries, the RAND Corp. study said. 
The study was an analysis of the first two years of the Appalachia Partnership Initiative formed in 2014 by Chevron Appalachia, the Allegheny Conference and the Claude Worthington Benedum Foundation. 
The API's goals are to increase awareness of STEM careers, improve STEM-related education from K-12, and expand workforce development opportunities for people working in STEM fields in 27 counties in Southwestern Pennsylvania, northern West Virginia and eastern Ohio.
Read more by clicking here.

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Tuesday, October 17, 2017

Permitting Activity Increases Again in Utica Shale

New permits issued last week: 14  (Previous week: 4+10
Total horizontal permits issued: 2647  (Previous week: 2638+9
Total horizontal wells drilled: 2145  (Previous week: 2141+4
Total horizontal wells producing: 1695 (Previous week: 1695+-0
Utica rig count: 23 (Previous week: 22)  +1

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Monday, October 16, 2017

Ohio Holds the ‘Key Anchor’ To Appalachia’s Bright Plastics Future

by Jackie Stewart, Energy in Depth

This week, Ohio laid a stake in the ground as the “key anchor” to the Appalachian storage hub — a critical component to support an economic revolution along the Ohio River — during the Utica Shale Summit hosted by the Canton Regional Chamber. The event provided a new perspective on the next phase of Appalachian Basin oil and natural gas development, including storage, infrastructure, and the ultimate end-use of natural gas liquids that has led to a rebirth in plastics manufacturing in the U.S. As a result of the conference, local Ohio papers are asking, “Could Ohio and nearby states become petrochemical hub?”
Thanks to prolific natural gas liquids from the Utica Shale, the Ohio River Corridor, a new site selection service company, announced it’s hopeful to soon rebrand the “Rust Belt” as the “Plastic Belt.”  So how is Ohio the so-called “key anchor” to this forecasted “Plastic Belt”?
Well, as recent American Chemistry Council and West Virginia University (WVU) reports have detailed, one of the key components to unlocking plastic manufacturing is finding storage solutions for natural gas liquids. And Ohio is in fact the only state in the Appalachian Basin that has a project underway to do address storage solutions.
The Mountaineer NGL Storage project, located in Monroe County, would support 3.25 million barrels of natural gas liquids (NGLs) initially, with capacity to store as much as 10 million barrels of NGLs in a salt formation about 6,700 feet below the surface. The project would be a huge resource to support the needs of ethane cracker plants slated for the region.
According Mountaineer President David Hooker, the project is a “key anchor” to the much talked about Appalachian Storage Hub concept. The Ohio project is essential to keeping NGLs produced in the Appalachian Basin local, as it serves as warehouse for NGLs during the operation of an ethane cracker. Here’s how the company illustrates its significant role in bringing manufacturing to the region.
As you can see, prolific natural gas liquid production from shale must be separated into ethane, propane, butane, etc., through fractionation. After that, the NGLs can be stored, or warehoused, to support the ebbs and flows that the private market will ultimately dictate.  For Mountaineer’s project, that means storing NGLs in salt caverns.
How Does Salt Storage Work?
Salt storage is one of the preferred methods of hydrocarbon storage, according to the Energy Information Administration (EIA), and has been used throughout the country for over 70 years. In other words, the process is certainly not new.  Utica Shale Summit conference attendees were excited to see a new video that highlighted Mountaineer’s project and provided an education salt storage.
Keeping it Local
In order to keep the vast production coming out of the Utica Shale local, there needs to be an incredible amount of infrastructure built out to support transportation and end-use in the region. That means finding a home for dry gas, such as gas-fired power plants, and taking NGLs to market. As Team NEO, an economic develop group, stated at the Utica Shale Conference,
“Right now we’re exporting a tremendous amount of value out of the region. What I’d like to do is try to have this region benefit from that and create wealth and jobs going forward. We have a window of opportunity to seize this. We have competition all over the world.”
Hooker agreed, saying “keeping it local is the key,” which is why his company has already spent $20 million toward supporting that goal.
But keeping Utica Shale local will largely depend on major investment decisions to build crackers in the region, and additional storage and infrastructure. Of course, Shell has already announced its investment in Pennsylvania, and Ohio is anxiously awaiting a final investment decision from PTT Global Chemical, but what about others? And will plastic manufacturing companies follow suit and decide to invest in the region as well?
Time will tell, but if the first storage facility in the tri-state is any indicator of things to come, there’s certainly a lot to look forward to.  And it can’t be emphasized enough that none of these activities would be possible without production of oil and natural gas from shale.

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