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Friday, May 26, 2017

Letter to the Editor: Geologist Says Rover Pipeline Problems Are Common and Being Handled Properly

Rover’s Focus is Rightly on Containment, Working with Authorities

by Bill Godsey

Regarding the Rover Pipeline’s recent release of drilling fluid in Ohio, I would argue that these occurrences – which are fairly common among the industry – are being properly addressed. It’s important for open communications among state and federal regulators and private companies like Rover to continue. Containment is appropriately the focus of those involved.

It’s expected that drilling fluid can and will rise through naturally occurring, pre-existing cracks I n the soil during horizontal directional drilling (HDD), which is considered an industry best-practice for installing pipe under wetlands and other sensitive areas. These “inadvertent returns” are common during the HDD process, and do not pose any long-term threats to the environment. Further, Rover included a comprehensive plan to address any such occurrence in its permit application, approved by FERC, to build the pipeline.

Rover is not taking the situation lightly – they have no reason to. Simply put, it in the best interest of private companies to properly follow the correct procedure to continue construction, but the company has every reason to be a good environmental steward and protector of the communities in which they are building. Projects of this nature was intentionally designed to mitigate short and long-term environmental impacts.

While media reports might aim to sensationalize the ongoing correspondence between the Rover Pipeline and the OEPA, I think it’s important to allow the process to be completed without exaggeration or hysteria.

Bill Godsey is a licensed professional geologist and a former geologist for the Texas Railroad Commission.

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Rover Pipeline Faces More Scrutiny from Ohio EPA Thanks to Stormwater Overflow

From The Columbus Dispatch:
The Rover pipeline is in trouble again, this time for storm water overflows on farm fields along its construction route. 
In a statement released Friday, Rover Pipeline officials responded to complaints from Ohio farmers regarding overflows that the company said are caused by recent rainfalls. Heavy rain has caused pipeline trenches and work spaces to fill with water and spill onto fields. 
Texas-based Energy Transfer, which is building the $4.2 billion underground pipeline route, said it is working with the Ohio Environmental Protection Agency and the Federal Energy Regulatory Agency, as well as the farmers, to remove the water. 
“Rainfall in Ohio this spring has not been unprecedented,” Ohio EPA spokesman James Lee said in an email statement. “Had Rover better planned their storm water management, they would have been aware that rain is common in Ohio during the months of April and May.” 
This isn’t the first time Rover has had to apologize for its actions.
Read more of that article by clicking here.

Meanwhile, activists are appealing to the FERC to stop construction on the pipeline.  From Livingston Daily:
Grassroots groups in Michigan and Ohio filed a complaint Wednesday asking the Federal Energy Regulatory Commission to halt construction of Energy Transfer's Rover Pipeline through the two states and reopen an environmental impact review because of recent environmental incidents.

Michigan Residents Against the ET Rover Pipeline and Ohio-based non-profit FreshWater Accountability Project are asking FERC to revoke the certificate issued to the company in February that allowed it to start building the 42-inch natural gas pipeline, which is not yet in operation.

"It's going to be an uphill fight, but we put together a string of pretty irresponsible actions by ET Rover," the groups' attorney Terry Lodge said Wednesday.
The effort has little chance of success.  Read more by clicking here. 

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May 31 Event in Jefferson County Promises Update on Area Oil and Gas Activity

From the Weirton Daily Times:
Area residents will have the opportunity to hear an update on the status of the oil and gas industry in Jefferson County on May 31.

That’s when the Jefferson County Chamber of Commerce, in conjunction with the Jefferson County Port Authority, will present a panel discussion and luncheon focusing on developments in the area. 
Sponsored by Ascent Resources, the presentation will run from 11 a.m. to 1 p.m. at Hellenic Hall, 300 S. Fourth St. Topics include the state of the industry in and around Jefferson County, permits, production, pipelines, infrastructure, investment and more. 
Speakers will include Amanda Finn, government relations manager for Ascent; Mike Chadsey, director of public relations for the Ohio Oil and Gas Association; Jimmy Stewart, president of the Ohio Gas Association; and Jackie Stewart, state director for Energy in Depth. A question-and-answer session will be included.
Read more by clicking here.

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State Historic Preservation Office Says Rover Pipeline Owes it $1.5 Million

From the Canton Repository:
The Rover Pipeline hasn’t honored an agreement to pay for harm the project does to historic properties, according to the State Historic Preservation Office. 
The dispute surfaced a week after state environmental regulators proposed penalizing Rover for construction mishaps and questioned whether the project is taking Ohio seriously as it rushes to finish the $4.2 billion natural gas pipeline. 
In February, Rover agreed to pay the State Historic Preservation Office $1.5 million a year for five years. The money will fund statewide education for historic preservation. 
Rover was supposed to make the first payment by March 1, but the bill remains unpaid, despite repeated contacts between the State Historic Preservation Office and Rover, according to an April 28 letter from the preservation office to the Federal Energy Regulatory Commission. The letter was filed Friday on the FERC online docketing system.
Energy Transfer, which is building the Rover pipeline, says that this claim is inaccurate and they do not owe the preservation office $1.5 million.  Click here to continue reading.

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Wednesday, May 24, 2017

Utica Shale Goes Over 2,000 Wells Drilled; Rig Count Rises Again

New permits issued last week: 10  (Previous week: 8+2
Total horizontal permits issued: 2515  (Previous week: 2506+9
Total horizontal wells drilled: 2005  (Previous week: 1990+15
Total horizontal wells producing: 1558  (Previous week: 1549+9
Utica rig count: 24  (Previous week: 23)  +1

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NEXUS Gas Transmission Donates $50,000 For Scholarship to Stark State

From Columbus Monthly:
NEXUS Gas Transmission has presented Stark State College with a $50,000 scholarship donation. 
According to a news release, Stark State is located near the proposed NEXUS gas pipeline route and offers relevant training for many careers in the oil and gas industry. As indicated by the college, the one-time donation will be used to support industry related programs, scholarships or training facility improvement for students pursuing certification and training to work in the oil and gas industry. 
We are grateful for this donation and the ability to use it to directly support hands-on training activities related to OSHA Safety Classes, Environmental Compliance Sampling of soils, water and air, and Department of Transportation (DOT)-required Operator Qualification training,” said Stark State College President Para M. Jones in a news release. “These skills and certifications are critical components of the labor force needs related to gas, water and other infrastructure projects throughout the region.”
Read more by clicking here.

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OPEC Asks for Help in Balancing Oil Market

From CNN Money:
OPEC has asked a favor of other major producers: Please stop pumping so much and help us balance the market. 
The unusual plea was issued Thursday in the cartel's closely-watched monthly report, which found that global markets are still suffering from too much supply.

The report said that balancing the market would "require the collective efforts of all oil producers" and should be done "not only for the benefit of the individual countries, but also for the general prosperity of the world economy." 
OPEC said that one producer in particular is to blame: The U.S., where shale producers have continued to ramp up their drilling despite lower crude prices.
Continue reading this article by clicking here.

Meanwhile, a Forbes article says that U.S. shale drillers still haven't won their battle with OPEC:
  • More than 200 U.S. energy companies filing for bankruptcy in less than 2 years;
  • A commodity price about half of what it was 3 years ago;
  • Rig count half of the 2014 level;
  • An industry just now beginning recover from large layoffs during 2015 and 2016.
If the current state of the U.S. upstream oil and gas industry is what an industry looks like when it has "won" a war, then let's not have any more wars, OK? 
But that's exactly what some in the energy-related news media would have you believe:  that the U.S. shale industry has succeeded in staring down the OPEC cartel's effort to put it out of business and emerged victorious.  Several readers contacted me and ask me if that was not in fact the bottom line of the piece I posted last Friday, titled "OPEC Still Fundamentally Misunderstands U.S. Oil Industry."

Well, no, that was not the point, but since some took it that way, I guess a fuller explanation is in order.

Click here to read more from that article. 

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CORN Sues to Try and Block the NEXUS Pipeline

From US News:
More than 60 property owners in northeast Ohio are asking a federal court to block a proposed high-pressure natural gas pipeline.

Organizers of the Coalition to Reroute Nexus say a suit filed Friday in U.S. district court charges that the project violates the owners' due process rights, misuses eminent domain to take property, and jeopardizes their safety. It seeks injunctions against the Federal Energy Regulatory Commission and Nexus Gas Transmission.

"This complaint has been a long time in development," said Paul Gierosky, a co-founder of the group. "Our every experience in dealing with FERC and Nexus has been documented and will be brought to bear in this case."

The lawsuit contends that the federal commission and used false and misleading information designed to trick property owners into waiving their constitutional rights. It urges the court to enjoin FERC from issuing a certificate to Nexus for the pipeline.
Read more by clicking here.

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Youngstown Anti-Drillers Set For Yet Another Attempt at Fracking Ban

From Natural Gas Now:
The Marxist CELDF is making yet another run at a “community rights” initiative in Youngstown, Ohio under the cover of fracking opposition. It seeks anarchy. 
A nation without laws is not a nation. 
Virulent anti-drillers in Youngstown, OH have now tried six times to pass a so-called Community Bill of Rights ballot measure–and have failed all six times, the most recent last November. The local yokels are pawns, useful idiots, for an ultra-radical group from Pennsylvania called the Community Environmental Legal Defense Fund (CELDF). The CELDF is behind dozens of such efforts, none of which has been successful. The CELDF is also behind a number of bizarre lawsuits — like the one claiming that an ecosystem is a “person” with rights
The CELDF has the local anti yokels in Youngstown amped up again — circulating a seventh petition for a ballot measure. But this time is different. In addition to the usual no fracking, no pipelines pablum, this petition has language that makes it legal to break the law. 
You read that right. If the ballot measure were to pass, and if an anti got it into her head to sit in front of a bulldozer that was about to clear ground for a wellpad, or dig a trench for a pipeline, the police would not be able to arrest and remove the anti. It would be within her rights to sit there and block legal, legitimate activity–all in the name of saving the planet.
Click here to read the entire article.

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Friday, May 19, 2017

Summer Savings and Huge Air Quality Improvements On Tap For Ohio — Thanks to Fracking

by Jackie Stewart, Energy in Depth

From northeast Ohio to southwest Ohio, increased use of natural gas is proving a major benefit to consumers, businesses, taxpayers and — most importantly — the environment.
Over the past two weeks, news has broke that three major Ohio job creators — MillerCoors BrewingWright Patterson Air Force Base and Cleveland Thermal — have invested more than $34 million combined in converting their boilers to natural gas. By doing so, 94 buildings in downtown Cleveland will be heated by shale gas and Cincinnati motorists are expected to save $44 million in fuel costs. And for the first time in 10 years, southwest Ohio will be in attainment of air quality standards, all thanks to fracking.
In northeast Ohio, the Cleveland Plain Dealer reports that Cleveland Thermal, which has been supplying thermal heating and district cooling to Cleveland since 1894, has converted 100 percent to natural gas. Essentially the city of Cleveland has gone from using wagons of firewood for heating needs in the 1800s to 100 percent natural gas today, thanks to advances in technology and environmental improvements that have become readily available and economic. Indeed, a shift to natural gas boilers became a win-win for business and the environment, as the Plain Dealer reported that,
“Marc Divis, president of Cleveland Thermal, said switching to natural gas will reduce the company’s carbon dioxide emissions by 49,200 tons a year. That’s an 84 percent reduction and the equivalent of planting a dense 19,000 acre forest.”
On the other side of the state in Trenton, Ohio, MillerCoors Brewing Company has made similar business decisions. Ohio’s largest brewery spent more than $10 million switching their boilers to natural gas in an effort to reduce greenhouse gas emissions and reduce overhead costs. As a result, the company reported that its greenhouse gas emissions decreased 37 percent, nitrogen oxide emissions dropped 88 percent and sulfur dioxide emissions decreased 96 percent last year.
During the same period of time, Wright Patterson Air Force Base in Dayton completed its multi-year conversion to natural gas as well. The switch to natural gas is expected to eliminate 1,000 tons of sulfur dioxide emissions, 200 tons of nitrogen oxides, five tons of particulate emissions and 290,000 tons of greenhouse gas emissions. As a result, the base proudly announced it would meet Clean Air Act regulations while saving $2 million a year in fuel costs, again demonstrating the win-win for the environment and for taxpayers who ultimately fund the base.
MillerCoors and Wright Patterson Air Force Base’s shift to natural gas has resulted in another major win for the greater Cincinnati, Dayton and Springfield areas, where motorist will see a 12 cent reduction in gas prices this summer.  This is a significant change of events, as for the last 10 years motorist in this southwest Ohio have paid more for gas in the summer due to the region’s poor air quality.
Cincinnati has long been a target of air quality woes but now — thanks to the use of natural gas from fracking — the Ohio Environmental Protection Agency has announced that the region is finally in attainment of ozone regulations.
Brad Miller, the assistant director of the Southwest Ohio Air Quality Agency said,
“We are now in attainment, which means we meet the air quality standards, for all six of the national air quality standards the U.S. EPA has established. This the first time many years we have been in attainment.”
Craig Butler, head of the Ohio Environmental Protection Agency, also said of the summertime gas prices,
 “We were able to make a very scientific case back to the federal EPA that we can relieve consumers from this hidden expense, and still see all of the environmental improvements, by these two facilities changing their boilers to natural gas.”
Ohio State Representative Bill Seitz was so thrilled with the news of lower gas prices this summer that he declared the news “Motorist Freedom Day.”

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Wednesday, May 17, 2017

Utica Shale Goes Over 2,500 Wells Permitted

New permits issued last week: 8  (Previous week: 14-6
Total horizontal permits issued: 2506  (Previous week: 2499+6
Total horizontal wells drilled: 1990  (Previous week: 1982+8
Total horizontal wells producing: 1549  (Previous week: 1551-2
Utica rig count: 23  (Previous week: 22)  +1

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Monday, May 15, 2017

Rover Pipeline's Importance Seen in Impact on Gas Prices

From Bloomberg:
Some of this year’s biggest gyrations in U.S. natural gas prices can be chalked up to a single pipeline. 
Energy Transfer Partners LP’s $4.2 billion Rover line, scheduled to begin partial service in July, will be one of the biggest links from the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio -- America’s most prolific gas production region -- to the Midwest and Canada. Gas futures surged to a 14-week high on May 10 after a regulatory setback prompted speculation that the project would be delayed, keeping supplies from reaching those markets. 
For a gas market that’s been weighed down by a stubborn supply glut for most of 2017, the timing of the Rover pipeline is critical. An on-time startup would derail progress in whittling down the surplus, unleashing more of the fuel even as hot weather boosts demand from power plants and exports to Mexico and overseas buyers climb. A delay, meanwhile, would keep a lid on gas output from eastern U.S. shale basins. 
“It’s a huge pipeline coming out of the Marcellus and Utica region and a lot of that gas is trapped there; it’s a big deal,” said Kyle Cooper, director of commodities research with IAF Advisors in Houston. The market may be “hypersensitive” to Rover regulatory filings, creating the potential for “some pretty violent moves in the market.”
Continue reading by clicking here.

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Energy Transfer Says Ohio EPA Has Not Issued Fines for Rover Pipeline Mishaps

From NGI:
FERC's actions in response to the Tuscarawas River HDD spill came just days after a May 5 letter from Ohio Environmental Protection Agency (Ohio EPA) Director Craig Butler asking for FERC’s help in responding to "numerous inadvertent returns of bentonite slurry at a number of locations throughout" the state, including the 2 million gallon Tuscarawas River spill, which affected "a high-quality Category 3 wetland." 
Butler told Acting FERC Chairman Cheryl LaFleur that Rover has "taken the position that Ohio has no authority to enforce violations of its federally delegated state water pollution control statutes, water quality standards or air pollution control statutes...Ohio EPA strongly disagrees with Rover's position." 
Butler added, "In light of Rover's restarting drilling operations today and Rover's position that the state is without any authority to address violations of environmental laws, we are asking FERC to review the matter and to take appropriate action in the most expeditious manner." 
Prior to FERC stepping in, Ohio EPA issued a series of proposed administrative orders in response to the spills that would require Rover to, among other things, develop a wetlands restoration plan and pay a $431,000 civil penalty. An Ohio EPA spokesman told NGI the orders represent the "beginning of the enforcement process" and that they are in response to the Tuscarawas spill and "at least 17 other Rover-related environmental incidents reported to Ohio EPA's spill hotline." 
While local media outlets reported that Rover had been fined by Ohio EPA for environmental violations, Energy Transfer spokeswoman Alexis Daniel challenged that characterization. 
"There has been a great deal of misrepresentation of the facts as it pertains to this issue," she said in an email. She referred NGI back to the Ohio EPA to "get a clear understanding of the specifics of the situation as no fine has been issued. We continue to work with all regulatory bodies with governance over the project to resolve any outstanding questions or concerns."
Click here to read the whole article.

It would appear that the Ohio EPA has issued the fines, but perhaps the reason that Energy Transfer says no fine has been issued is that the company seems to have decided that the agency has no authority over them and can be ignored.

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Rex Energy Plans a Busy Year in Carroll County

From the Canton Repository:
Rex Energy will soon be busy in Carroll County, where it plans to drill 12 Utica Shale wells this year. 
The State College, Pa.-based company outlined its expanded drilling program during a conference call with investors Wednesday. 
Rex had planned to drill five wells in Carroll, but a new financing agreement will allow the company to accelerate its plans. 
That means drilling seven more wells in Carroll from the existing Jenkins and Goebeler pads, where Rex has seen strong production of condensate, a petroleum liquid that is lighter than oil but heavier than natural gas.
Click here to read more.

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Thursday, May 11, 2017

05/11/17 Links of the Day: More 1st Quarter Reports, Green to Sue in Effort to Stop Nexus, and More

Energy in Depth:  Inflammatory Infant Mortality Study a Prime Example of Flawed 'Pay to Play' Science   -   "An inflammatory new study claiming fracking “kills babies” was published last week by Scientific Research Publishing (SCIRP). The study received zero mainstream media attention, which probably has something to do with its numerous glaring flaws. But it also points to a wider problem – that of subpar studies appearing in what are known as “pay-to-play” open-access journals such as..."

Bloomberg:  Oil's OPEC-Driven Gain Wiped Out as Shale Boom Offsets Cuts   -   "The oil rally following OPEC’s deal has disappeared. Futures on both sides of the Atlantic dropped to their lowest since late November on growing signs that the group’s production cuts are failing to clear a surplus of crude. Oil stocks felt the pinch, with the S&P Oil & Gas Exploration and Production Index slumping as much as 4.9 percent..."

Energy & Environmental Law Blog:  Ohio: Updated Statutory Unitization Guidelines   -   "On May 3, 2017, the Ohio Department of Natural Resources, Division of Oil and Gas Resources Management (the Division) issued revised guidelines for statutory unitization applications. The guidance document–largely rewritten from the previous version (issued in May 2014)—contains a number of notable changes, including the following..."

Seeking Alpha:  Chesapeake Energy: The Good and the Ugly   -   "May 4th was not a particularly pleasant day for shareholders of Chesapeake Energy Corp. (NYSE:CHK). After reporting financial results for the first quarter of its 2017 fiscal year, shares of the business, due also in large part to plummeting energy prices, closed down 7.4%. Seeing as how..."

Forbes:  Are Activists Harming the Very Environment They Claim to Protect?   -   "Over the past seven years, the entire country has read or watched news stories concerning activists protesting pipelines. Beginning first with the Keystone XL (KXL) oil pipeline, and moving on to the Dakota Access Pipeline (DAPL), these activists have forever changed the way..."

The Advertiser-Tribune:  Crossroads of Energy Infrastructure   -   "In western Ohio, the dominant energy technology is from utility-scale wind and solar power. In eastern Ohio, the main technology is extracting natural gas by fracking shale. In Seneca County, they come together in a unique way, said Dale Arnold, director of energy, utility and local government policy for Ohio Farm Bureau Federation. As he understands the federal government’s energy policy, Arnold said President Donald Trump means to allow new and old technology to..."

WKSU:  Nonpartisan Coalition Opposes the $300-Million-a-Year Bailout for FirstEnergy's Nuclear Plants   -   "The proposals at the Statehouse to subsidize FirstEnergy’s two nuclear plants are getting some pushback from about 40 different entities in Ohio. The Coalition Against Nuclear Bailouts has bipartisan support from elected officials, pastors and even organizations like AARP and the Ohio Coin Machine..."

Energy in Depth:  Anti-Fracking Donor Memo Mapped Out Strategy to Attack Oil and Gas with Questionable Health Claims   -   "A strategy memo from 2012 encouraged anti-fracking groups to make connections between health problems and fracking, even when no evidence existed to support the linkage. The goal of the plan, which included leveraging the power of the media and a focus on young children, was to undermine support for oil and natural gas development and expand regulations. The 2012 memo, entitled “Public Health Dimensions of Horizontal Hydraulic Fracturing: Knowledge, Obstacles, Tactics, and Opportunities,” was authored by Seth Shonkoff, who at the time was..."

Ohio Oil and Gas Assocation:  Ohio Mineral Owners Score a Win in Efforts to End De facto Fracking Moratorium on State Lands   -   "It appears Ohio mineral owners have had just about enough of the federal and state government interfering with their right to develop minerals located under their private property. At the urging of the National Association of Royalty Owners (NARO) Appalachia and Landowners for Energy Access and Safe Exploration (LEASE), Ohio Republican lawmakers this week added a provision..."

Ashland Times-Gazette:  City of Green Plans Suit to Stop Nexus Pipeline Construction   -   "A mayor has upped the ante in the fight over a proposed high-pressure natural gas pipeline by hiring attorneys to file a lawsuit aimed at stopping the pipeline from being built or stopping the project altogether. The Green City Council authorized spending $100,000 at a special meeting Tuesday to hire a Cleveland firm specializing in environmental law. This comes weeks after the council agreed to give $10,000 to a group preparing its own..."

Energy in Depth:  New EPA Study Indicates Agency is Greatly Exaggerating Methane Emissions   -   "A new U.S. Environmental Protection Agency (EPA) study released last week indicates the agency may be greatly exaggerating oil and natural gas system methane emissions. By using a combination of extractive air sampling and remote optical gas imaging (OGI) tools to analyze 80 pneumatic control systems across eight well pads, the study found oil and gas methane emissions in Utah’s Uinta Basin are “significantly lower” than previously..."

Bloomberg:  Shale Drillers Are Outspending the World with $84 Billion Spree   -   "U.S. shale explorers are boosting drilling budgets 10 times faster than the rest of the world to harvest fields that register fat profits even with the recent drop in oil prices. Flush with cash from a short-lived OPEC-led crude rally, North American drillers plan to lift their 2017 outlays by 32 percent to $84 billion, compared with just 3 percent for international projects, according to analysts at Barclays Plc. Much of the increase in spending is flowing into the..."

Gas & Oil:  Legal Battles Continue in Ohio Over Oil & Gas Rights   -   "Many Ohio lawsuits between surface owners and mineral owners over ownership of valuable oil and gas rights are being filed, and many others remain active, even after the Supreme Court of Ohio issued its sweeping decision on September 15, 2016 in Corban v. Chesapeake Exploration, LLC, 2016-Ohio-5796. Corban held that the 1989 version of the Ohio Dormant Minerals Act (“1989 DMA”) could only be relied upon by surface owners in cases brought before June 30, 2006. The Court also held that the 1989 DMA was nothing more than..."

Energy in Depth:  Wayne National Forest Fracking Lawsuit a Prime Example of Activists' "Litigious Battles to Drive Regulation"   -   "EID recently highlighted that national fringe environmental groups have promised “litigious battles, to drive regulation” as part of their goal to ban fracking. That effort is playing out in Ohio, where the Center for Biological Diversity, Ohio Environmental Council, Heartwood and the Sierra Club have an axe to grind with the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) after their numerous protests against leasing in..."

Seeking Alpha:  Gulfport Energy Q1 2017 Results - Earnings Call Transcript   -   "Yesterday afternoon, Gulfport reported first quarter 2017 net income of $154.5 million or $0.91 per diluted share. These results contain several non-cash items, including an aggregate non-cash derivative gain of $106.8 million, and expense of $1.3 million in connection with the recent SCOOP acquisition, and a loss of $4.9 million in connection with Gulfport's interest in..."

Seeking Alpha:  Rex Energy's (REXX) CEO Tom Stabley on Q1 2017 Results - Earnings Call Transcript   -   "Last week we announced the closing of our new $300 million first lien delayed draw term loan. Our initial borrowings under the term-loan were approximately $144 million, which were primarily used to repay all of the borrowings under our former senior secured revolving credit facility and to place $19.3 million of cash on..."

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Rover Pipeline Recklessness Prompts FERC to Slow Project

From the Washington Post:

The Federal Energy Regulatory Commission has curtailed work on a natural-gas pipeline in Ohio after the owner, Energy Transfer Partners, reported 18 leaks and spilled more than 2 million gallons of drilling materials. 
The pipeline regulator blocked Energy Transfer Partners, which also built the controversial Dakota Access pipeline, from starting horizontal drilling in eight areas where drilling has not yet begun. In other areas, where the company has already begun horizontal drilling, the FERC said drilling could continue. 
The FERC also ordered the company to double the number of environmental inspectors and to preserve documents the commission wants to examine as it investigates the spills. 
The biggest spill, in a pristine wetland along the Tuscarawas River about 50 miles south of Akron, covered 6.5 acres, the commission said, “coating wetland soils and vegetation with bentonite clay and bore-hole cuttings.” A video provided by the Ohio Environmental Protection Agency showed drilling mud a foot or two deep. 
Energy Transfer Partners has asserted that the spills of nontoxic drilling mud, used to cool and lubricate drilling equipment, were inadvertent and had been predicted in its permit application to build the Rover gas pipeline. The horizontal drilling is done to place pipelines well below ground to minimize the chances of contamination of rivers or wetlands. 
However, the FERC said that its staff has “serious concerns” regarding the magnitude of the largest spill, “its environmental impacts, the lack of clarity regarding the underlying reasons for its occurrence, and the possibility of future problems.”
Click here to read the whole article.

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Wednesday, May 10, 2017

Carrizo Follows Other Drillers Who Are Looking to Sell Off Utica and Marcellus Shale Assets

From the first quarter earnings call with Carrizo Oil and Gas:
Brian Corales - Howard Weil 
Good morning, guys. Just a couple for you. The increased lay-in budget, was that partly due to, I guess, the Eagle Ford acreage you added in the quarter? And what acreage, I guess, are you targeting? It sounds like you have something pinpointed now. 
S.P. Johnson - Carrizo Oil & Gas, Inc. 
We have acquired acreage in the Eagle Ford and the Permian. Generally it's bolt-on acreage to the acreage we already have. Nearly all of it adjoins something we're already operating. 
Brian Corales - Howard Weil 
Okay. And in Appalachia, I'm assuming you're looking to sell both assets. And is there a data room open, or is this kind of see what's out there? 
S.P. Johnson - Carrizo Oil & Gas, Inc. 
We have engaged bankers on both of them and are doing teasers followed by data rooms. 
Brian Corales - Howard Weil 
And any kind of rough estimate in terms of timing or – ? 
S.P. Johnson - Carrizo Oil & Gas, Inc. 
The Marcellus is further along. We've had some data room visits on that. The Utica, data rooms are being scheduled.
Click here to read the whole earnings call transcript. 

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Tuesday, May 9, 2017

Rover Pipeline Company Fined $431,000 For Multiple Incidents Across Ohio

From The Times Reporter:
The Ohio Environmental Protection Agency has ordered Energy Transfer, the company building the Rover natural gas distribution pipeline, to pay $431,000 for water and air pollution violations at various locations across the state, including Stark County. 
In its order issued Friday, OEPA also instructed Energy Transfer to submit plans to address potential future releases and restore impacted wetlands along the $4.2 billion underground pipeline route, which stretches from Washington County in southeastern Ohio to Defiance County in the northwest. 
Work on the pipeline began in mid-February, and state officials say a total of 18 incidents involving mud spills from drilling, stormwater pollution and open burning at Rover pipeline construction sites have been reported between late March and Monday to the agency.
Read the whole article by clicking here.

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Two Drillers Selling Off Appalachian Assets

Noble Energy, Inc. (NYSE: NBL) ("Noble Energy" or "the Company") today announced that it has signed a definitive agreement to divest all of its upstream assets in northern West Virginia and southern Pennsylvania to an undisclosed buyer for a total amount of $1.225 billion. The amount includes upfront cash of $1.125 billion and an additional contingent amount of $100 million, structured as three separate payments of $33.3 million. The contingent payments to the Company are in effect should the average annual price realization at Dominion South exceed $3.30 per million Btu in the individual annual periods from 2018 through 2020.
David L. Stover, Noble Energy's Chairman, President and CEO, commented "The Marcellus has been a strong performer for Noble Energy over the last few years, which is a direct result of the success of our employees' efforts. During the same time period, we have also significantly expanded the inventory of investment opportunities in our liquids-rich, higher-margin onshore assets, which has led us to now divest our Marcellus position. This enables us to further focus our organization on our highest-return areas that will deliver industry-leading U.S. onshore volume and cash flow growth. This transaction also provides proceeds already exceeding our target for 2017, with several opportunities for additional proceeds ahead of us this year."
From PDC Energy's 1st quarter results press release:
The Company anticipates 2017 production to be within the top-third of its previously disclosed guidance range of 30 to 33 MMBoe with 2017 capital investments expected to be in the top half of its $725 to $775 million range. Additionally, the Company plans to pursue the 2017 divestiture of it Utica Shale asset in order to provide additional focus to its premier Core Wattenberg and Delaware Basin assets.

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Utica Rig Count and Number of Wells in Production Both on the Rise

New permits issued last week: 14  (Previous week: 9+5
Total horizontal permits issued: 2499  (Previous week: 2485+14
Total horizontal wells drilled: 1982  (Previous week: 1974+8
Total horizontal wells producing: 1551  (Previous week: 1540+11
Utica rig count: 22  (Previous week: 21)  +1

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Monday, May 8, 2017

API Ohio Praises House Action to Remove Onerous Tax Increase from State Budget

API Ohio Executive Director Chris Zeigler welcomed the Ohio House Finance Committee’s decision to remove the proposed severance tax increase from House Bill 49.

“The committee’s decision recognizes that our industry is an important part of the solution for advancing Ohio’s economic and employment goals,” said Zeigler. “Pro-growth tax policy and smart, science-based regulations will ensure that the state’s oil and natural gas industry continues to provide benefits for Ohio’s economy, consumers, workers and our environment.

“In removing such a damaging tax increase Speaker Rosenberger, Chairman Ryan Smith and the House Finance Committee have taken a critical step for Ohio’s oil and natural gas production and processing sector to remain competitive compared to other states.

“We are committed to continuing our work with all members of the General Assembly on forward-looking energy policies that will help ensure Ohio’s prominent role in America’s energy renaissance. We are proud of our contribution to U.S. leadership in the production and refining of oil and natural gas, and in the reduction of carbon emissions.”

API Ohio is a division of API, which represents all segments of America’s oil and natural gas industry. Its more than 625 members include large integrated companies, as well as exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms. They provide most of the nation’s energy and are backed by a growing grassroots movement of more than 40 million Americans.
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Drillers Provide 2017 First Quarter Updates

UPDATE ON 5/8/17

Several more drillers have released reports on their activity.

From Eclipse Resources:
  • The Company updated its Utica Dry Gas type curve assumptions, resulting in an increase in EUR of approximately 13% to approximately 2.2 Bcf per 1,000 foot of lateral based on the results of extended flow testing on its completed Dry Gas Utica Shale wells using the Company’s “Gen3” completion design, which is expected to generate a before tax internal rate of return of approximately 70% at today’s forward natural gas strip pricing.
  • The Company successfully drilled its newest record setting “Super-Lateral” well, the Great Scott 3H, with a total measured depth of 27,400 feet and completable lateral extension of 19,300 feet in less than 17 days from spud to TD in the Company’s Utica Shale Condensate area.
  • The Company completed drilling its first of two planned Marcellus Shale Condensate wells with a completable lateral extension of 10,000 feet.
  • The Company finished completions operations on a seven well Dry Gas Utica pad testing several innovative “Gen4” completion techniques, including testing increased proppant levels, diversion chemicals and engineered frack stages.
  • The Company issued second quarter 2017 production and expense guidance and updated its full year production and expense guidance, resulting in an increase in its expected average daily production guidance range for 2017 to between 315 and 320 MMcfe per day and a reduction in its 2017 per unit operating expenses for 2017 to between $1.40 and $1.50 per Mcfe.
Read the whole release by clicking here.

From Chesapeake Energy:
So I guess what I'm really asking is, as you evolve the portfolio towards these more oily areas, higher-rate areas, more economic areas, how do you think about the relative reset in your portfolio? I'm thinking specifically Marcellus and whether you would ever consider accelerating asset sales across some of your more pure-play gas positions?

Robert Douglas Lawler - Chesapeake Energy Corp. 
Sure. Well, it's a great question, Doug. And as we evaluate the portfolio constantly, the churn in evaluation consists of what is the EBITDA generation, what is the future potential, what is the competitive investment thesis in our portfolio of great assets going forward. But the key in my mind and across the company is that we're going to continue to improve our operations and continue to improve our balance sheet and look for opportunities to reduce our debt further as quickly as possible. 
I'd just draw your attention back to what the investment community's view of the Haynesville was a few years ago, and the significant value that our operating expertise and experience, what that's done and the uplift there that we've recognized and the value of that asset in the past few years as we continue to drill and produce just big boomer wells there in the Haynesville Shale. That same transfer of technology and operating capability we've pushed to the Powder River. And we have that excitement there. 
And as you look at the Marcellus and the Utica in the Northeast, these are very, very strong cash-generating assets. Some of the best rock shale, gas rock in the world. When you can spend $100 million and keep an asset flat at 2 BCF a day for next five-plus years, it's a tremendous asset to have in our portfolio. What I'm getting at there is that, if we can accelerate the value, we will absolutely do that and consider bigger asset sales, broader asset sales, to accelerate the value to our shareholders. 
But make no mistake, along the way as we evaluate the portfolio and continue with our investment thesis, we are driving the greatest value in a very disciplined capital program, pursuing that free cash flow neutrality. Essentially, if it weren't for some of the extraneous items the past several quarters, our spending has been in line, capital spending for drilling and completion, CapEx within our EBITDA. And we're going to continue those asset sales and look for opportunities to add the value. But make no mistake, across the portfolio, we're making meaningful improvements that will generate value for our shareholders in the future.
Read the whole earnings call transcript by clicking right here. 

From Rice Energy:
In Belmont County, we turned to sales 10 net operated Utica wells with an average lateral length of 8,400 feet. Our average lateral length for Utica wells drilled and completed during the quarter was 10,600 feet and development cost averaged $1,130 per foot. 
Our Utica development costs were 9% below budget resulting from improved operating efficiencies and lower-than-expected service cost inflation. Of note, during the first quarter, we drilled a five-well pad with an average of 12,700 foot laterals at an average drilling cost 30% below budget. 
We're incredibly proud of our team's accomplishments this quarter. We recently set the Utica industry's recorded by drilling 6,170 feet in a 24-hour period of time. The team continues to be technical leaders as evidenced by holding the industry record for drilling in the Utica.
Click here to read the entire earnings call transcript. 


Several drillers have reported on their first quarter activity this year.  View some of the details from these various releases below.

From EQT:
Finally, an update on our Utica program. As we've indicated during previous calls, we continue to work in understanding the reservoir and improving costs and have decided to not share individual well results as we move along. We have completed the Big 177 well in Wetzel County, West Virginia, and it is online. Our 2017 plan calls for drilling seven wells and we are currently drilling the Moore well in Greene County, PA, and should have that well online in the second quarter. After we TD the Moore, we will move the rig to Armstrong County, Pennsylvania to drill the next Utica well. With these test wells, we are getting a better understanding of the production mechanisms, recoveries, and the economics of Utica, which was our overall goal of the 2017 program. 
With that, I will turn the call over to Steve.
Read their whole earnings call transcript by clicking here.

From Rex Energy:
Rex Energy's first quarter 2017 production was 173.4 MMcfe/d, consisting of 110.1 MMcf/d of natural gas, 9.7 Mboe/d of NGLs (including 5.0 Mboe/d of ethane) and 0.8 Mboe/d of condensate. Condensate and NGLs (including ethane) accounted for 36% of production during the quarter. 
During the first quarter of 2017, realized natural gas prices, before the effects of hedging, improved approximately 42% as compared to fourth quarter 2016 realized natural gas prices. The improvement in natural gas realizations was driven by improved differentials in the northeast markets and a full quarter of the company's Gulf Coast transport. In addition, C3+ NGL prices, before the effects of hedging, average approximately 59% of WTI oil prices. The improvement in C3+ NGL prices was largely due to continued improvement in Mont Belvieu prices and improved differentials for C3+ NGLs in the northeast. The company continues to expect full-year 2017 realized C3+ NGL prices to average approximately 50% - 55% of WTI. 
"Our first quarter result 2017 results are the first step in achieving our two-year plan for 2017 and 2018," commented Tom Stabley, President and CEO of Rex Energy. "One of the most important highlights of the quarter was our price realizations, with the strong results underlining the importance of our marketing initiatives and current marketing portfolio. With a full year of Gulf Coast transport and improved differentials in the northeast markets, we expect to see improved realizations throughout the year and will continue to pursue further enhancements to our marketing portfolio to further improve our realizations."
Read the whole release by clicking here.

From Southwestern Energy:
Moving to Southwest Appalachia, we're continuing our early testing that was accelerated from 2018 on our first Utica well, the OE Burge. This well is currently flowing at a flat rate of 17 million cubic feet per day, with over 8,500 PSI of pressure. Based on our current assumptions, early results indicate this well is a top quartile well in the region, with an average EUR of 2.5 to 3 BCF per one thousand feet of lateral. This type of productivity shows the potential of the enormous resource this play and our estimated 1,400 locations. 
Also, we recently placed five wells online that tested tighter stage phasing and increased profit loading. Four of these wells were completed utilizing 140 foot stage phasing and 3,500 pounds of profit per foot, while one additional well was completed utilizing as much as 5,000 pounds per foot of profit. Early indications shows that all five of these wells are performing better than their closest offsets. And to date, these five test wells have performed similarly and we will continue to monitor these wells to determine their long term performance enhancements.
Click here to read the whole earnings call transcript.

From Range Resources:
As a quick update on the Utica, I believe it's worth pointing out the updated map in our presentation on page 44. Of particular note, we've highlighted the recent activity, including some direct offsets to our acreage currently being drilled that will clearly enhance our 400,000 net acre position further. 
We'll continue to monitor those wells and other Utica activity in Pennsylvania as we go forward. Our best well remains as one of the top four Utica wells in the play. We believe it will hold flat for close to 400 days and the EUR looks to be around 3.25 Bcf per 1,000 foot. Again, essentially all our acreage is HBP'd and we believe the Utica play will play a complementary and important role in the future.
Read more of this earnings call by clicking here.

From CONSOL Energy:
So, a quick operations update. We drilled 9 wells in the past quarter: 7 dry Utica wells in Monroe County, Ohio and two Marcellus wells in Washington County, PA. For one of the Marcellus wells, our team achieved an Appalachian Marcellus drilling record of 7,380 feet drilled in a 24-hour period on our Morris 30B well in Washington County, PA. 
In the quarter, drilling efficiency, or days per 1,000-foot of lateral, improved 18% compared to 2016, helping reduce our cost per lateral foot by 11%. In Monroe County, Ohio, the dry Utica wells averaged approximately 9,900 lateral feet while averaging 21.5 drilling days per well, compared to 24 drilling days per well during the fourth quarter of 2016. At the current pace, a single rig could drill 16 dry Utica shale wells per year with 10,000-foot laterals, which is a 14% improvement compared to the fourth quarter of 2016. 
Drilling costs for the dry Utica in Monroe County have dropped from $384 per lateral foot in the fourth quarter of 2016 to $351 per lateral foot this quarter, and we expect further improvement in future costs. When you include completion costs, which have increased some due to design changes in proppant loading and proppant type, our Monroe County dry Utica well costs are now around $9 million for a 9,000-foot lateral, which compares to $9.6 million just eight wells ago. 
We recently TD-ed the Aikens 5M, our first offset to the Gaut 4H well in Westmoreland County, PA in the deep dry Utica. From a drilling standpoint, we have successfully drilled the Aikens well in a fraction of the time it took to drill the Gaut well. Specifically, it took us 38 days to TD the Aikens well, compared to 167 days to drill the Gaut well. 
Previously, we had stated that it would take us five wells to seven wells to get our costs under $15 million. With the improvements seen on the current well and assuming completion operations go as planned, there's a clear path to a sub-$12.5 million deep dry Utica well in the next two wells. Again, this highlights our tremendous rate of change. Results like this are likely to accelerate our shifting focus from the Marcellus to the dry Utica, fast-tracking the Utica development planning process and its infrastructure build-out options.
That whole earnings call can be read at this link.

Chesapeake Energy will release its first quarter results and hold a conference call to discuss them tomorrow.

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Gas Power Developers Fighting What They Call a FirstEnergy Bailout

From Business Journal Daily:
Executives and organizations that support the development of independent energy production are calling two bills introduced in the Ohio General Assembly nothing less than a $5 billion bailout for utility giant FirstEnergy Corp. that will saddle residents with higher energy costs. 
FirstEnergy says the bills, collectively called the Zero Emissions Nuclear Resource Program, help to preserve nuclear energy as a vital, reliable power source that provides electricity to millions of Ohioans each day, not to mention hundreds of jobs in the industry. 
The debate essentially pits large utilities such as FirstEnergy against smaller, independent, non-utilities such as Clean Energy Future, which plans to invest more than $1 billion in the region to build two combined-cycle energy production plants in Lordstown. 
“We really can’t find one organization that supports FirstEnergy’s program,” says Bill Siderewicz, president of Boston-based Clean Energy Future. “It’s a mirage that is underhanded and devious.” 
Siderewicz says that FirstEnergy’s program – encapsulated in Senate Bill 128 and House Bill 178 – essentially grants the utility a bailout akin to $340 million annually over 16 years, or $5.4 billion over the life of the program.
Click here to read the whole article.

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Wednesday, May 3, 2017

Rig Count Down, Permitting Steady in Latest ODNR Report

New permits issued last week: 9  (Previous week: 77+2
Total horizontal permits issued: 2485  (Previous week: 2476+9
Total horizontal wells drilled: 1974  (Previous week: 1968+6
Total horizontal wells producing: 1540  (Previous week: 1540+0
Utica rig count: 21  (Previous week: 22)  -1

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