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Thursday, July 20, 2017

Analyst: Activist Investor Unlikely to Stop EQT-Rice Energy Deal

From Seeking Alpha:
In the finance community, merger arbitrage is sometimes referred to as “a business of picking up nickels in front of a steamroller.” By contrast, the EQT Corporation (EQT)–Rice Energy (RICE) merger arbitrage situation increasingly appears to be an exercise of “picking quarters in front of a scarecrow.” 
Following the stir created by the activist hedge fund JANA Partners, which is advocating against the merger and demanding immediate separation by EQT of its upstream and midstream businesses instead, the arbitrage spread has widened dramatically and is currently at a level that makes expected return on RICE and EQT to the assumed transaction closing materially differential, presenting investors participating in these two stocks with a dilemma. 
Based on July 14 closing prices, a position in the EQT-RICE merger arbitrage pair would earn a ~6% annualized return if the transaction closes in mid-December. By the standards of the merger arbitrage trade where the return is often measured versus zero, this is a very lavish return. The unusually wide spread obviously indicates strong concerns (not to say fear) and disengagement by many arbitrageurs. 
Given the operational merits of the proposed combination and the endorsement by investors so far, a case can be made that in spite of JANA’s activism, the transaction has high likelihood of being approved by EQT shareholders and will likely close as planned.
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Regulators Have More Hoops for ETP to Jump Through Before Progressing with Rover Pipeline

From Reuters:
U.S. energy regulators on Wednesday gave Energy Transfer Partners LP a list of tasks to complete before the Rover natural gas pipeline can enter service. 
The $4.2 billion Rover project from Pennsylvania to Ontario is the biggest gas pipeline under construction in the United States. 
ETP has long said it expects the first phase of Rover to enter service in late July with the second phase by Nov. 1. 
Several energy analysts, however, have said an order by the U.S. Federal Energy Regulatory Commission (FERC) on May 10 banning ETP from new horizontal directional drilling under waterways and roads after a spill in Ohio could cause delays.
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EnerVest Has Financial Problems, But Disputes Report on the Extent of Them

From NGI:
Houston-based EnerVest Ltd., one of the largest privately held onshore exploration operators in the United States, is working with its investors and lenders to recapitalize over-leveraged equity funds and may sell more assets to ensure it is in compliance. However, one of the funds is not about to be taken over by one of the lenders, a spokesman told NGI. 
A story published Monday in The Wall Street Journalsaid a $2 billion fund launched in 2013 was “worth essentially nothing” and had wiped out investments by major pensions, endowments and charitable foundations. 
The fund’s lenders, led by Wells Fargo & Co.,“are negotiating to take control of the fund’s assets to satisfy its debt, according to people familiar with the matter,” the Journalsaid. 
EnerVest spokesman Ron Whitmire, chief administrative officer, said that’s not true. 
“Wells Fargo is not trying to take control of any of EnerVest’s funds to satisfy the debt,” Whitmire said. In simple terms, EnerVest is not broke.
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Upstream Oil Investments Are on the Rise This Year

From MarketWatch:
After two years of significant declines in upstream oil investments, the sector is finally facing a rebound in 2017 and it all comes down to one thing: a sharp jump in money flowing into U.S. shale oil projects. 
The International Energy Agency, in a report out on Tuesday, predicts a 53% upswing in shale investments this year, even as oil prices are struggling to make a sustainable push above $50 a barrel. 
“The largest planned increase in upstream spending in 2017 in percentage terms is in the United States, in particular in shale assets that have benefited from a reduction in breakeven prices as a result of a combination of improvement in costs and efficiency gains,” the IEA said. 
The big rise in U.S. activities is expected to give global upstream — or exploration and production — investments a 6% bump in 2017, following a 44% plunge between 2014 and 2016. Russia and the Middle East are also seen ramping up spending on upstream projects, albeit at a slower pace, as the chart below shows.
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Wednesday, July 19, 2017

Molori Energy Ready to Explode Higher

A novel use of fracking could ramp up production in the conventional North Texas oil wells that Molori Energy holds in a JV with Ponderosa Energy, says Bob Moriarty of 321 Energy.

Energy resource companies are uniquely different than gold and silver resource companies. With energy companies, you either hit and produce oil and gas or you go out of business. With junior resource companies in the gold and silver space, you never want to try to go into production. After all, that's where you fail. You can never fail as long as you keep drilling.

With gold and silver juniors, they want to drill until their projects resemble Swiss cheese, not produce. After all, you might eventually hit something if investors will keep throwing money at you. All the while, management can continue to collect those fat paychecks and issue themselves more options every time their stock hits a new low.

With energy you either produce or die. And a lot of time you die even if you do produce. They all die for exactly the same reason. Oil and gas prices go up and down faster than the blink of an eye. Oil first hit $118 in May of 1980 only to plunge to a low of $17 by November of 1998 before soaring to $156 in June of 2008 only to tumble to $48 by January of 2009, a mere seven months later. Oil then rocketed higher to a high of $123 in April of 2011 before collapsing to a low of $29 in January of 2016.

There is a small but vocal group of people screeching about how gold was suppressed all the way from $252 in August of 1999 to $1923 in September of 2011 before it made its way gently into a low of $1050 in December of 2015. Compared to the price action in oil, gold looks positively boring.
Gold juniors go out of business because investors eventually get tired of funding their bullshit and cut off their allowance. That's why a gold junior can and often does go down 99% even while gold is only going down 40% in a perfectly normal correction.

Oil juniors and sometimes mid-tier and majors collapse because when oil goes to $156, their costs explode higher so at $156 oil they are in hock up to their ears and it might cost $120 a barrel to produce. At $119 a barrel in a common and regular correction, they shutter their doors and have to go find a real job.

Corrections are a common ordinary feature in any commodity but you will never hear that word used by the PermaBulls. You can either take corrections, even harsh corrections into account, and plan for them or alternatively you are the guy collecting unemployment hoping that McDonalds is still taking applications.

If you are a PermaBull writing about resource markets, you simply whine about manipulation when everyone who has ever traded any market knows that all markets are manipulated all of the time.
I got a call a couple of weeks back about from someone I know in the energy business who needed help getting the story out on oil junior with a teeny-tiny market cap but great expectations.

First of all, my readers need to understand that the energy business is the biggest business in the world bar none with about 90 million barrels a day of oil production. At $42 oil, that's $3.78 billion a day in revenue. A DAY!

Oil is big business. Billion dollar oil companies are literally a dime a dozen. A billion dollar gold company on the other hand is really big. A billion dollar oil company is trivial. And there are hundreds of remora fish swimming around the junior energy space just as there are in the junior metals space all hoping to grow up and become sharks.

Molori Energy Inc. (MOL:TSX.V; MOLOF:OTCQB) had a plan that worked pretty well. The company began in 2006 as Taipan Resources and hobbled along until 2012 when the stock got up to $8.50 on a pre-rollback basis. They promptly blew up and sank into oblivion and pennies per share in 2016 before new management stepped in, rolled back the shares and started running it as if it was a real business.

In late 2016 and early 2017 Molori raised money via a couple of private placements with the intention to go into the oil and gas production business. They inked a deal with Ponderosa Energy in early June calling for Molori to get a 25% interest in certain North Texas panhandle oil fields in a partnership with Ponderosa Energy by giving Ponderosa $1 million and 2 million MOL shares.

Ponderosa took advantage of those highly leveraged oil field operators when the price of oil dipped below $30 in early 2016 and picked up some nice production wells that had been poorly maintained and financed. In June Ponderosa hedged their position in those fields by doing the deal with Molori. Ponderosa owns 75% of the partnership, Molori has the remaining 25%.

Tuesday, July 18, 2017

Rover Pipeline Start Up Date Pushed Back as Problems Continue

From NGI:
The initial start-up for Energy Transfer Partners LP's (ETP) Rover Pipeline could be pushed back to "late summer" due to recent regulatory setbacks, the company said Monday. 
ETP/Rover spokeswoman Alexis Daniel told NGI’s Shale Daily that "as a result of our continued efforts to work with" the Federal Energy Regulatory Commission and the Ohio Environmental Protection Agency (Ohio EPA), "we are anticipating that the Phase 1 section has the potential for an in-service date of late summer of 2017. At this time we do not anticipate any delays to the November 2017 in-service date on Phase 2." 
Daniel was responding to a question about last week's letter from FERC Office of Energy Projects Director Terry Turpin, which outlined several clean-up and mitigation activities ETP/Rover would have to complete before receiving in-service authorization.
Click here to read more.

Also from another NGI article:
Rover Pipeline LLC and parent Energy Transfer Partners LP violated the Natural Gas Act (NGA) and FERC regulations by not disclosing plans to acquire and demolish an historic home in Ohio that was located near a planned compressor station, Commission staff has alleged. 
The Federal Energy Regulatory Commission's Office of Enforcement issued a notice of alleged violations Thursday stating that it "has preliminarily determined" ETP/Rover failed to satisfy "a forthright obligation" that applicants for FERC certificates "set forth all information necessary to advise the Commission" in evaluating a project application. 
"Staff has preliminarily determined that, between February 2015 and September 2016, Rover did not fully and forthrightly disclose all relevant information to the Commission in its Application for a Certificate of Public Convenience and Necessity and attendant filings" in the project docket [CP15-93], FERC wrote. "Specifically, in the Application and other docketed filings, Rover falsely promised it would avoid adverse effects to a historic resource that it was simultaneously working to purchase and destroy. 
"Rover subsequently made several misstatements in its docketed response to the Commission's questions about why it had purchased and demolished the resource."
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Permitting Up, Rig Count Down on Latest Utica Shale Report

New permits issued last week: 10  (Previous week: 2+8
Total horizontal permits issued: 2551  (Previous week: 2544+7
Total horizontal wells drilled: 2052  (Previous week: 2040+12
Total horizontal wells producing: 1590  (Previous week: 1587+3
Utica rig count: 23  (Previous week: 25)  -2

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Court Rules That Munroe Falls Must Reimburse Beck Energy Legal Fees

A press release received by email from Krugliak, Wilkins, Griffiths, & Dougherty Co., L.P.A.:

Munroe Falls Ordered to Pay Beck Energy’s Attorney’s Fees Over Frivolous Court Case

On July 13, 2017, the Summit County Court of Common Pleas awarded Beck Energy $45,000.00 in attorney’s fees against the City of Munroe Falls (Munroe Falls) for having to defend against a frivolous lawsuit brought by the city. The frivolous Complaint sought (1) a Declaratory Judgment requiring Beck Energy Corporation (Beck Energy) to obtain a zoning certificate prior to the commencement of drilling the Sonoco oil and gas well and (2) a Stay prohibiting Beck Energy from commencing any drilling activities at the Sonoco oil and gas well.

After the filing of the frivolous Complaint, Beck Energy sent a letter demanding that Munroe Falls dismiss the lawsuit on the grounds that it lacked any good faith basis under the Ohio Supreme Court’s decision in Morrison v. Beck Energy Corp., 143 Ohio St.3d 271, 2015-Ohio-485. Beck Energy’s letter pointed out that the conditional zoning certificate mentioned in the frivolous Complaint was the same zoning certificate Munroe Falls previously claimed was required in Morrison. In Morrison, decided on February 17, 2015, the Ohio Supreme Court ruled that the very same zoning certificate that Munroe Falls attempted to require Beck Energy to obtain violated the Home Rule Amendment and the ODNR’s sole and exclusive authority to regulate oil and gas wells per ORC 1509.

Beck Energy warned Munroe Falls that it would seek sanctions for the frivolous Complaint if it wasn’t dismissed. Munroe Falls did not dismiss its frivolous Complaint and on July 14, 2016, the Court granted a converted Motion for Summary Judgment filed by Beck Energy. Thereafter, Beck Energy filed its Motion for Sanctions.

The Court granted Beck Energy’s Motion for Sanctions, awarded $45,000.00 in attorney’s fees and found “the filing of the lawsuit amounted to frivolous conduct” and “was brought for an improper purpose to cause unnecessary delay or needless expense.” In addition, Munroe Falls’s city officials failed to articulate any good faith basis to support their claims.

According to Beck Energy’s Attorney, Scott Zurakowski of Krugliak Wilkins Griffiths & Dougherty Co., L.P.A., “the decision by the Summit County Court of Common Pleas shows that the complaint filed by the City of Munroe Falls never had a good faith basis under Ohio law, and was filed solely to harass and maliciously injure Beck Energy.”

Beck Energy is a small, family operated company owned by Raymond T. Beck employing approximately 20 people in 2 offices in Ravenna and Woodsfield, Ohio. Beck Energy operates more than 300 wells throughout various counties in Ohio, including Monroe, Noble, Washington Stark, Portage and Columbiana Counties.

According to Mr. Zurakowski, “the resources that the city of Munroe Falls used for this duplicative lawsuit would have been put to better use in providing raises and benefits to the city’s municipal employees, including police, fire and safety personnel.”

Founded in 1958, Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. provides representation across various practice areas of law: Oil, Gas & Mineral Law, Corporate and Business Law, Real Estate and Construction, Labor and Employment, Employee Benefits, Workers’ Compensation, Commercial Lending and Finance, Taxation, Health Care, Environmental Law, OSHA, Trusts and Estates, and Litigation in all areas. The Firm has over 50 attorneys with offices throughout Northeast Ohio, serving Canton, Akron, Alliance, New Philadelphia, and Sugarcreek. For more information visit

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Monday, July 17, 2017

State Board Raids Ohio Oil and Gas Fund to Pay Out on Unrelated Lawsuit

From The Columbus Dispatch:
With three legislators objecting to the “raid,” a state board on Monday approved appropriating $15 million from an oil-and-gas fund designated by law to protect Ohioans and the environment, to be used to pay a settlement of an unrelated lawsuit. 
The Controlling Board voted 4-3 to remove the money from the fund, which is used in part to seal “orphan” natural-gas and oil wells, to fund a settlement with landowners near Grand Lake St. Marys whose properties have flooded since a widening of the dam spillway in 1997. 
In response to questions about the legality of the move, Department of Natural Resources officials said temporary language long inserted in state budgets permits money to be withdrawn from an assortment of funds to pay legal settlements. 
Rep. Jack Cera, D-Bellaire, objected to using the fund for an unrelated purpose. 
“This multimillion-dollar cash grab by the state shows where Columbus politicians’ priorities are — not with hardworking taxpayers and property owners in eastern Ohio,” Cera said. “After almost 10 years to plan for a lawsuit settlement in the western part of Ohio, state officials failed to responsibly plan for the future and instead are robbing our area of what’s rightfully ours.”
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Cheers to Building an Ohio Ethane Cracker: $130 Million Spent to Secure PTT Global Chemical

by Jackie Stewart, Energy in Depth

This week, Thailand-based firm PTT Global Chemical (PTTGC) America announced it would purchase land along the Ohio River in Belmont County for $13.8 million to build a proposed $6 billion ethane cracker plant. The processing plant will support the record-breaking natural gas production coming out of Ohio by allowing a valuable component of the natural gas, ethane, to be “cracked” locally into ethylene, a feedstock source for the petrochemical industry. To date, a total investment made by possible from revenue generated by Ohio liquor sales and private investment by this company totals approximately $130 million invested over the past 28 months to bring a multi-billion ethane cracker to the Ohio. Although a final decision to build the plant has not been announced, it’s safe to say that Ohio is “all-in” to support the project and the game-changer that will come as a result from the manufacturing of petrochemical products along the Ohio River. If a look at the development of the Monaca, Pennsylvania Shell ethane cracker is any indicator of things to come in Ohio, one certainly has to be optimistic that PTTGC is well on its way to moving the project forward.
According to the Pittsburgh Post-Gazette, Royal Dutch Shell announced it would consider building an ethane cracker in 2011, and five years later the company announced a final decision had been made. Looking at Shell’s timeline, it’s clear that the path PTTGC timeline is strikingly similar and if history repeats itself, the timeline suggests Ohio will receive good news later this year. If announced as planned, the decision would come a year sooner than then Shell project.
Shell Chemical Appalachia Ethane Cracker Timeline 
To view a PDF of the PTT Global Ethane Cracker Timeline, click here.
Raise a glass and build an ethane cracker
To date, Ohio’s more than $1 billion in annual liquor sales have poured $17 million into securing PTTGC’s final investment decision.  Here’s how that works: In 2013 Ohio created a private nonprofit, JobsOhio, to entice business development and provide incentive packages for companies like PTTGC to come to the state. JobsOhio acquired Ohio’s liquor sales business to gain a revenue stream and fund these efforts. Operating income from liquor sales made it possible for the state to provide an “aggressive incentive package.” Therefore every mixed drink or shot that’s taken in bars across the Buckeye State have quite literally supported the advancement of this project.
The Buckeye State is cheering on this multi-billion dollar project and the thousands of jobs that will come right along with it and is hopeful for a final investment decision to secure this ethane cracker later this year.

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Ohio House Overrides Veto Regarding Oil and Gas Leasing Commission

From the OOGA:
On July 6th, the Ohio House of Representatives overrode a total of 11 line-item vetoes pertaining to House Bill 49, the state budget bill. One of those veto overrides dealt with the Oil and Gas Leasing Commission, the state body that was created to review state properties for potential oil and gas leasing. Let’s take a look at current law and what the language included in the state budget bill actually does. 
House Bill 133 (sponsored by State Representative John Adams) was passed and enacted by the state legislature in June, 2011. It was signed into law by Governor John Kasich on June 30, 2011 and became effective law on September 30, 2011. The bill created the Oil and Gas Leasing Commission, which was charged with overseeing and facilitating the leasing of land owned or controlled by state agencies and universities. These properties were classified into four distinct tiers. However, it is important to note that state nature preserves were excludedfrom these tiers and, therefore, cannot be leased. 
It is also important to point out that the State of Ohio included the following statement of policy when it comes to state-owned oil and natural gas resources (included in Ohio Revised Code Section 1509.71 (A)): 
“It is the policy of the state to provide access to and support the exploration for, development of, and production of oil and natural gas resources owned or controlled by the state in an effort to use the state's natural resources responsibly.”
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Friday, July 14, 2017

Rig Count Rises During Week Ending July 8, 2017

New permits issued last week: 2  (Previous week: 11-9
Total horizontal permits issued: 2544  (Previous week: 2540+4
Total horizontal wells drilled: 2040  (Previous week: 2039+1
Total horizontal wells producing: 1587  (Previous week: 1587+-0
Utica rig count: 25  (Previous week: 23)  +2

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Tuesday, July 11, 2017

Ohio EPA Asks Attorney General to Crack Down on Rover Pipeline

From The Canton Repository:
Rover Pipeline has not cleaned up diesel-contaminated waste that state regulators told the company to stop dumping near the water supplies of tens of thousands of Stark County residents. 
Ohio Environmental Protection Agency Director Craig Butler cited Rover’s failure to properly dispose of the waste as an example of how Rover and parent company Energy Transfer Partners have stiff-armed state regulators. 
On Monday, Butler said he had referred Rover’s violations to the Ohio Attorney General for civil action, including a civil penalty of almost $1 million. 
Dallas-based Energy Transfer is building the $4.2 billion Rover Pipeline across Ohio, including parts of Stark, Tuscarawas and Carroll counties. The interstate pipeline will carry natural gas produced by wells in the Utica and Marcellus shales. 
Despite Ohio EPA’s attempts to negotiate a settlement, Rover and Energy Transfer argue they’re exempt from state regulation because the Federal Energy Regulatory Commission approved the pipeline, Butler said.
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Some Rice Energy Pipeline Investors Not Fans of Proposed Deal with EQT

From Bloomberg:
Jana Partners LLC just isn't a fan of Big Gas. In a frosty letter delivered to EQT Corp. on Wednesday, the activist investor heaped scorn on the company's recently announced deal to acquire fellow natural gas producer Rice Energy Inc.:
While EQT would indeed become the country’s largest natural gas producer, there is no unique value that accurues [sic] to shareholders generated simply by being the biggest. 
Now Jana, which has taken a 5.8 percent stake in EQT, plans to mount a campaign to scuttle the $8.2 billion cash-and-stock deal. Rice's discount to the implied offer has duly widened this week (news of Jana's stake surfaced on Monday): 
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Researchers Discover Sulfide-Producing Bacteria in Fracked Wells

From EurekAlert! Science News:
Researchers have found that the microbes inhabiting a hydraulically fractured shale formation produce toxic, corrosive sulfide through a poorly understood pathway. The team's findings, published this week in mSphere®, an open-access journal of the American Society for Microbiology, reveal that the oil and gas industry may need new ways to monitor and mitigate sulfide-producing bacteria in fractured shales. 
"This is a pretty inhospitable environment of high pressure, salinity and temperature some 2,000 meters underground. You'd think that microbes introduced during the fracturing process would die, but some of them make a good life for themselves," says Mike Wilkins, an environmental microbiologist at The Ohio State University in Columbus and senior researcher on the study. "The industry spends a fair amount of money trying to keep microbes out of these systems." 
Hydraulic fracturing, also known as "fracking," involves the high-pressure injection of water, sand, and chemicals into shale formations to create fracture networks that release oil and gas, which are pumped back to the surface and recovered. Practiced for only the last decade, not much is known about the microbial ecosystems in the fracture networks. 
Sulfide-producing microbes cause multiple problems for drilling operations. Hydrogen sulfide can "sour" a well and must be separated from oil and gas in an expensive process. Sulfides can be toxic to the workers on the drilling pad and can also corrosively degrade metal pipelines. The microbes themselves can gum up the extraction process by filling in the tiny fractures with either biomass or excreted precipitates.
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Three Strikes, You’re Out: Athens County Board of Elections Rejects “Invalid” Community Bill of Rights

by Jackie Stewart, Energy in Depth

The stack of defeats for anti-fracking activists and the Community Environmental Legal Defense Fund (CELDF) in Ohio continue to pile up. For the third year in a row, fringe environmental activists attempted a ballot measure to advance a so-called “bill of rights” charter amendment in Athens, Ohio. Today, and similar to the past two years, the Athens County Board of Elections again voted unanimously to reject a “bill of rights” ballot initiative, ruling the measure as “invalid.”
It truly is Groundhog Day in Athens, as anti-fracking activists are recycling the same talking points as last year in the wake of the vote. Activist Dick McGinn again called the Board of Election’s decision a “travesty” and vowed to file a protest. McGinn was clearly one of the whopping three people who attended the anti-fracking event at the Athens County Board of Elections today, showing again how incredibly marginalized opposition to oil and gas development really is in Ohio, a fact EID has highlighted before, and will continue to highlight.
As a reminder, local controls have repeatedly been rejected in Ohio, as the Ohio Department of Natural Resources has been given sole regulatory authority over the oil and gas industry, per the Ohio Revised Code. The most recent failed ballot measure comes after the Ohio Supreme Court ruled twice that the so-called “bill of rights” would not be permitted on the general election ballot.
While there is no shale development going on in Athens, all of the county residents are still reaping the benefits of shale development. EID recently highlighted that Athens County received $31,599 from the sale of minerals in Ohio’s Wayne National Forest, with another $100,000 yet to come, despite the fact that there was no mineral lease sale in Athens County. The reason that the anti-fracking “movement” does not exist in Ohio is because fracking is putting people back to work in Appalachia, as evidenced by the four million in work hours logged by Ohio Laborers union members.

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Monday, July 10, 2017

Rover Pipeline Progresses Despite Delays

From NGI:
The highly anticipated Rover Pipeline, a massive 3.25 Bcf/d Appalachian takeaway project scheduled to come online later this year, will likely begin partial service this month, backer Energy Transfer Partners LP (ETP) has confirmed. 
"The Phase 1 section of the Rover Pipeline from Cadiz, OH, to Defiance, OH, is expected to be in service in July," ETP spokeswoman Alexis Daniel told NGI. "We do not anticipate any delays to the November 2017 in-service date on Phase 2." 
Despite delays in receiving its FERC certificate, ETP has held to a tight schedule for Rover, maintaining its plans to bring the project online in two phases this year. The full Phase 1 -- connecting producing areas of Ohio, West Virginia and Pennsylvania to the Midwest Hub in Defiance, OH, via Rover's Mainline A segment -- was originally scheduled to come online this month. 
ETP had to revise its schedule slightly after the Federal Energy Regulatory Commission, responding to a 2 million gallon release of drilling fluids at a Rover horizontal directional drilling (HDD) site near the Tuscarawas River in Stark County, OH, ordered Rover to halt HDD work at multiple crossings for the project pending an independent review. Notably, FERC's order affects the supply gathering Clarington Lateral, as the lateral’s HDD crossing at Captina Creek in Ohio can't be completed without FERC lifting its moratorium.
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Rig Count Down on Latest ODNR Utica Shale Report

New permits issued last week: 11  (Previous week: 3+8
Total horizontal permits issued: 2540  (Previous week: 2536+4
Total horizontal wells drilled: 2039  (Previous week: 2032+7
Total horizontal wells producing: 1587  (Previous week: 1584+3
Utica rig count: 23  (Previous week: 24)  -1

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Wednesday, July 5, 2017

Environmental Research Group Report Exposes Flaws of Fracking Health Studies

by Seth Whitehead, Energy in Depth

Ever notice how fracking opponents tend to focus on quantity rather than quality when touting studies claiming shale development harms public health? The following 2015 comments by Food & Water Watch’s Emily Wurth are just one example,
“In 2014 alone there were 154 peer-reviewed studies that came out on the impacts of shale gas development, many of which found serious concerns. So that’s about three studies a week. I mean, those of us who work on this issue thought to ourselves, wow, it seems like there’s a new study on the problems of fracking every other day.”
A comprehensive report released earlier this month by environmental research group Resources for the Future (RFF) — certainly no shill for oil and gas — reveals why anti-fracking activists are focusing on quantity rather than quality. RFF reviewed 32 of the more prominent shale-focused studies on birth outcomes, cancers, asthma, and other health effects, including migraines and hospitalization.
Cumulatively, none of those major categories of studies were deemed “high quality,” while studies on birth defects, hospitalizations and multiple symptoms were cumulatively deemed to be of “low quality,” as the following matrix from the report shows.

Report authors Alan J. Krupnick and Isabel Echarte of RFF were rather blunt in their critiques of the shale-focused health studies they evaluated. As EID has pointed out many times before, a vast majority of studies released linking fracking to adverse health outcomes fail to prove causation, and the RFF report also notes this prevalent, glaring flaw,
“Overall, we find that the literature does not provide strong evidence regarding specific health impacts and is largely unable to establish mechanisms for any potential health effects.”
“Due to the nature of the data and research methodologies, the studies are unable to assess the mechanisms of any health impacts (i.e., whether a certain impact is caused by air pollution, stress, water pollution, or another burden). Even where good evidence is offered for a link between unconventional oil and gas development and health, the causal factor(s) driving this association are unclear.”

Appeals Court: EPA Must Not Delay Obama-Era Methane Rules

From NPR:
An appeals court in Washington, D.C., has blocked an attempt by the Environmental Protection Agency to delay Obama-era methane regulations, rejecting claims by the EPA that the oil and gas industry wasn't allowed to comment on the rules. 
The agency could choose to rewrite the rules, but it overstepped in trying to delay them for years, the U.S. Court of Appeals for the D.C. Circuit decided. 
The regulations in question are designed to prevent leaks at oil and gas facilities. Methane, which is released in natural gas leaks, is a potent greenhouse gas, contributing to global warming; other leaked substances are harmful for human health
During the Obama administration, the EPA crafted new rules, and the first deadlines for reporting and compliance were set for this summer. But then the Trump administration announced a temporary stay on the rules — first for 90 days, then for two years. 
Scott Pruitt, the administrator of the EPA, has expressed doubt over fundamental facts about climate change, like the central role that greenhouse gas emissions play in global warming. Before being confirmed, he promised to aggressively roll back regulations at the agency, and observers say he's been effective in fulfilling that promise.
The whole article is available by clicking here.

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Baker Hughes Announces Completion of Merger with GE

Baker Hughes and GE Oil & Gas Complete Combination, Creating the World’s First and Only Fullstream Oil and Gas Company

Baker Hughes and GE Oil & Gas Complete Combination, Creating the World’s First and Only Fullstream Oil and Gas Company
Uniquely Positioned to Drive Productivity, Lower Costs and Innovate Globally for Customers
LONDON & HOUSTON—July 03, 2017—Baker Hughes, a GE company (NYSE: BHGE) announced today that the transaction combining GE’s oil and gas business with Baker Hughes is complete. The new company is the first and only to bring together industry-leading equipment, services and digital solutions across the entire spectrum of oil and gas development.
Starting today, BHGE will help its customers acquire, transport and refine hydrocarbons more efficiently, productively and safely, with a smaller environmental footprint and at lower cost per barrel. BHGE is focused on:
  • Providing a fullstream offering. No other company brings together capabilities across the full value chain of oil and gas activities—from upstream to midstream to downstream. This portfolio positions BHGE to create new sources of value, improving productivity and project economics through integrated equipment and service offerings.
  • Combining physical and digital to increase reliability and uptime. Applying digital and advanced technologies to oil and gas could bring approximately five percent productivity improvements across the entire industry. BHGE will use cloud-based software, advanced manufacturing and brilliant factory solutions to help its customers capture some of this opportunity—reducing risk and improving productivity in their operations as well as its own.
  • Creating new ways to win. BHGE’s leading technology and access to the “GE Store” of knowledge, experience, and research mean that it can bring new solutions to market faster. It deepens its competitive advantage through its long-standing local partnerships, creative business models and access to financing.
  • Building on heritage to create a world-class culture. BHGE brings together over 125 years of experienced talent in the industry with a mindset of continuous improvement to serve customers in over 120 countries. Both Baker Hughes and GE have world-recognized commitments to integrity, innovation, simplification and diversity, and BHGE recommits to these principles.
Lorenzo Simonelli, president and CEO of Baker Hughes, a GE company said, “Disruptive change is the oil and gas industry’s new normal. We created BHGE because oil and gas customers need to withstand volatility, work smarter and bring energy to more people. Our offering is further differentiated from any other in the industry across the value stream and enables and assists our customers in driving productivity, while minimizing costs and risks.”
Simonelli continued, “BHGE has proven technologies and experience with the spirit of a startup, and our leadership team looks forward to quickly demonstrating the strengths of the new company. Our focus is on integrating our businesses quickly and seamlessly so we can drive long-term value for all of our stakeholders.”
Jeffrey Immelt, chairman and CEO of GE, said, “BHGE can help our customers be more productive in any cycle, especially today’s. It’s a smart deal for our combined customers, shareholders and employees. Lorenzo and his team are world-class leaders and will focus on accelerating the Company’s capability to extend the digital framework in ways oil and gas customers have never seen before. The completion of the transaction marks a new era in the industry, and I am extremely proud of our team’s focus, dedication and diligence, which resulted in the completion of this combination in just eight months.”
The integration of the Russian businesses will be completed upon receipt of Russian regulatory approval.
Set up for success

Belmont County Cracker Plant Moves Closer to Becoming a Reality

The future of the proposed cracker plant is looking brighter in Belmont County.

We’ve just learned PTTGC has purchased nearly 200 acres of land in the Ohio Valley.

This news has been confirmed with a Columbus-based spokesman for PTTGC America, which released a statement during the 5 o’clock hour. 
"Because of how essential this property is to the proposed petrochemical complex, PTTGC America determined it is prudent to exercise the purchase option, even though the final investment decision has not been made,” said Dan Williamson, spokesman for PTTGC America. 
“We do confirm that the deeds to part of the property were recorded a couple of weeks ago,” Belmont County Commissioner Mark Thomas said. “PTT has executed and purchased property that was formerly owned by FirstEnergy and that’s the 170-odd acre property south of the Moundsville bridge heading south toward the river.

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Analyst: Shale Drillers Are Ignoring Warnings and Drilling Themselves Into a Hole

From Reuters:
U.S. shale firms are drilling themselves into a deep hole despite warnings from industry leaders about the risk of flooding the market with too much crude. 
Drilling and production are rising. Prices are declining. Companies are barely breaking even or losing money. Costs are starting to rise. And share prices are sliding. 
Current oil prices are not sustainable according to Harold Hamm, the chief executive of Continental Resources, said in an interview on June 28.

Prices need to be above $50 per barrel to be sustainable and below $40 would force producers to idle rigs, Hamm said ("Harold Hamm warns oil prices below $40 will idle U.S. drilling", CNBC, June 28). 
"While this period of adjustment is going on, drillers don't want to drill themselves into oblivion. Back up, and be prudent and use some discipline," he urged rival chief executives.
Continue this article by clicking here. 

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July 2017 Utica and Marcellus Shale Activity Maps

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Super Laterals Are Spreading From Utica and Marcellus Shale to Other Plays

From Seeking Alpha:
The shift towards longer laterals in shale development is a broadly recognized industry trend. It is worth noting, however, that long-reach laterals have been a staple in the shale industry for quite some time. For illustration, the Bakken has been developed using two-mile laterals for many years now, with thousands of such wells currently on production. 
That said, wells with lateral sections longer than two miles have been uncommon. While several operators have recently reported wells with laterals in the 12,000-13,000 range, such wells still represent a negligible fraction of the total well population. 
The limitation on the lateral length is often defined by lease geometry. However, technical concerns - the risk of a lost or compromised wellbore or completion job - have driven operators’ deliberate election to limit lateral lengths to 10,000 feet or less. The reference to “longer laterals” typically indicates operators’ preference for 1.5-mile or 2-mile laterals as opposed to 1-mile (single-section) laterals. 
However, as drilling and completion techniques continue to evolve and acreage is blocked up, the industry may need to expand its lateral length vocabulary. There are multiple reasons to believe that two-mile laterals are not the final destination in shale development - three-mile laterals and even four-mile laterals are on their way and will become an effective tool in reducing the industry’s cost of supply. Currently, the term “super-lateral” may work well for those wells. Over time, however, “super-laterals” are likely to become just as common as two-mile laterals are today. “Super” may become the new “long.”
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Final Budget for Ohio Eliminates Loophole Allowing Unitization of Public Land for Drilling

From ThisWeekNews:
In addition to creating the operating budget for fiscal year 2018-19, HB 49 previously included a loophole regarding unitization, a practice that allows horizontal drilling to reach minerals below the surface of a landowner’s property without the landowner’s approval. 
Woody Woodward, the Ohio Parks and Recreation Association’s executive director, said the House committee’s revisions reverted the unitization protocol to current law, meaning that the unitization of public land is not allowed. 
A metropolitan park is protected from any unitization order, and it cannot be included in a unitization pool without that metropolitan parks district’s approval, Woodward said. 
“We feel good about the work that the conference committee has done on this,” Woodward said. “It protects the valuable natural resources, which are included in metro parks throughout the state.”
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National Geographic Show Pushes More Anti-Fracking Methane Misinformation

by Seth Whitehead, Energy in Depth

As silly as it seems, fracking opponents continue to suggest natural gas — a fuel the U.S. Energy Information Administration (EIA) and Intergovernmental Panel on Climate Change (IPCC) acknowledge is the primary reasons the U.S. is the only developed nation in the world to reduce carbon emissions — is somehow part of the problem when it comes to climate change.
The latest example is an upcoming episode of the National Geographic climate change series “Years of Living Dangerously” that bombastically plays up — to an unintentionally hilarious degree — the debunked notion  that methane leaks are wiping out all of natural gas’ obvious climate benefits.
In a three-minute teaser video for the soon-to-be-aired “Chasing Methane” episode, former New York Times food and cooking reporter Mark Bittman and a familiar cast of characters make increasingly absurd and inaccurate claims about methane leaks from natural gas development.
First, National Oceanographic and Atmospheric Administration (NOAA) scientist and noted methane emission exaggerator Gaby Petron claims to have found that methane leakage rates are at four percent in Colorado, leading Bittman to set the tone for the entire episode by asking the following:
The fact that Petron — whose past claims of elevated methane leakage have been criticized by EIDEnvironmental Defense Fund (EDF) and others — based her data on readings taken from a device attached to her van — her van! — is never called into question.
But the absurdities only escalate from there. Next up is a claim that Bittman and a research team found 11 percent leakage rates in Utah’s Uinta Basin. And if that wasn’t scary enough, the video claims 17 percent leakage rates were found in California’s Los Angeles Basin, more than 11 times what nearly every reputable scientific study has found!
Considering scientists agree that natural gas loses its climate advantages when methane leakage exceeds 3.2 percent, the intended takeaway from the episode is clear — natural gas is bad, scary bad — as the following screenshots from the video indicate.

Thursday, June 29, 2017

06/29/17 Links of the Day: Rover Asks FERC to Approve Drilling; New Ohio Injection Wells Approved; And More!

Gas & Oil:  Record Keeping Essential to Prove Lack Of Production in Paying Quantities   -   "Oil and gas leases typically include language indicating that the lease will remain in effect so long as the leased property continues to produce oil and gas in paying quantities. Ohio courts have long held that a well is producing in paying quantities if the revenues from the well exceed the expenses involved in maintaining the well. Unless production from the leased property has ceased..."

Ashland Times-Gazette:  Rover Pipeline Fine Will Be Used for Work at Ashland County Courthouse   -   "Ashland County should be receiving its $50,000 payment this week as part of a settlement with one of the companies building a natural gas pipeline across Ohio. During a departmental update Thursday, building maintenance supervisor Dennis Harris told Ashland County commissioners the check was mailed Monday from Houston-based Energy Transfer Partners. The company is building the $4.2 billion Rover pipeline to carry natural gas from wells in the shale areas of southeastern Ohio to distribution points in..."

Bloomberg:  Shale's Record Fracklog Could Force Crude Prices Even Lower   -   "There’s yet another concern growing as oil prices continue to erode: A record U.S. fracklog. There were 5,946 drilled-but-uncompleted wells in the nation’s oilfields at the end of May, the most in at least three years, according to estimates by the U.S. Energy Information Administration. In the last month alone, explorers drilled 125 more wells in the Permian Basin than they would..."

The Courier:  Marathon Completes 50-Mile Pipeline in Northwestern Ohio   -   "A new 50-mile pipeline, constructed between Harpster in Wyandot County and Lima in Allen County, is operational and will supply fuel to 10 Midwestern refineries. The new line is a project of Marathon Pipe Line, a subsidiary of MPLX. On Tuesday, company officials said it took 450 contractors over one million man-hours to construct the pipeline, but the project was on time and under budget. The pipeline, known as Harpster-Lima, passed several tests during..."

Gas & Oil:  Supreme Court to Rule on Free Gas vs. Lease Argument   -   "The Ohio Supreme Court must decide whether the acceptance of free gas is sufficient to prevent a property owner from terminating an oil and gas lease on her property. Justices heard oral arguments on that issue Tuesday in a case pitting a Washington County landowner against an oil and gas company, with the decision having implications for other leases across eastern Ohio’s emerging shale gas and oilfields. “The appeal concerns a fundamental question that directly and immediately affects..."

The Repository:  Working to Keep Pipelines Secure   -   "Regional first responders gathered Tuesday at the Stark County Emergency Management Agency to discuss how to safeguard pipelines and respond to emergencies with them. The meeting was timely given the ongoing construction of Energy Transfer’s Rover Pipeline in Stark, Carroll and Tuscarawas counties. Class attendees included..."

Tribune Chronicle:  Public Hearing Set for Proposed Energy Center   -   "So far, most of the comments Mayor Arno Hill said he’s heard about the proposed Trumbull Energy Center have been positive. But he will be better able to gauge community views on Clean Energy Future’s plans to build its second electric generating facility along Henn Parkway following a public hearing next month, Hill said. “I’d say 90 percent of what’s being said..."

Business Journal Daily:  ODNR OKs 2 New Injection Wells in Brookfield   -   "The Ohio Department of Natural Resources has approved permits for Pittsburgh-based Highland Field Services LLC to begin work on two new wastewater injection wells in the township. Highland Field Services submitted its permit applications on Jan. 19, seeking approval for two injection wells — No. 1 and No. 5 — on land just west of state Route 7, north of Warren-Sharon Road, or “Old 82,” and south of Merwin Chase Road, according to documents filed with..."

WFMJ:  Suit Alleges Pollution Violations by Warren and Drilling Waste Treatment Plant   -   "An environmental watchdog group has filed a lawsuit in federal court claiming that the City of Warren and an oil and gas waste disposal facility in the city are responsible for violating standards for chemicals being allowed to flow into the Mahoning River. The Michigan-based, Fresh Water Accountability Project filed a civil action in..."

Marcellus Drilling News:  Rover (Again) Asks FERC For Permission to Finish Horizontal Drilling   -   "Yesterday Energy Transfer Partners, the builder of the Rover Pipeline, once again asked the Federal Energy Regulatory Commission (FERC) if they could pretty-please-with-a-cherry-on-top resume horizontal directional drilling (HDD) in a couple of key locations in Ohio, so they can finish phase one of..."

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