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Wednesday, May 31, 2017

ODNR Publishes Shale Activity Maps Updated for May 2017




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Cleveland State University Report Finds Utica Shale Investment Has Surpassed $50 Billion

by Jackie Stewart, Energy in Depth

A new Cleveland State University (CSU) report entitled “Shale Investment Dashboard in Ohio finds total Utica Shale investment topped $50.4 billion from 2011 to the summer of 2016. That total includes $38.8 billion in upstream investment by oil and gas operating companies, $8.1 billion in midstream projects and $3.3 billion in downstream investment during that timespan. Remarkably, these figures could prove to be conservative, as several recent and/or relevant projects were not included in the report.
Researchers from CSU and Youngstown State University arrived at their findings by using industry interviews and publically available data prepared for JobsOhio, a private, nonprofit corporation that promotes job creation and economic development for Ohio.
The methodology for CSU’s upstream investment estimate focused on one-time land investments, drilling, roads and gathering lines, the cost of storage, processing and disposal of produced water, lease bonuses and royalties paid to mineral rights owners.  The report acknowledged that “upstream investment in Ohio has slowed dramatically” as a result of the recent low commodity price environment for oil and natural gas. But despite the fact that rig counts have fallen by 313 percent in just two years, Ohio’s oil and gas operators have still collectively spent nearly $40 billion. According to the report, drilling has directly and positively impacted the counties where development has taken place, with oil and gas operators spending over $21 billion in Ohio’s Utica Shale counties, more than 96 percent of which has been invested in Ohio’s top eight producing counties: Carroll, Belmont, Harrison, Monroe, Guernsey, Noble, Columbiana and Jefferson.  This $21 billion spent does not include royalties, bonuses for undeveloped acres and lease operating expenses. Nor does it include the taxes paid by operators. This is noteworthy, as Ohio’s oil and gas operators have paid more than $45 million in ad valorem taxes, in addition to sales taxes, severance tax, income tax, and fuel use tax. All of this investment has come directly from unconventional drillers, and as the report stated,
“Carroll County continues to be leader in investment to date by wells, led by Chesapeake Exploration.”
CSU’s report estimates Chesapeake has spent an astounding $7.3 billion in Ohio, excluding additional spending on royalties, lease operating expenses, bonuses for undeveloped acreage and taxes. Other shale operators have been pouring investment into the state as well and, as EID recently reported, Ohio has much to gain from royalty payments, as is obvious by the $1.6 billion in estimated royalties paid on production of minerals.
The vast majority of these payments have been to private mineral owners, not from leasing of state lands. As EID recently highlighted, leasing federal and state lands can be a major boost to tax revenues and royalties for Ohio. In fact, if we assume the 41,697 acres owned by Ohio Department of Transportation and the Ohio Department of Natural Resources were developed, that acreage alone could mean up to $160 million in bonus payments for the state. This income would surely add significant revenue to address Ohio’s budget issues.
Of course without fracking and upstream activities, you would not need midstream investments such as pipelines, gathering and interstate systems. Therefore, the midstream natural gas processing and infrastructure investment detailed in the report is entirely derived from Utica Shale development.  The CSU study examined estimated midstream investment from 2011 to the Summer of 2016 in six key categories: gathering lines, processing plants, fractionation plants, storage tanks, railroad terminals and interstate transmission lines. Together, they have accounted for $8.1 billion invested by the oil and natural gas industry. However, the CSU study only accounts for three interstate natural gas pipelines — Leach Xpress, Spectra OPEN and Equitrans Ohio Valley Connector — all of which are either completed or near completion, accounting for $2.35 billion.  CSU did not account for the NEXUS project or Energy Transfer’s Rover pipeline, which would add another $5.8 billion to the investment column. These projects together are slated to bring $256 million in new tax revenues.
The third and perhaps most exciting phase of shale development covered in the report is downstream investment.  CSU defined downstream investment as natural gas power plants, petrochemical investment, conversions of boilers from other fuel sources to natural gas, construction of compressed natural gas (CNG) stations, and liquefied natural gas (LNG) and hydrogen refueling stations.  According to the report,
“Downsteam development in the petrochemical and refinery business has just begun, and is likely to grow in the coming years as natural gas and natural gas liquid provide an inexpensive feedstock. Investment into natural gas fueled electricity generation, is expected to reach over 11,000MW in the next several years…Investment into natural gas related transportation…is also likely to continue, including hydrogen refueling stations, as result of low natural gas prices.”
Together, investment made in Ohio by “downstream development,” has been approximately $3.4 billion, according to the report. However, similar to their midstream analysis, this does not take into account several noteworthy “proposed” downstream investments, such as the $5 billion PTT Global Chemical ethane cracker and approximately $7 billion in additional natural gas fired power plants. If these projects come to fruition, this segment investment would swell to $15.4 billion!
Perhaps the most unsung development Ohio has realized since shale development took off has been the natural gas refueling stations sprouting up all over the states and the incredible conversion of boilers from other fuel sources to natural gas to natural gas. In just five years there have been 37 natural gas refueling stations constructed, adding $37.6 million of new investment. Notably, four new LNG refueling stations and a new Stark County hydrogen refueling station were not included in the report, which would another $2 million to the tally.
From our perspective, the most surprising (and exciting) data in this report was found in the analysis of natural gas-fired combined heat and power plants. Over the past four years, billions have been spent in converting old boilers with new technology to burn natural gas. Some of the projects were included in the CSU report, but others such as Cleveland Thermal, MillerCoors Brewing Company and Wright Patterson Air Force Base were not included. The CSU report has approximately $4.5 million accounted for in its Combined Heat and Power Plants investment tally, but this list doesn’t include these additional significant investments, which would add another $34 million to the stack.
What’s more, the millions invested in converting these boilers to natural gas means significant improvements in air quality for Ohioans.
For example, Cleveland Thermal’s conversion — which will yield an 84 percent reduction of carbon dioxide emissions — equates to planting a dense 19,000-acre forest. MillerCoors Brewing saw a 37 percent reduction in greenhouse gas emissions, an 88 percent reduction in nitrogen oxide emissions and a 96 percent decrease in sulfur dioxide emissions after its conversion last year.  And the Wright Patterson Air Force Base’s switch to natural gas is expected to eliminate 1,000 tons of sulfur dioxide emissions, 200 tons of nitrogen oxide emissions, five tons of particulate emissions and 290,000 tons of greenhouse gas emissions, helping the base to meet Clean Air Act regulations while saving the Air Force base $2 million a year in fuel costs. These natural gas conversions have paid off for both the environment and economy in southwest Ohio, where motorists have been on the hook for 12 cents more a gallon on gasoline purchases during summer months in exchange for not having to participate in the E-check vehicle emission program. This year — thanks to fracking and natural gas conversions by MillerCoors and Wright Patterson Air Force Base, Cincinnati and Dayton motorists are slated to see $44 million in savings, as the region has finally met the air quality standards, ending the summer fuel hikes imposed on area motorists. As Ohio EPA Director Craig Butler recently said of these developments,
“You get a really big picture perspective of how much success we have seen over the years in improving air quality.”
Yes, we have — thanks to fracking and clean burning natural gas. What policymakers at both the federal and state level need to understand, and Ohio has proven, is that the shale revolution is not just a win for the economy — it’s a win for the environment, too. Thanks to fracking, Ohioans do not have to choose between stable jobs or clean air. We can enjoy all of the benefits that a thriving economy brings and breathe easy while doing it.

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Utica Shale in Ohio Sees No New Permits Last Week


New permits issued last week: 0  (Previous week: 10-10
Total horizontal permits issued: 2515  (Previous week: 2515+-0
Total horizontal wells drilled: 2008  (Previous week: 2005+3
Total horizontal wells producing: 1561  (Previous week: 1558+3
Utica rig count: 22  (Previous week: 24)  -2


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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.”
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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.
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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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