Monday, July 31, 2017

EID Investigation: City of Youngstown Has Spent More Than $185,000 On Six Failed ‘Community Bill of Rights’ Ballot Measures

by Jackie Stewart, Energy in Depth

As Pennsylvania-based anti-fracking group Community Environmental Legal Defense Fund (CELDF) announces its hope of placing a so-called Community Bill of Rights measure on the ballot in Youngstown for a seventh time, a new EID report shows that the City of Youngstown has already spent $187,219 to put the measure on the ballot thus far. All six previous “Community Bill of Rights” ballot measures have failed.
Freedom of Information Act (FOIA) requests and documents from the City of Youngstown and Mahoning County Board of Elections confirm that the city has paid $19,219.55 advertising the six previous ballot measures. Each time the so-called Community Bill of Rights is placed on the ballot, the City of Youngstown pays approximately $6,000 in required advertising costs. The Mahoning County Board of elections has confirmed that $168,000 has also been paid by the City of Youngstown to print the ballots, additional advertising, ballot space, poll workers, and notes there are additional funds that have been paid to staff to count the votes.
This week, fringe environmental activist group Frack Free Mahoning Valley — which works in concert with CELDF — announced it has delivered petitions to have the measure placed on the ballot again to the City of Youngstown, and this year that group changed the name of the so-called Community Bill of Rights to the “2017 Youngstown Drinking Water Protection Bill of Rights in an attempt to mislead voters. The Mahoning County Board of Elections must now verify the signatures to allow the measure on the November ballot. For ballot measures that have taken place in odd years, such as the proposal for 2017, projections for the cost to taxpayers could be has high as an additional $36,000, which is nearly equivalent to a year’s salary for an employee in the City of Youngstown.
Notably, the Ohio General Assembly last year passed House Bill 463, which is bipartisan legislation that includes a provision that “requires a board of elections or the Secretary of State to invalidate a local initiative petition if the board or Secretary determines that the petition or any portion of it does not fall within the scope of the local government’s constitutional authority to enact ordinances, or does not satisfy the statutory prerequisites to place the issue on the ballot.” Therefore, any so-called “Bill of Rights” charter proposals that run counter to state law could in fact be challenged and ruled invalid. Both Medina County and Athens County Board of Elections recently voted to keep measures similar to the City of Youngstown charter off the ballot, and both boards’ votes were swiftly upheld by the courts.
Ohio courts, including the Ohio Supreme Court, have ruled on local control issues on numerous occasions regarding various industries over the years, and in each instance have determined that the state of Ohio has primacy over local governments in regulating issues and businesses that are of statewide interest and concern. The provisions found in H.B. 463 allow for legal rejection of charter amendment petitions, such as the seventh attempt by the Community Environmental Legal Defense Fund. As reported by EID, the six consecutive ballot measures have already cost the City of Youngstown over $185,000. Further frivolous misuse of taxpayer funds would be an outrage.

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DTE Earnings Call Reveals that NEXUS Pipeline In Service Date is Pushed to 2018

From Seeking Alpha's transcript of DTE's 2nd quarter earnings call:
Moving on to a NEXUS update, I know many of you are interested in the progress and the timing of this project. So, before I get into that, and get into the timing, I'll reiterate what I said on the first quarter call, and that is that the precise in-service date for NEXUS doesn't materially impact our 2017, 2018 or long-term EPS profile. So, we want to get moving on the project, but near-term earnings are not the driver of that desire. 
So that said, as you know, the FERC quorum has not yet been restored. And as I said on the first quarter call, we expected a year-end 2017 in-service date if we received a FERC certificate by the end of the second quarter or sometime within reach of midyear. 
We also said on the first quarter call that if the FERC certificate wasn't received within that timeframe, then the project might push into 2018. Well, that's where we are now, with a in-service date in 2018. 
And Jerry Norcia will give more color on the FERC dynamics in a few minutes. But even though the process is taking longer than we'd like, we're still feeling very good about the project itself. We continue to make progress on the pipeline in the interim. So we have all the materials and equipment, nearly all the right-of-way easements, we're in the final stages of obtaining the necessary permits, and our construction contracts are in place. 
So to put it plainly, we're completing the steps that are in our control to complete during this period. And once we receive the FERC certificate, we will go immediately to work, and we will, at that time, provide a more precise projected in-service date.
Read the whole earnings call by clicking here.

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Majority in Lordstown Speak Out in Support of 2nd Power Plant

From the Tribune Chronicle:
With few concerns and minimal safety issues related to the construction of the first power plant along Henn Parkway, there is no reason to keep a second facility from going in next door, local leaders said.

Village fire Chief Travis Eastham said his department has responded to eight calls since construction of the Lordstown Energy Center started in April 2016. Of those, six were medical emergencies, one involved a mismarked gas line and the other was related to a welding spark that started a small fire that was out before emergency crews arrived, Eastham said. 
“I’ve talked to residents who live not far from the construction (site) and I feel really confident from a safety standpoint about this second project,” he said. “I support it 100 percent as the fire chief, and I see no reason why there shouldn’t be a second power plant.” 
About 200 people, including at least two dozen area construction workers, gathered at Lordstown High School on Tuesday night for a public hearing on the proposed Trumbull Energy Center.
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Oil Drillers Face Continued Effects of Downturn, But the Chase for Gas is On

From Bloomberg:
Oil prices have been lousy for so long that U.S. producers are hoarding unfinished wells rather than pumping crude out of them. In the natural gas patch, just the opposite is happening. 
While the energy slump has idled lots of wells for both commodities, their economics have diverged. Oil remains at half its price in 2014, leading to a record backlog of drilled-but-uncompleted wells spread across shale formations where fracking brought on a surge in crude production. Meanwhile, gas futures are almost double last year’s low, and the so-called fracklog of wells in the Marcellus gas fields of Pennsylvania and West Virginia is shrinking as drillers there unleash supplies to take advantage of higher prices. 
By the end of June, the fracklog in the Marcellus was the smallest in the three and a half years since government data has been collected. The drop portends a production boom that could imperil bullish gas bets, which jumped to a three-year high in May on speculation that a hot summer, new pipeline capacity and rising exports of the fuel would boost demand. 
Gas explorers are “putting a down payment on a bull market that companies hope is coming,” said John Kilduff, a partner at the commodities hedge fund Again Capital LLC. They’re “taking the view that prices are going to rebound.”
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Thursday, July 27, 2017

After 6 Defeats, Anti-Drilling Legislation Will Be on the Ballot Again in Youngstown

From Business Journal Daily:
This November city voters will again – for the seventh time since May 2013 – vote on a ballot issue to restrict activity related to oil and gas extraction in the city. 
The Youngstown Community Bill of Rights Committee will hold a news conference Monday to announce it has secured the necessary number of signatures to place such an issue on a city ballot. 
The activitists will hold their event at 2:15 p.m. in front of City Hall, according to a media advisory. Following a brief news conference, the committee will deliver the signatures to the clerk of City Council’s office to be submitted to the Mahoning County Board of Elections for certification. 
The seventh version of the Community Bill of Rights charter amendment is one of two issues the committee announced in early June that it would seek signatures for.
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Rice Energy Acquires Assets of Lola Energy

From NGI:
A subsidiary of Rice Energy Inc. has purchased all of the assets held by upstart Lola Energy LLC in a series of transactions that were finalized this month, according to deed transfers and assignments of interest filed in three northern West Virginia counties and another in southwest Pennsylvania. 
Lola was formed in 2015 with a $250 million private equity commitment from Denham Capital Management LP and funds from its executive management team. CEO Jim Crockard's LinkedIn profile indicated the company "exited" its position in a "confidential sale" this month to "an undisclosed strategic buyer just ahead of breaking ground on the company's first permitted pad location" in Greene County, PA. 
Crockard's profile also said the company built a nearly 20,000 acre position through leasing and mineral buying in Greene County and Monongalia County, WV. At the time Lola was formed, the company was already leasing in Greene County and evaluating other land in southwest Pennsylvania, northern West Virginia and eastern Ohio. 
Rumors of the sale to Rice have swirled for weeks. An assignment and bill of sale transferring rights and interests between Lola Drilling I LLC, Lola Energy Operating Co. LLC and Rice Drilling B LLC were filed in Monongalia County on July 18. NGI's Shale Daily obtained a copy of the public record along with related filings in other counties and verified similar transactions in the region. They note a purchase and sale agreement between the parties dated May 31. In Monongalia County, for example, assets, equipment, contracts, production and permits, among other things, were listed under the assignment of interest.
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Event Highlights Monroe County's Role in Utica Shale Recovery

From the News and Sentinel:
Because of the ongoing production, pipeline work, rig construction and other oil and gas-related activity in the county, Ohio Oil and Gas Association Director of Public Relations Mike Chadsey and Chamber of Commerce official Barbara Carslund decided to gather the organizations together to inform residents of developments in the industry, and how they expect their plans will impact local jobs and the economy in a positive way. 
Chadsey said he wanted to emphasize that the industry has been in a downturn in the last couple of years, but that it is beginning to make a comeback. 
“Monroe County has been at the heart of the industry coming out of the downturn,”Chadsey said. “Certainly the Wayne National Forest leases play a part in that, and Monroe County is geographically located on top of some really good geology. That is the fundamental basis of what we are talking about tonight.” 
Chadsey noted he thinks the industry’s cycles should be described more as an “ebb and flow” rather than with the more commonly used “boom” and “bust” terms. 
Jimmy Stewart, president of the Ohio Gas Association, agreed with the “ebb and flow” description, and said the industry is especially susceptible to changes in market forces — supply and demand — for natural gas, both locally and globally.
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NEXUS Opponents Say FERC Acted Broke the Law by Approving It

From The Chronicle:
NEXUS gas pipeline opponents are arguing the federal government acted illegally during the approval process for the project and, specifically, failed to ascertain its safety. 
Those assertions were filed in federal court in Akron Wednesday in response to a motion from NEXUS and the Federal Energy Regulatory Commission to dismiss a lawsuit from the group of more than 60 people including landowners from Medina, Summit and Stark counties. 
In its motion to dismiss, NEXUS says the court has no jurisdiction in the matter because the Natural Gas Act of 1938 gives “exclusive review” to a federal court of appeals in Washington, D.C. 
NEXUS also said that FERC “performed substantial independent analysis of pipeline safety issues.” 
The suit asks the federal court to vacate and overturn a recommendation made last Nov. 30 by a commission unit that the pipeline’s planned route through Medina, Lorain and other counties be approved for the $2 billion project.
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Rover Pipeline Facing Wrath of Farmers After Pumping Water Out of Trenches & Into Fields

From The State:
Dozens of Ohio farmers have complained that their fields have been flooded after heavy rains by crews pumping storm water out of open trenches. Some have asked a federal judge to tell the company to stop doing it, arguing it violates their land agreements. 
Those agreements compensate the owners for putting the pipeline on their land, but farmers say it doesn't give the company the right to flood their adjacent land. Energy Transfer Partners said it has been dealing with unprecedented rainfall and is trying to avoid and minimize impact on crops. 
Doug Phenicie, whose family farms about 1,800 acres (728 hectares) near New Washington in northern Ohio, said he watched this spring as a bulldozer pushed standing water onto a neighbor's field. "It looked like waves at the ocean," he said. 
A muddy, brown stream rippled across his soybean field last week following another big storm as crews pumped out more water. It's become a common sight, he said. 
The concern for farmers is that not only will some of this year's crop be ruined, but that it will be hurt for years to come in areas where the floodwaters have coated the ground with heavy clay and the heavy equipment has packed down the soil.
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Report Says That 39% of Potential U.S. Natural Gas is in Utica/Marcellus Shale

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Gas Companies Try to Get Lawsuit Over Royalty Scams Tossed on Technicality

From the Pittsburgh Post-Gazette:
Two major players in Pennsylvania’s Marcellus Shale gas boom sought to convince a Bradford County judge on Thursday to narrow or throw out a lawsuit by the state attorney general, who accuses the companies of misleading landowners about lease terms and cheating them out of royalties. 
Oklahoma-based Chesapeake Energy Corp. and Texas-based Anadarko Petroleum Corp. argue the state’s case is fundamentally flawed because it misapplies Pennsylvania’s consumer protection law to a situation where the apparently harmed party — the landowners — were not consumers, but sellers, of mineral rights. 
“The consumer protection statute does not regulate the conduct of purchasers,” Daniel Brier, an attorney for Chesapeake, told Senior Judge Kenneth Brown. He said four-fifths of the state’s complaint should be dismissed for that reason alone. 
In a case originally filed in 2015, the attorney general’s office alleges that Chesapeake and three of its subsidiaries violated the state’s Unfair Trade Practices and Consumer Protection Law by inflating prices for shipping gas from wells to major pipelines, engaging in deceptive leasing practices and participating in a price-fixing scheme with Anadarko.
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Oil and Gas Jobs Start to Come Back; Will the Workers Come Back Too?

From Powersource:
Zach Scott was a year old and his brother was still in the womb when their dad got laid off from Halliburton in 1986, the year after oil prices tanked and ushered in the largest industry downturn until, some argue, the current one. 
Within two years, 20 percent of the workers in the oil and gas industry had lost their jobs. Many of them did not return and they discouraged their children from going into the industry — creating a generational gap that is now coming home to roost. 
Mr. Scott’s father did neither of those things. He kept coming back to the oil and gas fields, despite the multiple layoffs that used to count as battle scars for industry veterans. 
Cautiously, things appear to be turning up again, leaving companies scrambling for workers and wondering if those they have let go will return. If those former employees don’t come back, will the industry known for bluster, swearing and endless hours away from home be able to recruit the hot-shot smarts it needs to move forward? 
At the end of each cycle, about 30 percent of the workers who lose their jobs don’t come back, said Tony Angelle, a vice president with Halliburton. His company is thinking about ways to attract talent now that activity is picking up again after a two-year slump.
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EIA Predicts Rise in Oil and Gas Production for the Utica Shale

From Business Journal Daily:
Oil and gas production in eastern Ohio’s Utica shale is projected to rise next month as exploration activity continues to trend upward in the shale play, according to the latest data from the U.S. Energy Information Administration. 
EIA’s Drilling Productivity Report shows that the Utica is expected to produce 52,000 barrels of oil per day in August, up from 50,000 barrels a day for July. 
Natural gas production also remains strong in the Utica, EIA said. Utica wells are projected to yield 4.55 billion cubic feet of dry and wet gas per day in August, compared with 4.45 billion cubic feet in July, an increase of 104 million cubic feet per day. 
Oil and gas production in the nearby Marcellus shale in Pennsylvania and West Virginia is also on the increase, EIA reported. 
Wells in the Marcellus should produce 42,000 barrels of oil per day in August, up from the 41,000 barrels per day recorded for July.
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Analyst Predicts Wide Fluctuations in Natural Gas Prices

From The San Diego Union-Tribune:
Natural gas in the U.S. is abundant and figures to remain a dominant source for the nation’s energy supply for years to come, a leading industry analyst said at a national conference for utilities commissioners in San Diego this week. 
But at the same time, Andrew Weissman warned that natural gas prices may be headed for wide fluctuations in the coming years. 
“We face tremendous swings in demand that we can’t predict,” said Weissman, ​​founder of EBW AnalyticsGroup, a company based in Washington, D.C., that provides consulting services in the oil and natural gas markets. 
“And it’s likely to create conditions where, either with no notice, supplies become extremely tight or, with no notice, we’re flooded with natural gas.”
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Wednesday, July 26, 2017

Permitting Dies in Utica Shale Last Week, But Rig Count Jumps Up

New permits issued last week: 0  (Previous week: 10-10
Total horizontal permits issued: 2552  (Previous week: 2551+1
Total horizontal wells drilled: 2057  (Previous week: 2052+5
Total horizontal wells producing: 1590  (Previous week: 1590+-0
Utica rig count: 26  (Previous week: 23)  +3

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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.
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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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