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Friday, October 20, 2017

API Foresees Growing Demand for STEM Workers as Shale Expansion Continues

From TribLIVE:
The continuing development of the Marcellus shale play, plus the expected retirement of skilled oil and gas tradesmen, will drive the need for STEM workers in Southwestern Pennsylvania into the next decade, a study said. 
A steady supply of workers with skills in science, technology, engineering and math (STEM) is needed to offset predicted shortages in skilled labor in the energy and advanced manufacturing industries, the RAND Corp. study said. 
The study was an analysis of the first two years of the Appalachia Partnership Initiative formed in 2014 by Chevron Appalachia, the Allegheny Conference and the Claude Worthington Benedum Foundation. 
The API's goals are to increase awareness of STEM careers, improve STEM-related education from K-12, and expand workforce development opportunities for people working in STEM fields in 27 counties in Southwestern Pennsylvania, northern West Virginia and eastern Ohio.
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Tuesday, October 17, 2017

Permitting Activity Increases Again in Utica Shale


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

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Monday, October 16, 2017

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

by Jackie Stewart, Energy in Depth

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

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OPEC Urges Shale Drillers to Do Fair Share to Control Oil Market

From the Motley Fool:
The Secretary General of OPEC, Mohammed Barkindo, has a message for shale drillers. Speaking at an energy forum in India, he said, "We urge our friends in the shale basins of North America to take this shared responsibility with all the seriousness it deserves, as one of the key lessons learned from the current, unique supply-driven cycle." In other words, start sharing some of the responsibility to help keep excess supply off the market. 
His plea comes as U.S. output has staged a remarkable comeback this year and is on pace to break the 1970 record of 9.6 million barrels per day by next year. However, the message will probably fall on deaf ears, since shale drillers aren't beholden to OPEC but shareholders. So the only way for OPEC to get its message across would be to take away the one thing shale drillers need to keep drilling, which is a stable oil price -- that is, unless shareholders persuade them to use their money for something other than drilling more wells. 
How we got here 
The oil market is still trying to get back on its feet after a blistering downturn caused by a gusher of new supplies, primarily from U.S. shale drillers, that flooded the market in recent years. OPEC initially responded by unleashing its own torrent of oil, which it hoped would drown out weaker shale drillers. However, instead of killing that emerging industry, it has only made shale stronger, because good old American ingenuity drove out costs through efficiency gains and innovation. Consequently, many shale drillers are now thriving at $50 crude. 
That's a problem for OPEC, because it's trying to rebalance the oil market by coordinating a production cut to drain excess inventory. While those oil stockpiles have fallen this year, they haven't come down as quickly as hoped, because shale drillers promptly ramped back up.
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CELDF’s Worst Year Yet: Ohio Supreme Court Rejects Youngstown ‘Bill of Rights’ Appeal

by Jackie Stewart, Energy in Depth

The Community Environmental Legal Defense Fund’s (CELDF) years-long Ohio anti-fracking campaign suffered its greatest blow yet on Friday, as the Ohio Supreme Court rejected the group’s appeal of the Mahoning County Board of Elections’ vote not to allow a measure aimed at banning fracking in Youngstown on the ballot for a seventh time. Six previous “Community Bill of Rights” measures had been rejected by Youngstown voters prior to Friday’s Supreme Court decision, which will ensure the measure won’t even appear on the ballot this November.
CELDF, which has been the driving force behind a very small group of anti-fracking activists targeting Ohio for years, has basically thrown in everything but the kitchen sink into its efforts to abuse Youngstown voters again this November — including crowdfunding, legal disputes and parachuting an activist in from Colorado to rally the troops. But its efforts have finally hit a wall. Friday’s 4-3 Ohio Supreme Court decision puts to bed years of debate over the validity of the ballot measure and, hopefully, will be a final end to the abuse of taxpayer funds that has already cost the City of Youngstown more than $187,000. There’s simply no question that 2017 continues to be the worst year on record for fringe environmental activists like CELDF, as Ohioans continue to reject anti-fracking initiatives across the state.
Here’s a quick recap of what’s went down in Youngstown for the past five years.
CELDF Youngstown “Bill of Rights”
After six consecutive defeats at the ballot box, the Mahoning County Board of Elections found that CELDF’s seventh attempt at getting a “Community Bill of Rights” measure on the ballot conflicts with state laws that clearly articulate that local governments in Ohio cannot regulate fracking and therefore ruled the measure to be “invalid.”
The decision was challenged by CELDF-backed groups and, as a result, the Ohio Supreme Court heard the case with haste due to the upcoming November election. If enacted, the Youngstown Bill of Rights would have essentially banned all construction activities within the city of Youngstown, as well as all oil and natural gas development.
Cost to City of Youngstown
As a reminder, CELDF has deep pockets. It can afford to be a litigation factory and abuse local municipalities at the ballot box. In 2015 alone, CELDF reported more than $1.4 million in assets, swelling its coffers by over 75 percent in just the past few years. CELDF has also consistently used Youngstown as a means to raise money, as its most recent campaign crowdfunded more than $5,000 specifically to pay for failed legal actions in Youngstown. So it’s really no surprise that CELDF has no regard for how much its efforts end up costing taxpayers, which is documented in the chart below.
CELDF Parachutes In Recruits
The Youngstown fight has been a hallmark campaign for CELDF. Its Youngstown efforts, while clearly a continued failure, have served as a battle cry throughout Ohio and even in other states as well. In fact, just days before the Ohio Supreme Court decision, CELDF parachuted in activist and Lafayette City, Colo., Councilwoman Merrily Mazza to rally the troops as part of a “Community Rising Tour.” Youngstown was Mazza’s last stop on the tour, no doubt due to the fact that Youngstown has been CELDF’s premier campaign for years. To put into perspective just how far Mazza is going to travel back home to Lafayette, using fossil fuels, take a look at this visual:
Mazza’s 3,281-mile round trip again highlights the arrogance and the “do as I say not as I do mentality” that these fringe environmental activists continue to showcase not just in Ohio but across the country.
Conclusion
This isn’t the first time the Ohio Supreme Court has struck down CELDF in Ohio and it probably won’t be the last. But for now, and for the first time since 2013, Youngstown voters won’t have to fork over thousands of dollars of taxpayer money to put the so-called “Community Bill of Rights” measure on the ballot. And for the people who actually live and work here (unlike Mazza and CELDF) we applaud the Ohio Supreme Court for its swift action to — at least temporarily — bring an end to CELDF’s costly madness.

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SRBC Continues to Find No Water Contamination from Drilling

From the Susquehanna River Basin Commission:
The Susquehanna River Basin Commission has released a report on potential impacts to water quality from unconventional natural gas drilling and other activities in the Basin. 
A water quality monitoring network with more than 50 stations was put into place in 2010, as the natural gas industry was rapidly growing in the Basin. Most of the activity was located near headwater streams where water quality observations and data were scarce. 
To date, the Commission’s network of monitors has not detected discernible impacts on the Basin’s water resources, but continued vigilance is warranted. 
“The Commission takes very seriously its role in monitoring water quality conditions in the Basin, in order to collect the necessary data to make informed decisions,” said Executive Director Andrew Dehoff, P.E. “This report provides more information as part of the Commission’s mission to sustainably manage the water resources of the Susquehanna River in a way that supports both ecological health and economic development.”
Read the whole news release by clicking right here.

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NEXUS Pipeline Gets Construction Go-Ahead; Rover Approved for More Horizontal Directional Drilling

From NGI:
FERC issued an order Wednesday clearing Nexus Gas Transmission LLC to start construction, an expected but no less significant step forward for the delayed greenfield natural gas pipeline. 
The order came the same day as the competing Rover Pipeline LLC received clearance from the Federal Energy Regulatory Commission to resume work at four horizontal directional drilling (HDD) locations where work had been stopped since May. 
Rover and Nexus are not the only Northeast natural gas transmission projects to face regulatory setbacks in recent years. The regulatory climate has been particularly hostile for pipelines in New York, where developers have faced obstruction, an issue explored in NGI’s latest special report, Empire State Showdown: The NatGas Battle for New York
FERC staff authorized Nexus to proceed with construction on the 255-mile project, excluding specific segments where the developer will need to submit additional information before work can start [CP16-22].
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New Bill Would Give Some Ohio Counties Bigger Share of Oil and Gas Production Revenue

From The Times Leader:
Congressman Bill Johnson introduced legislation last week that, if passed, would allow oil and gas producing counties in Ohio to keep more revenue generated from production on federal lands. 
The bill, titled Providing Opportunities With Energy Revenues (or POWER) Counties Act, is similar to previous legislation introduced by Johnson in 2015 that was not enacted. The proposed legislation seeks to “amend the Mineral Leasing Act to require payment to counties of a portion of certain revenues received by the United States under Federal oil and gas leases, and for other purposes,” according to congress.gov. 
The Mineral Leasing Act, first enacted by Congress in 1920, regulates the leasing of public lands for the development of several mineral resources, including coal, oil, natural gas, other hydrocarbons and other minerals. 
“There is little doubt that Eastern and Southeastern Ohio are at the center of America’s energy renaissance,” Johnson said. “Energy development is having a positive impact on virtually every sector of our economy, including education. Our students are learning about the many job opportunities that have arrived — and will continue to arrive — resulting from the oil and gas boom. Schools are expanding their programs to help prepare students for new and exciting careers here at home, where they have been raised and educated.”
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Wednesday, October 11, 2017

Pipeline Construction is Aiding OH Utica Shale in Closing Gap on PA Marcellus

From MDN:
It’s been a few months since we’ve brought you news about the monthly average for Baker Hughes’ venerable rig count–largely because after GE completed it’s merger with Baker Hughes they quit issuing monthly press releases from their website! We spotted a story in the Pittsburgh Business Times that talks about Ohio coming close to parity in their rig count with Pennsylvania–which is a really big deal–and the reasons for it. That story sent us looking for the latest rig count numbers and indeed, it’s true. As of September, PA averaged 33 shale rigs in operation, while OH averaged 29–the closest we’ve ever seen it. If you look at the counts for last week (BH does a weekly rig count too), the numbers are even closer: PA with 31 rigs, OH with 29. We don’t typically monitor the weekly counts as they always fluctuate up and down–better to look at monthly averages. But the fact remains that PA has been pretty steady, operating between 32 and 34 rigs per month since January of this year, while OH has gone from operating an average of 20 rigs in January to 29 last month, and West Virginia has gone from operating an average of 8 rigs in January to 15 rigs last month (nearly doubling). Yet PA is static. Is there an explanation? Some experts think there is, and it can be explained in a single word: pipelines…
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Ohio Supreme Court Rules That Youngstown Fracking Ban Will Not Go on Ballot for 7th Time

From the Youngstown Vindicator:
There won’t be charter amendments to ban fracking or change how elections are conducted on Youngstown’s Nov. 7 ballot. 
In a 4-3 decision Friday, the Ohio Supreme Court rejected an appeal by officials with the two groups backing the proposals to overturn Sept. 6 votes by the Mahoning County Board of Elections not to permit either to be put in front of voters this fall. 
One proposal would have sought to ban fracking and fracking-related activities – city voters have rejected similar ballot initiatives six previous times – and the other would have changed how elections are conducted in the city, including restricting who can give campaign contributions. 
Supporters filed writs of mandamus with the Supreme Court on Sept. 7.
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Two New Gas-Fired Power Plants Approved in Ohio

From OPSB:
The Ohio Power Siting Board (OPSB) today separately authorized the construction of natural gas-fired, combined cycle generation facilities in Guernsey and Trumbull counties. The two facilities will add 2,040 megawatts (MW) of generation capacity to the regional transmission grid. 
In Guernsey County, Guernsey Power Station, LLC will construct the 1,100 MW Guernsey Power Station in Valley Township. Guernsey Power Station plans to construct a natural gas pipeline that would supply the facility with natural gas from the Tallgrass Energy Partners Rockies Express Pipeline. The facility will interconnect to a 765 kilovolt (kV) electric transmission line owned by American Electric Power. Guernsey Power Station plans to commence construction in December 2017 and begin commercial operation by October 31, 2020. 
In Trumbull County, Clean Energy Future-Trumbull, LLC will construct the 940 MW Trumbull Energy Center in the village of Lordstown. The facility will be supplied with natural gas from a Dominion East Ohio pipeline and will interconnect to a 345 kV electric transmission line owned by American Transmission Systems, Inc. Clean Energy Future-Trumbull plans to commence construction in November 2017 and begin commercial operation by June 2020.
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Rover Pipeline Gets Approval from FERC to Nearly Double Capacity

From NGI:
FERC on Friday authorized Rover Pipeline LLC to start up three units at its Compressor Station 1 in Carroll County, OH, putting the 3.25 Bcf/d mega project a step closer to bringing its full capacity online by 1Q2018. 
The three units would increase capacity on Rover to 1.2 Bcf/d from around 680 MMcf/d currently, according to a supplemental request filed Thursday with the Federal Energy Regulatory Commission [CP15-93]. 
"Rover customers have indicated that they have supply available at this time to utilize this additional capacity," it said. Rover had initially requested authorization to place the units into service last month. 
In its request, Rover said it has completed commissioning the units and conducted noise testing to ensure the site is in compliance with FERC regulations. Rover asked for immediate authorization.
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Rig Count Tumbles on Latest Utica Shale Report from ODNR


New permits issued last week: 4  (Previous week: 11-7
Total horizontal permits issued: 2638  (Previous week: 2633+5
Total horizontal wells drilled: 2141  (Previous week: 2134+7
Total horizontal wells producing: 1695 (Previous week: 1693+2
Utica rig count: 22 (Previous week: 26)  -4

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Monday, October 9, 2017

Belmont County Cracker Plant Moves Closer to Becoming a Reality

From The Times Leader:
Officials with Thailand-based PTT Global Chemical said they will “enhance the well-being and quality of life” for those who live in the Dilles Bottom area if the firm builds its estimated $6 billion ethane cracker there. 
Belmont County Commissioner Mark Thomas admits it remains to be seen what this actually means. Still, he sees the announcement as continued progress toward an affirmative final investment decision. 
“I do know that it reaffirms the strong partnership between the state of Ohio and PTT Global Chemical America,” he said. “With that said, I cannot but think this remains continued positive news as the two entities continue to work together to one common goal: a positive plant announcement sooner than later.” 
According to the company, PTT officials signed a memorandum of understanding with JobsOhio during the weekend. JobsOhio is the private corporation Gov. John Kasich established in 2011 as a replacement for the state-run Department of Development.
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Ohio School District to Receive $42 Million from Single Natural Gas Power Plant

by Jackie Stewart, Energy in Depth

A single Ohio school district will receive more than $42 million in tax revenue from a single new natural gas power plant, according to local school officials in Guernsey County.  Again — this is just one school district benefiting from a single natural gas power plant project. There are currently 12 natural gas power plant projects in various stages of development in Ohio. So once completed, these projects will not only power more than 10 million households, but also provide millions to local schools and around the state, as the above examples illustrates.
For a quick recap of where things currently stand with the status of natural gas power plants slated for Ohio, here’s a quick snapshot.
As EID reported in August, the newest of these projects is the recently completed Oregon Clean Energy Center, located outside of Toledo. As you can see in the chart above, the project employed 950 construction workers during its peak and retains about 20 permanent workers full-time. What’s more is that it will add $20 million to the local economy on an annual basis for years to come and pump millions into the local school district.
Ohio Gov. John Kasich participated in the opening of the plant and said,
“Think about this: This plant is providing the same amount of power as one nuclear plant. And at the same time we say that, there’s no risk to it. So this is the future here. This is a big deal. So I think it’s important that Ohio stay in a deregulated environment which brings in investors. If all of a sudden you don’t have a level playing field then you don’t have significant investment. It will go in another place.”
To see what a new operational combined cycle natural gas power plant looks like check out this video on the Oregon Clean Energy Center’s website:
As Gov. Kasich said, “This is a big deal,” and school districts across the state who stand to benefit financially from these new gas-fired plants would certainly agree.

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Trump EPA Prepared to Annihilate Obama's Clean Power Plan

From Reuters:
The U.S. Environmental Protection Agency will propose repealing the Clean Power Plan - the Obama administration’s centerpiece regulation to fight climate change - and plans to solicit input on a rule to replace it, according to an EPA document seen by Reuters. 
The decision marks the agency’s first formal step to sweep away the rule intended to cut carbon emissions from power plants, after President Donald Trump signed an executive order in March launching the EPA’s review. 
The Republican president has expressed doubts about the science of climate change and has blamed former Democratic President Barack Obama’s efforts to cut carbon emissions for hurting the coal mining and oil drilling industries.

The Clean Power Plan, or CPP, was challenged in court by 27 states after Obama’s administration launched it in 2015. It is currently suspended by the D.C. Circuit Court of Appeals, which set a deadline of Friday for a status report from the EPA on how it plans to proceed.
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Thursday, October 5, 2017

NEXUS Pipeline Hoping to Start Construction Next Week

From WOSU Radio:
The developers behind the NEXUS natural gas pipeline want to begin construction by October 10. 
In August, the Federal Energy Regulatory Commission (FERC) approved the $2 billion pipeline that will run through 12 Ohio counties from Northeast Ohio to Michigan and Canada. The federal agency is in the process of reviewing the request. 
According to a recent filing with FERC, NEXUS has obtained all of its necessary permits and acquired 97 percent of the right-of-ways. But one place it has not gotten permission to build is in Oberlin. 
“Nexus could not start to build the project in the city unless it acquires those easements,” says Carolyn Elefant, who represents Oberlin in the pipeline case.
The whole article can be read by clicking here.

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Permitting Up, Rig Count Steady in Utica Shale Last Week


New permits issued last week: 11  (Previous week: 5+6
Total horizontal permits issued: 2633  (Previous week: 2625+8
Total horizontal wells drilled: 2134  (Previous week: 2131+3
Total horizontal wells producing: 1693 (Previous week: 1688+5
Utica rig count: 26 (Previous week: 26)  +-0

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Rising Oil Prices Sent Tumbling by OPEC Production and Shale Drilling Increase

From Bloomberg:
Oil’s bull market rally stumbled into some bad news.

Futures fell the most in more than three weeks after Saudi Arabia and at least three other OPEC nations pumped more crude last month. Meanwhile, escalating prices spurred additional U.S. exploration, a bearish signal from a production point of view. The dollar also strengthened, diminishing the appeal of commodities.

“It’s coming out that OPEC’s oil output rose last month, another rise in the rig count. That’s all feeding in here to generating some downward pressure,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. Oil’s loss also comes as “we’ve seen some decent dollar strength.” 
Oil entered a bull market last week on signs that rising demand and production cuts by the Organization of Petroleum Exporting Countries and allies such as Russia were reducing a global surplus. Turkey’s threat to halt exports of Kurdish crude also put traders on edge.
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Wednesday, October 4, 2017

EID Report: Sales Tax Revenues in Ohio Shale Counties Outpace State Averages

by Jackie Stewart, Energy in Depth

New EID research using data obtained from the Ohio Department of Taxation’s sales tax distribution website shows that from 2012 to 2016 the aggregate Ohio sales and use tax grew by 45 percent in eight core Utica Shale producing counties, outpacing the sales tax growth rate of Ohio’s 80 other counties by 15 percent. With more than $50 billion spent in Ohio by the oil and gas industry, it’s not surprising that Ohio’s economy continues to show significant and tangible signs of growth.
Methodology of Sales Tax & Use Revenue Analysis
For this analysis, EID analyzed the county apportionment of the state’s eight top oil and natural gas producing counties — Belmont, Carroll, Columbiana, Guernsey, Harrison, Jefferson, Monroe and Noble — for fiscal years 2007-2016. The average sales tax revenues for these eight counties were grouped into two categories: “before shale” (FY 2007-2011) and “after shale” (FY 2012-2016).
According to the Ohio Department of Taxation’s sales tax distribution website,
“Counties and regional transit authorities may levy additional sales and use taxes. The local share is returned to the counties and regional transit authorities in the second month after the month the return is filed.”
In other words, the sales tax allocation that the state pays to each county is only a small fraction of the overall sales tax actually paid by consumers. In fact, the state of Ohio keeps the majority of sales tax revenues for its general fund. Here’s an example of how that works:
  • A business in Carroll County sells an item for $100.00 plus $6.75 in sales tax, the consumer is charged $106.75. The business collecting the sales tax sends that $6.75 to the state of Ohio.
  • Out of that $6.75, the state keeps $5.75 and returns $1.00 to the county where the business is operating.
The reason this is important to note is because the 45 percent boost in sales tax revenue found in these top shale counties is in fact a boost to the entire state, because the state of Ohio keeps the vast majority of the tax collected, with only a small fraction returned to individual counties.
While the 45 percent aggregate growth is certainly impressive, some individual counties, such as Harrison County and Monroe County, really stood out particularly on a per capita basis.
Utica Shale County in Focus: Harrison Co. Sales Tax Revenue Increases 215 Percent
From FY 2007-FY 2011 (before shale) Harrison County averaged about $1.3 million per year in sales tax revenue. With a population of 15,450, the county’s per capita revenue (on average) was about $88.
Harrison County has consistently been a top producing natural gas county statewide ever since its first horizontal well went into production in 2011. Even so, the real economic impact to the sales tax revenue is more likely driven by the bricks and mortar investment by midstream companies. The surge of economic activity in the county brought on by significant investments made by companies such as MarkWest. So how does that impact sales tax revenues?
Well, Harrison County went from $1.3 million per year in sales tax revenues before shale to (on average) $4.2 million per year from FY 2012-FY 2016. This shows the oil and gas industry has grown those tax coffers by $2.6 million per year (215 percent) taking the per capita revenue from $88 up to $274!
Utica Shale County in Focus: Monroe Co. Tax Revenue Increases 130 Percent
Monroe County continues to show the best dry gas wells coming out of the Utica Shale. Drilling activities have consistently been on the rise and there’s also been a flurry of pipeline activities. There is also now end use investment, such as a proposed natural gas power plant and natural gas liquids (NGLs) storage facility.
A few years ago, after losing the county’s largest employer county budgets were in dire straits. Like so many counties along the Ohio River struggling from coal and steel facility closures, Monroe County was only receiving about $1.4 million in sales tax revenues from FY 2007-FY2011, with a per capita rate of $102.  Since 2011, or “after shale,” Monroe County has realized an annual average of $3.4 million in sales tax revenue , representing a boost of about $2 million per year, raising the per capita rate to $235. This represents an aggregate growth of 130 percent!
Conclusion
We can deduce a few important trends from the data and analysis on sales tax revenue collections and trends. First, there’s a clear connection between areas where shale production is occurring and economic growth for that region. Second, and tiered off the first point, production of natural gas is leading to tertiary investment, such as midstream (pipelines, processing of NGLs, etc.), and end use applications and storage (such as natural gas power plants, NGLs storage, and manufacturing). For example, as EID recently reported, thanks to fracking, a steel manufacturing plant recently reopened after being closed for eight years.
And more importantly, we are just getting started. Imagine what will happen next with Shell’s plans to continue to build out a world-scale petrochemical plant and the potential of a second project announcement by PTT Global Chemical.  In short, it’s simply impossible to deny that production of shale from the Appalachian Basin is leading to long-term and tangible growth trends along the Ohio River.

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Activist Investors Want Shale Producers to Change the Way Executives are Paid

From Reuters:
Activist investors are taking aim at U.S. shale producers, the companies most responsible for turning the nation into a global energy powerhouse, pushing them to stop rewarding executives for spending billions of dollars on new wells when crude prices are depressed. 
U.S. crude output has surged past 9 million barrels a day largely because of the shale sector, whose output this year is up 27.5 percent. The gains are fueled by a boost of about 50 percent in capital spending, benefiting executives come bonus time but crimping shareholder returns. Investors want the higher spending to go to dividends and buybacks, not more drilling. 
The shift they are seeking could dampen spending on new wells, chilling a shale boom that has benefited U.S. motorists and consumers. It could help the Organization of the Petroleum Exporting Countries, Russia and other producers who are trying to drain a global crude surplus. Booming U.S. shale production has largely thwarted OPEC output cuts aimed at lifting prices. Low oil prices, in turn, have hurt shareholder returns. [O/R] 
Activists point to the lopsided split between pay and returns. The 10 biggest U.S. shale producers paid their chief executives $2.2 billion over the past decade despite shareholder returns of 1.7 percent. These companies include Apache Corp (APA.N) and Devon Energy Corp (DVN.N).
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Tuesday, October 3, 2017

Green Going to Court in Fight Against NEXUS Pipeline

From the Akron Beacon Journal:
After months of silence on the city’s strategy to try to derail the controversial Nexus natural gas pipeline proposal, leaders announced their plans at Tuesday’s City Council meeting. They’re going to court. 
The city filed appeals with the Sixth Circuit Court of Appeals and the Ohio Environmental Protection Agency’s appeals board on Tuesday. They says its the region’s best chance rather than trying to convince the Federal Energy Regulatory Commission to block the proposed 255-mile, $2.1 billion project. 
The mayor, law director and Council President Chris Humphrey made the announcement in response to concerns that the city had given up on its two-year battle against the pipeline. Thursby Road resident Joe Bologa and others questioned why the city didn’t try to block the FERC certificate of approval. 
The EPA action would affect communities in several Ohio counties including Summit, Stark, Medina and Wayne — all of which are in the proposed Nexus pipeline’s path to Canada. 
“Today the city of Green filed suit to vindicate our rights,” Humphrey said. “I think it’s very, very important that our citizens be given accurate information. There has been a lot of information that has gone out over email that has been terribly incorrect.”
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Two Analysts Look at Chesapeake, But They Don't See the Same Thing

From Seeking Alpha:
Spending money before it is produced is becoming a common theme for Chesapeake Energy (CHK) management. It does not seem to matter if the company has a bargain basement deal or an expensive one-time deal. Management is always there with cash-in-hand ready to spend. Permanent financing is always a secondary consideration. The debt market appears willing to keep this charade going because of the sheer amount of debt on the market. But that just increases the chances of the ratings agencies shouting a warning after the horse has left the barn. 
The latest spending binge is being financed through a sizable private placement. In the meantime, only about $550 million of debt will be retired. That means that about another $300 million of debt will be on the books. Maybe that $300 million will be delayed by an immediate payment of the credit line debt with the banks. But low cash flow almost guarantees that debt will increase by that $300 million sooner or later. 
There is a very good chance that this alleged refinancing is a misdirection move by management. The market will be entranced by the refinancing. But there will be little attention paid to the fact that the extra money will at least temporarily pay down the bank line. The misdirection allows management to continue to borrow against the credit line. Really bad implications are that the process to sell property at accretive levels is not going well, so management is trying to buy itself some time.
Also from Seeking Alpha:
This has been a tough year for Chesapeake Energy (CHK) shareholders. But I believe this is a well-managed oil and gas producer that will likely post significantly higher levels of volumes and earnings in the second half of the year, driven in large part by double-digit growth in production in the fourth quarter on a sequential and year-over-year basis. That could provide much-needed relief to shareholders. 
This hasn’t been a great year for Chesapeake Energy stock which has tumbled 37% on a year-to-date basis. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which is the benchmark fund for independent oil and gas producers, has fallen 17% in the same period. This shows that Chesapeake Energy stock has underperformed its peers by a wide margin. The company has been hurt by persistent weakness in energy prices, a high debt load and tough weather conditions (Hurricane Harvey) which disrupted the company’s exploration and production work. But I think the negative headlines have overshadowed the company’s impressive operational performance.
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As Always, Analysts Try to Predict the Future on Oil Prices

From Forbes:
Oil prices rose throughout the 2000s before collapsing recently and shaking economies and governments across the globe. Indeed, as one of the foundations of the world’s economy and financial markets, the oil and gas industry has played a major role in market crashes and recessions over time. We’ve moved from boom to bust and back again with relative regularity. Can we expect the same now that we’ve weathered this recent collapse? Within the context of what’s happened historically, I think we can draw a pretty good picture of the future of oil prices. 
From a free market to price-setting monopolies 
First, let’s consider where the oil industry came from. It was originally dominated by “wildcatters,” cowboys who drilled as much as they could, anywhere they could. When overproduction crashed prices, they declared bankruptcy and moved, starting over when prices rose again. 
Then, a handful of businessmen, John Rockefeller chief among them, took the industry and organized it. The group bought and controlled larger and larger parts of the whole, until it was in a position to manage production and prices. Standard Oil, at its peak, pretty much owned the industry and could set prices at will. At least this was the case until it was broken up into the smaller (but still huge) companies that we think of as the U.S. oil industry even today.
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From Bloomberg:
Shale drillers and oil sands producers have posted some healthy profits so far this year, but it’ll take oil consistently above $50 a barrel for their investments to pay off in the long run.

That’s the conclusion of a Moody’s Investors Service study of 37 exploration and production companies in the U.S. and Canada released Thursday. It’s also why legendary hedge fund manager Jim Chanos, who’s shorting shale driller Continental Resources Inc., says independent explorers have been a bad deal for shareholders.

Shale oil producers “are creatures of the capital markets,” Chanos told Bloomberg TV’s Julia Chatterley, Joe Weisenthal and Scarlet Fu. “Because the wells deplete so quickly, they constantly need to raise money to replace the assets.” 
Producers in the U.S. and Canada have made dramatic efforts to cut costs since the collapse of oil prices three years ago, with many delivering higher dividends to investors this year. But with limited wiggle room to reduce costs further, any improvement in their ability to sustain healthy returns will have to come from commodity prices, Moody’s analysts Sreedhar Kona and Steven Wood said in the report.
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