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Saturday, January 20, 2018

Ohio EPA Watching Rover Pipeline Closely, Expresses Concern Over Missing Drilling Mud

From NGI:
The Ohio Environmental Protection Agency (Ohio EPA) has requested daily updates on Rover Pipeline LLC's latest horizontal directional drill (HDD) under the Tuscarawas River, citing "significant concerns" over a potential repeat of a major spill that occurred there last April. 
In a letter sent last Thursday to Rover sponsor Energy Transfer Partners LP (ETP) and FERC, Ohio EPA cited a recent "loss of returns associated with the pilot hole installation in Stark County at the HDD under the Tuscarawas River." 
The Tuscarawas crossing is the site of a roughly 2 million gallon drilling fluids spill last April that led the Federal Energy Regulatory Commission to suspend new HDD activities on the project pending independent review. 
Citing information gathered during a Jan. 10 on-site inspection, Ohio EPA said 146,000 gallons of drilling fluids "have been lost down the hole," while also noting that based on Rover's use of "drone surveillance several times a day" and continuous monitoring of the pipeline right of way no inadvertent returns had been discovered.
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Friday, January 19, 2018

Supersized Well Pads Becoming All the Rage in Utica and Marcellus Shale

From the Pittsburgh Post-Gazette:
Dave Elkin remembers in the earlier days of the Marcellus when EQT drilled three wells from a single well pad and it was considered a technological marvel. 
“The greatest thing since sliced bread,” Mr. Elkin, a senior vice president of asset optimization at EQT Corp., thought at the time. 
It was a quaint memory that contrasts sharply with the company’s and industry’s new normal: superpads — concrete platforms that can house 30 wells, maybe even 40, with long horizontal tentacles stretching underground for up to 4 miles in each direction. 
A superpad means a quarter of a billion dollars pumped into a single hillside in a place like rural Washington County. It means fewer well pads in total but much more activity on those that exist. It means that from a 10-acre spot, a company like EQT can theoretically slurp natural gas from underneath an area nearly the size of the City of Pittsburgh. 
“I call them mini-industrial complexes,” said David Schlosser, president of exploration and production at EQT.
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More Increases in Takeaway Capacity Coming for Utica and Marcellus Shale

From Argus:
The US northeast should realize an increase of more than 3 Bcf/d (85mn m³/d) of natural gas pipeline capacity by the end of this quarter, compared with an increase of 2.3 Bcf/d in volumes in the fourth quarter of 2017. 
Columbia Gas Transmission's 1.5 Bcf/d Leach XPress pipeline project began flows last week, shuttling gas from West Virginia and Pennsylvania into Ohio and to an interconnection with Columbia Gulf pipeline near Leach, Kentucky. 
Energy Transfer Partners has been bringing its 3.25 Bcf/d Rover pipeline project on line in phases, with the final tranche of 1.55 Bcf/d expected to begin flowing by the end of March. The 713-mile (1,147km) pipeline will transport Appalachian shale gas to pipeline interconnects in West Virginia, markets in Ohio and Michigan, and to the Dawn storage hub in Ontario, Canada. 
Finally, Spectra's 128mn cf/d Atlantic Bridge project began partial flows of 40mn cf/d in November, with the rest of that line expected to start up soon. But that project is not expected to have as significant an impact on prices or production levels as Leach XPress and Rover, analyst Jake Fells of BTU Analytics said.
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PA Court Ruling Smacks Down Home Rule Fracking Bans; What Could it Mean in Ohio?

From the Athens News:
Dick McGinn, who has led efforts in Athens city and county to pass community bill of rights ordinances or amendments, also criticized the Pennsylvania federal judge’s decision.

“Obviously the judge has little interest in civil rights,” he wrote in an email. “Her chosen legal path is to favor the ‘rights’ of corporations to trample on civil rights. The fight will continue. The people will win in the end.”

McGinn, in his capacity as a leader of the Athens County Bill of Rights Committee, issued a news release Tuesday celebrating the fact that Athens City Council had codified language in the Community Bill of Rights passed by voters in 2014, “exactly as voted on by the people; and includes the ballot language, too.” This is the same CELDF-originated legal reasoning that the federal judge in Pennsylvania rejected in the Grant Township case.

Athens Law Director Lisa Eliason was asked Tuesday if she felt concerned about the Athens law considering the sanctioning and referral to the Supreme Court of the CELDF attorneys in the Pennsylvania case. “I do not believe the act of codifying the Bill of Rights Initiative Petition exposes the city of Athens to the type of liability set forth in the Pennsylvania case,” she responded. “The city of Athens Bill of Rights Initiative Petition passed by an overwhelming majority and represents the ‘home rule’ will of the people.”

JACKIE STEWART, WHO DIRECTS the oil and gas industry-funded outreach group, Energy in Depth (EID) Ohio, issued a statement on Monday, praising the federal judge’s decision.

“The Community Environmental Legal Defense Fund has been targeting communities all over the country for years with misinformation campaigns and has proven to be nothing more than a litigation factory, as this recent federal judge has confirmed,” Stewart wrote. “EID has been cataloging the extensive costs incurred in towns where CELDF operates, and we are pleased that a federal judge has now recognized that ‘such litigation creates enormous expense to parties and taxes limited judicial resources.’

“CELDF has made it clear that its goal is to ‘bankrupt’ towns it operates in, and now a federal judge has finally exposed how incredibly deceptive this group is. A prime example is Youngstown, where CELDF has cost taxpayers over $187,000 and voters have rejected the group's Community Bill of Rights six consecutive times."
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Opponents of NEXUS Pipeline Dealt a Blow by FERC

From NGI:
FERC has denied several motions to stay its August certificate order approving the Nexus Gas Transmission pipeline project that were filed by environmental and citizens’ advocacy groups. 
The groups filed their motions for a stay in September and October, with their sights set on preventing the project from advancing while a request for rehearing was pending. The Federal Energy Regulatory Commission denied motions filed by the Sierra Club; Oberlin, OH; Sustainable Medina County; Neighbors Against Nexus; Freshwater Accountability Project; Communities for Safe and Sustainable Energy, and the Coalition to Reroute Nexus. 
It was the latest setback for opponents who have waged a hardline campaign to stop the 1.5 Bcf/d project to carry Appalachian gas to markets in the Midwest and Canada. The bulk of the 257-mile pipeline would be constructed in Ohio. The Sierra Club filed late last year in the U.S. Court of Appeals for the District of Columbia to stop all Nexus construction but the challenge was later dropped.
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Wednesday, January 17, 2018

Utica Shale Permitting Picks Up Slightly; Rig Count Up Too

New permits issued last week: 6  (Previous week: 2+4
Total horizontal permits issued: 2740  (Previous week: 2736+4
Total horizontal wells drilled: 2240  (Previous week: 2239+1
Total horizontal wells producing: 1798 (Previous week: 1787+11
Utica rig count: 23 (Previous week: 21)  +2

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Friday, January 12, 2018

Carroll County Energy Begins Commercial Operations

CARROLLTON, Ohio, Jan. 10, 2018 /PRNewswire/ -- Advanced Power today announced commercial operation has begun at its 700-megawatt Carroll County Energy natural gas electric generation facility.

Carroll County Energy is a combined-cycle natural gas electric generating facility built to sell into the PJM market. It is located in an area with low priced natural gas production, as well as AEP's 345 kV transmission lines and Kinder Morgan's Tennessee Gas Pipeline system.

Commercial operations began in mid-December, said Chuck Davis, President, Advanced Power Asset Management. He said that commencement of operations was a credit to community partnerships, solid financial support, and the professionalism of Bechtel, the general contractor as well as the subcontractors and scores of workers employed to build the facility.

"In the four-plus years since we first announced plans to build this state-of-the-art generation facility, Carroll County Energy has received outstanding support from the leadership and citizens of the Village of Carrollton, Washington Township and Carroll County," Davis said. "We are particularly proud to have been able to help the local schools to benefit the people who live and work around our facility."

Plans to build Carroll County Energy were announced in July 2013. In April 2015, Advanced Power closed the $899 million project financing. Equity investors are TIAA Investments, JERA, Ullico and Prudential Capital Group and Advanced Power. Providing senior secured credit facilities for construction were BNP Paribas, Credit Agricole and eight other commercial banks.

The facility, which features two GE gas turbines and a steam turbine, has the capacity to generate electricity for approximately 750,000 homes. Bechtel built the project under a turnkey construction contract. Ethos Energy is operating the facility, which employs 22 people. Advanced Power continues to manage the business.

Advanced Power is a privately owned company whose mandate is to develop, acquire, own and manage power generation and related infrastructure projects throughout Europe and North America. Advanced Power's leadership has a proven track record of identifying, developing and managing power generation and related infrastructure projects. Management has led the development of over 15,000 MW of power generation projects and $7 billion of limited recourse project financing.
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Wednesday, January 10, 2018

EIA Projects that U.S. Oil Production in 2019 May Surpass Saudi Arabia, Rival Russia

From CNBC:
American drillers will pump enough oil in 2019 to potentially surpass Saudi Arabia's output and rival the world's current top producer, Russia, according to a forecast from the U.S. Department of Energy. 
The department's Energy Information Administration forecast Tuesday that U.S. oil production will average 10.8 million barrels a day in 2019, a level that would put it on par with Saudi Arabia and Russia. EIA expects American output to top 11 million barrels a day for the first time ever in November 2019. 
This year, EIA sees U.S. output rising to 10.3 million barrels a day, the highest ever annual average production.

"Led by U.S. production, particularly in the Permian Basin, and new oil sands projects in Canada, non-OPEC production is forecast to continue growing through the end of 2019," EIA acting Administrator John Conti said in a statement. 
"We expect to see growth near 2.0 million barrels per day in 2018 and 1.3 million barrels per day in 2019."
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Oil Could Be Headed for a Price Spike...Or Maybe a Price Collapse

Two articles by Forbes contributor Michael Lynch looked at the potential for oil prices to spike or the potential for them to crash.

From the first article:
There is significant optimism about oil prices for next year given the return of inventories to something approaching “normal” levels, and a high degree of compliance among oil producers who have agreed to cut production. Strong economic growth should produce robust demand next year, and there is a relatively strong consensus that the market will be bullish for oil prices, with some talking about a $70 or $80 target for Brent. Compared to the swings of the last decade, a $10 or even $20 increase seems like a pittance, but would actually put $100 billion to $200 billion into the pockets of OPEC countries, and add tens of billions to the oil industry’s revenues. 
And numerous events could cause prices to move upward, including civil unrest in Venezuela or Libya, increased attacks on Nigerian producing facilities, disputes between the governments in Baghdad and Kurdistan, the re-imposition of sanctions on Iran, and technical problems at any number of large facilities around the world. 
But market tightness seems unlikely to cause a sharp increase in prices, since a number of producers would presumably take that opportunity to raise production. But one assumes that the Southwestern U.S. has seen new sightings of that 1980s bumper sticker, “God grant me one more boom and I promise not to screw it up,” a sticker that’s gotten more use than “Clinton for President.” Because it’s boom and bust, not boom and boom or boom and plateau, a basic fact that the industry and investors seem to forget.

How could it happen again? The four major modern price collapses —1986, 1998, 2008, and 2014— have each had a different cause, and provide some idea of what might cause another collapse next year. The first was the result of a market collapse — OPEC production fell by half from 1980 to 1985 — due to excessively high prices. In 1998, the market was not under such strong pressure, but most OPEC nations were exceeding their quotas, led by Venezuela, which proclaimed its defiance to the organization. A combination of short-term economic weakness leading to higher inventories and a determination by Saudi Arabia to rein in the errant producers led to the lowest prices in many years.
And from the second:
A recent post talked about how the oil price might collapse this year, and what factors would cause that. In this post, the potential for a price spike and what might be behind it will be enumerated. Because, as those involved in following oil markets have long known, almost any trend and price is possible—in the short run. 
Several decades ago, a reporter from a Swedish business magazine asked me to participate in a contest to predict the oil price at year’s end. (Okay, he didn’t really call me, he called the group I worked for and nobody else was around.) I wound up winning the contest, received a nice sweatshirt and an interview in the magazine to explain my success. However, when I told the reporter that I had basically guessed, since the short-term market is quite volatile and predicting political elements that affect the price impossible. The magazine never called me again. 
So, the market fundamentals suggest that prices will be tight this year, but a spike, that is, a sharp significant increase, rather than a gradual rise. Higher prices usually come from one of two sources: rapid demand growth in a tight market, or a significant disruption in supply.

Rapid demand growth could, theoretically, occur just as the result of a robust global economy, as in the rebound in 2010 (see figure) and the strong 2015 growth. Alternatively, there are a few short-term events that can cause demand to spike, as in 2004, when constraints on Chinese coal deliveries saw power companies rely on oil, sending that country’s demand up 1 mb/d for the year and reversing the bearish expectations for the year (double the previous trend). Few economies are large enough that an unusual event like that could affect the global market—unless it was very stressed already.
Lynch's conclusion? 
So, my expectations are for slight market tightening in the first part of 2018, but a likely decline due to slower economic growth, some quota cheating and strong shale oil production. But as the market moves into balance towards the 3rd quarter, the potential for supply disruptions to have a bigger impact will grow. Serious economic weakness could bring a collapse, but the political instability in Libya and/or Venezuela, with a tighter market balance, could see prices up above $70, maybe even $80. Ignoring (relatively) small probability events, prices will probably be slightly lower next year, but will the short-term trajectory is not random, it remains highly uncertain.

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Arctic Weather Not Bringing Skyrocketing Natural Gas Prices With It

Natural gas consumption has soared during the past couple of weeks of arctic weather and it's a good bet that next month's bill will include a built-in shudder. 
Columbia Gas of Ohio estimates delivered gas volumes this week are double what they were during the first week of last January. Dominion Energy of Ohio said gas volumes in its Ohio lines were running as much as 54 percent higher than a year ago. 
Average residential bills are expected to increase by about $20, Columbia estimates because of the extremely cold temperatures. 
Still, prices per unit of gas for some Ohio consumers are actually falling. 
Dominion and Columbia customers who rely on their utility's monthly variable price are now paying, or soon will pay, less per unit of gas they buy this month than they did in December.
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Tuesday, January 9, 2018

President Trump is Opening Things Up for Oil Drillers; Now the Pressure is on Them

From Forbes:
Back in the late 1980s and early 1990s, pickup trucks all over the U.S. oil patch could be seen sporting a bumper sticker that read "Lord, please just give me one more oil boom and I promise not to mess it up." 

Fast forward to 2017 and the first few days of 2018, and the oil and gas industry is being handed the first half of that plea by the Trump Administration in the form of radical shifts from the Obama-era energy and environmental policies of the previous 8 years. For its own sake, those in the U.S. oil and gas industry today had better take the promise made in that bumper sticker slogan very seriously. Because if the industry messes this opportunity up, there will be hell to pay the next time the voters decide to put a Democrat in the White House, an inevitability that could come about as soon as 2020. 
In just the last week, the Department of the Interior has presented the industry with three major policy reversalsthat will make it easier and more efficient to conduct drilling and exploration activities on federal lands and in federal waters, but also present major opportunities for the industry to mess things up:
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Landowners Lose Another Utica Shale Case Before Ohio Supreme Court

In a January 3, 2018 decision, the Supreme Court of Ohio held that Ohio does not recognize an implied covenant to explore further as a distinct implied covenant in oil and gas leases. See Alford v. Collins-McGregor Operating Co., Slip Opinion No. 2018-Ohio-8
The appellant-landowners were subject to an oil and gas lease executed by their predecessors in favor of the appellee-lessee in 1980. The landowners’ lease contained a one-year primary term and a standard habendum clause. The lease did not require the lessee to drill a specific number of wells or produce from a particular depth. It also did not disclaim implied covenants. One well was drilled under the lease in 1981, which produced from the Gordon Sand formation. In 2015, the landowners filed suit, alleging that while deeper formations like the Utica and Marcellus shales were being developed near their property, their lessee had not explored for oil and gas on their property from any depths below the Gordon Sand. The landowners claimed that this failure violated an implied covenant to explore further, and they asked the court to forfeit the lease as to the deeper depths. 
The lessee successfully moved to dismiss the suit, arguing that Ohio law does not recognize the remedy of horizontal forfeiture, and the court of appeals affirmed. On appeal to the Supreme Court of Ohio, the landowners claimed that lower courts were wrong in dismissing their suit, as they stated a claim for the breach of the implied covenant to explore further, and that such a claim could be remedied through horizontal forfeiture of the unexplored depths.
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Permitting Slow in Utica Shale During 1st Week of 2018

New permits issued last week: 2  (Previous week: 8-6
Total horizontal permits issued: 2736  (Previous week: 2734+2
Total horizontal wells drilled: 2239  (Previous week: 2236+3
Total horizontal wells producing: 1787 (Previous week: 1787+-0
Utica rig count: 21 (Previous week: 23)  -2

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Monday, January 8, 2018

Gas-Fired Power Plant Coming to Site of Former Ormet Plant in Ohio

From WTRF News:

While the public focuses on high-profile projects like the possible Belmont County ethane cracker, there's another project quietly going forward in Monroe County. 
At the site of the former Ormet plant, Fortress Investment Group out of New York purchased 1660 acres in June. 
And they are about to build a natural gas fired power plant there. 
People were surprised to hear about Long Ridge Energy, and they liked the idea. 
"Anything that can stimulate the growth of this area would be good, you know, after the steel and coal industry kind of fell apart," said John Celli of St. Clairsville. "I think it's good business for the locals around here." 
"I think it would be a really good idea, especially if they hired a lot of locals," said Jeff Culley of New Martinsville. "They'll bring in a lot of jobs and probably help the economy a little bit. So I think it's a good idea."

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Lawyer Behind Community Fracking Bans Hit With Legal Sanctions

From Natural Gas Now:
Tom Linzey, the arrogant spoiled attorney who founded and runs the CELDF, has been getting away with conning communities and funders for many years now. Like the snake-oil salesman he is, he’s sold his bogus “Community Bill of Rights Ordinance” (CBR) concept to communities from Maine to New Mexico, losing every step of the way, but never paying a penalty for bad faith lawyering. 
Tom Linzey is a Marxist, or worse, by any definition but has developed a nice gig offering free legal services to communities looking for any way possible to stop this or that. They provide the platform and useful idiots such as Leonard DiCaprio, Adelaide Park Gomer, Henry Wallace’s descendants fork over the money that has allowed Linzey to pursue his radical agenda. The gig may be up in one case, though. Federal Judge Susan Paradise Baxter has had it with the CELDF and the bully Tom Linzey. She’s just sanctioned him and fellow CELDF attorney Elizabeth Duane with $52,000 in legal sanctions for their “clearly unreasonable” lawyering. 
There are no better words to explain happened than those from Judge Baxter’s opinion, who found the CELDF attorneys had acted in bad faith. She also found another attorney (Lindsey Schromen-Warrin) representing two radical local groups probably deserved sanctioning but the request for such had not been timely.
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Friday, January 5, 2018

Chesapeake Offers to Settle Dispute with Landowners, With Conditions

From The Inquirer:
Chesapeake Energy Corp. has agreed to pay Pennsylvania landowners $30 million to settle federal lawsuits over its disputed gas-royalty payments. But the deal hinges on state Attorney General Josh Shapiro also resolving a lawsuit against the shale-gas producer.

Chesapeake’s lawyers told a federal judge in Scranton last week that they had reached a deal to settle several longstanding class-action suits, according to a transcript of the status meeting. The settlement would provide payments to all 14,000 Chesapeake gas leaseholders, and the landowners would also be allowed to “reset” their leases to clarify the terms under which they are paid royalties, or their share of gas sales. 
But the Oklahoma City gas producer said it won’t go forward with the deal unless it also resolves a lawsuit filed in Pennsylvania in 2015 by former state Attorney General Kathleen G. Kane that alleged Chesapeake cheated landowners by making large deductions from their royalty payments. 
“We want global peace,” said Daniel T. Donovan, a Chesapeake lawyer with the firm Kirkland & Ellis in Washington. “We want to move forward for a better relationship, different relationships with the lessors, but we need global peace.” 
Representatives of the Pennsylvania Attorney General’s Office told U.S. District Judge Malachy E. Mannion that it and Chesapeake are still far apart in negotiations to settle the state’s suit over unfair trade practices, which also names Anadarko Petroleum Corp.
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Wednesday, January 3, 2018

Final Week of 2017 Brings Big Increases in Producing Wells in Utica Shale

New permits issued last week: 8  (Previous week: 13-5
Total horizontal permits issued: 2734  (Previous week: 2716+18
Total horizontal wells drilled: 2236  (Previous week: 2201+35
Total horizontal wells producing: 1787 (Previous week: 1751+36
Utica rig count: 23 (Previous week: 21)  +2

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