Wednesday, February 28, 2018

Residents Displaced After Well Pad Explosion Return Home

From The Intelligencer:
Heavy rain continues to stall the efforts to cap a well at XTO Energy’s Schnegg well pad near Captina Creek, the site of an explosion on Feb. 15, but the majority of the evacuees have returned home. 
“We’re still working. Obviously the weather has been a factor slowing us down. We’re still trying to move that big crane. We want to do that very carefully because it’s near a well that had been producing before the master valve was shut after the incident,” XTO spokeswoman Karen Matusic said. “Weather forecasts are continued rain. Its supposed to get even heavier tomorrow I’ve heard …We’re still working even though it’s raining, but there’s access roads. We have to be careful everything is still safe and secure. A couple times the working crew has been pulled off the pad by emergency responders.” 
Matusic said the process involves using the access roads to remove debris and heavy equipment. The high winds and rain may impact safety of the access roads. 
“Those roads, even before rain, were tough. They’re rural roads,” she said. 
Matusic said the pad had four wells, and the well that had the blowout was not yet in production.
Click here to read more. 

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Permitting Picks Up, Rig Count Holds at 22 on Latest Utica Shale Update

New permits issued last week: 9  (Previous week: 2+7
Total horizontal permits issued: 2765  (Previous week: 2755+10
Total horizontal wells drilled: 2274  (Previous week: 2273+1
Total horizontal wells producing: 1848 (Previous week: 1844+4
Utica rig count: 22 (Previous week: 22)  +-0

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Monday, February 26, 2018

Rover Pipeline Capacity Increases With Approval to Start Up Compressor Station in Wayne County

From NGI:
FERC on Wednesday authorized Rover Pipeline LLC to bring its Mainline Compressor Station 2 in Ohio into service, raising total project capacity to just over 2 Bcf/d as the designed 3.25 Bcf/d interstate pipeline readies for full service later this year. 
In a letter order posted to the project docket, Federal Energy Regulatory Commission staff gave Rover the go-ahead to start up the approximately 38,000 hp station, which is located in Wayne County, OH. 
In a request submitted earlier this month, Rover said it had finished installing and commissioning the station’s six units. The additional compression will grow Rover’s mainline capacity to 2,015 MMcf/d “and enhance its operational efficiency,” the pipeline told FERC.
View the original article and read more by clicking here.

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Wednesday, February 21, 2018

2/21/18 Links of the Day: Explosion at Well Pad, EQT Looks to Split, and Much More

Press release:  Honeywell To Provide Natural Gas Liquids Fractionation Plant For MarkWest's Hopedale Plant   -   "Honeywell (NYSE: HON) today announced that its UOP Russell business will provide a fractionation plant capable of producing 60,000 barrels per day of natural gas liquids (NGLs) to MarkWest Energy Partners. The company, which is a wholly owned subsidiary of MPLX LP (NYSE: MPLX), will install the plant at its Hopedale facility located in Jewett, Ohio. The fractionation system will recover propane, isobutane, normal butane and pentane – or natural gasoline -- from mixed natural gas liquids for use..."

The Columbus Dispatch:  Columbia Gas Ready to Tap Regional Gas Supplies, Possibly Saving Customers Money   -   "Starting in April, much of the natural gas provided by Columbia Gas of Ohio will be coming from sources closer to home, a development that might contribute to low prices for consumers. The utility will start at that time using several pipelines that can ship gas from the Utica and Marcellus shale formations in Ohio and several neighboring states. At the same time, Columbia is ending a long-term contract in which it got..."

Bloomberg:  Crude Halts Decline as Demand Seen Burning Through Shale Output   - 

OPSB:  OPSB Schedules Local Hearing for Proposed Power Plant in Harrison County   -   "The Ohio Power Siting Board (OPSB) will hold a hearing to allow the public to express their views about Harrison Power LLC’s proposal to construct a 1,050 megawatt natural gas-fired electric generating facility in Cadiz, Ohio. The local public hearing is scheduled as follows: April 5, 2018, at 6 p.m. Puskarich Public Library 200 East Market Street Cadiz, Ohio 43907 The proposed Harrison Power Project would be located on approximately..."

Seeking Alpha:  Antero Resources' (AR) CEO Paul Rady on Q4 2017 Results - Earnings Call Transcript   -   "In the Utica, we placed a 10-well pad to sales at year-end that is currently flowing dry gas at a combined rate of over 200 million cubic feet a day with wellhead pressures in excess of 3,000 psi. In fact we achieved record production of 632 million a day recently in the Ohio, Utica, after running only one rig and completing only 22 wells in the play in 2017..."

MDN:  Rover Pipeline’s SWPA Burgettstown Lateral Ready for Startup   -   "On Tuesday, Rover Pipeline (Energy Transfer Partners) sent an official request to the Federal Energy Regulatory Commission (FERC) asking for permission to begin service on one of the remaining legs of the pipeline not yet up and running as part of Phase 1 development. Rover wants to begin service on the Burgettstown Lateral by Feb. 26. The Burgettstown Lateral (see the map below) extends from Burgettstown (Washington County), PA through Hancock County, WV and into..."

Pittsburgh Post-Gazette:  EQT Nearing Decision on a Possible Split; Stock Surges   -   "EQT Corp. will announce in the next two weeks a plan that will likely separate its oil and gas drilling business from the pipeline infrastructure side, the company said on Thursday. It’s been months in the making and nudged along by an activist shareholder campaign last year that tried to use EQT’s acquisition of Rice Energy Inc. as leverage to force..."

Forbes:  Shale Sector Settles into New Sweet Spot at $65 a Barrel   -   "When oil prices cratered from the high $80s in 2014 to below $40 in 2016, the U.S. upstream sector went looking for a rallying cry, and “$50 is the new $80” became the mantra. Oil prices of $80 and higher had funded massive capital budgets and expansive drilling programs across the Lower 48 in the years before the downturn, but as prices drifted lower in 2016 and 2017, the viability of U.S. shale production was called..."

The Intelligencer:  Powhatan Point Residents Remain Displaced as Well Pad Leak Continues   -   "A break in the weather Sunday allowed a well control team to gain access to a leaking natural gas drilling pad — the first step toward bringing the leak under control. XTO Energy spokeswoman Karen Matusic said the explosion that occurred at the Schnegg pad on Cats Run Road on Thursday created a lot of debris that must be removed in order to create a safe work zone for the well control team. Heavy rain that eventually led to flooding across the region was falling Thursday around the time of..."

The Intelligencer:  After Almost a Week, XTO Methane Leak Continues   -   "XTO Energy spokeswoman Karen Matusic said the high pressure associated with eastern Ohio Utica Shale wells may have contributed to the explosion at the Schnegg pad near Captina Creek on Thursday. Nearly a week after the well blew, several residents remain displaced, while unknown quantities of the greenhouse gas leak into the air. President Donald Trump’s Environmental Protection Agency states that methane “absorbs..."

VORYS:  ODNR Temporary Orders for Oilfield Waste Remain in Effect   -   "On February 15, 2018, the Supreme Court of Ohio denied an appeal of a mandamus action seeking to force ODNR to rescind temporary orders that ODNR had issued to a number of facilities across the state for the storage, recycling, treatment, processing, or disposal of brine and other oilfield waste. R.C. 1509.22(B)(2)(a) requires that “on and after January 1, 2014, no person shall store, recycle, treat, process, or dispose of in this state brine or other waste substances associated with the exploration, development, well stimulation, production operations, or plugging of oil and gas resources without an order..."

Davis Wright Trumaine:  Industry Petition Pushes FERC to Require Gas Pipelines and Storage Companies to Immediately Reflect Lower Tax Rates in Shipper Rates   -   "In light of reduced corporate tax rates as the result of Tax Cuts and Jobs Act of 2017 (Tax Act), a broad coalition of gas industry trade associations and gas producers recently filed a petition with the Federal Energy Regulatory Commission (FERC) urging the agency to lower gas pipeline and storage company rates to reflect tax rate reductions. The January 31, 2018 petition also offers a blueprint for how FERC could quickly..."

Pittsburgh Post-Gazette:  Researchers Find Fracking Spurs Bigger Quakes at Different Depths   -   "Five small earthquake sequences triggered by fracking in eastern Ohio between 2013 and 2015 were more complex than researchers previously understood, revealing that fracking-linked seismic disturbances originate at different geological depths and that deeper events pose greater risks. The new study — led by researchers at Miami University in Ohio and published in the Proceedings of the National Academy of Sciences — uncovered interesting dynamics about..."

Energy in Depth:  Report Finds U.S. Natural Gas Methane Emissions Have Little Climate Change Impact   -   "The “Keep It In the Ground” movement has been proliferating methane misinformation for years, repeatedly claiming methane leaks wipe out natural gas’ climate benefits and contribute significantly to climate change. Numerous third-party experts, including the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA), have refuted these claims and affirmed natural gas’ substantial climate benefits. And now, new research from the Gas Technology Institute’s Center for Methane Research puts U.S. natural gas system methane emissions into..."

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Anti-Drillers in Green Not Done Fighting NEXUS Pipeline Despite City Accepting $7.5 Million Settlement

From the Akron Beacon Journal:
Disgruntled Green residents are trying to reverse the city’s settlement with Nexus by placing the issue before voters. 
A petition drive to obtain at least 735 signatures of valid Green voters is underway and must be filed by March 9 with the Summit County Board of Elections. If the signature drive is successful, the issue would be put before voters during an August special election or on the Nov. 6 general election ballot. 
The city had been fighting plans by Nexus to build a 36-inch, high-pressure natural gas pipeline through Green. 
Under the settlement, the city is getting $7.5 million in cash, around-the-clock monitoring of the pipeline and 20 acres west of Boettler Park that the city can use to extend a trail from the park to Koons or Thursby roads.
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Rig Count Drops Again on Latest Utica Shale Report

New permits issued last week: 2  (Previous week: 4-2
Total horizontal permits issued: 2755  (Previous week: 2752+3
Total horizontal wells drilled: 2273  (Previous week: 2267+6
Total horizontal wells producing: 1844 (Previous week: 1845-1
Utica rig count: 22 (Previous week: 24)  -2

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Thursday, February 15, 2018

Bankruptcy May Be Coming for Rex Energy

From NGI:
Appalachian pure-play Rex Energy Corp. disclosed in a regulatory filing this month that it is exploring financial alternatives to strengthen its balance sheet, including the possibility of filing for bankruptcy to restructure. 
The small-cap company disclosed in a U.S. Securities and Exchange Commission Form 8-K filing that the talks began last September with financial advisers that represent a group of investors holding a “substantial portion” of the company’s senior notes. 
While Rex management stressed in the filing that no deal has been reached with noteholders during the ongoing negotiations, possibilities include restructuring, refinancing, asset sales or some type of debt forbearance, among other things. 
Some second lien noteholders, Rex said, have agreed to a voluntary, pre-packaged Chapter 11 bankruptcy filing as a way to reorganize in exchange for debt and equity securities. According to the filing, the company has various bond debts of more than $600 million that are scheduled to mature over the next four years.
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Activist Group Uses Wayne National Forest Decision to Renew Call for Fracking Ban

by Jackie Stewart, Energy in Depth

The Wayne National Forest (WNF) announced this week that it will begin revising its Land Management Plan in April. In a press release issued Tuesday, the WNF explained that its decision was prompted by its desire to improve compatibility with the Ohio Department of Natural Resources (ODNR) and other state agencies:
“With ODNR’s intention of revising Ohio’s Forest Action Plan by 2020, we have decided the time is right to revise our Land Management Plan, so that we can work more collaboratively with the State.”
But not surprisingly, the Center for Biological Diversity (CBD) — one of the groups that filed a lawsuit against the BLM and United States Forest Service (USFS) last year for “failure to account for the impacts of fracking on public health, water, endangered species and the climate” in the WNF — is claiming the decision was prompted by its lawsuit, while also using the announcement as an opportunity to renew its call for a fracking ban in the Wayne.
In a press release headlined “Ohio’s Wayne National Forest Announces Land-planning Update Following Fracking Lawsuit,” CBD spokesman Taylor McKinnon states:
“The Wayne’s management plan is completely outdated, so this is welcome news. The public can now demand a plan that bans fracking in the Wayne. People cherish this spectacular place for its clean water, wildlife and wild forests, not industrialization and pollution.”
Though EID has set the record straight several times before on this issue, it bears repeating that the local community not only supports development in the WNF, but also re-emphasize that claims that WNF’s land management plan is “completely outdated” are completely false as well. Furthermore, the complaints listed in CDB’s lawsuit have long been addressed.
Let’s review this now more than decades-long saga.
Back in 2012, , in response to activist protests, WNF reviewed its 2006 Forest Plan and made noteworthy changes to reflect horizontal drilling, such as updated language pursuant to casing and regulation in Ohio, hydraulic fracturing, orphan wells acting as conduits, fluid migration and forest fragmentation. Following that review, officials declared development could proceed in WNF without any additional regulations or changes to the WNF’s plan due to the safety of these operations and the strong regulations in place in Ohio.
Nonetheless, protests from “Keep It In the Ground” groups such as CBD continued over the next five years, culminating with the aforementioned lawsuits filed by CBD, the Ohio Environmental Council, Heartwood and the Sierra Club in 2017.
A close look at that lawsuit revealed it was simply a hodgepodge of erroneous complaints that have long been addressed.
  • The lawsuit claims USFS should have conducted more environmental reviews when it established its Forest Plan and supplemental review. It did.
  • The lawsuit claimed the most recent extensive WNF environmental review did not go far enough and did not include enough public comment opportunities. Wrong on both fronts.
  • The lawsuit included a litany of accusations made over alleged violations of the Endangered Species Act. Each were false.
Essentially, the lawsuit is a prime example of why CBD has a well-earned reputation as a multimillion-dollar litigation factory whose primary objective is pouring sugar into the gas tank of the regulatory process in order to disrupt the process as much as possible.
Make no mistake, its goal is to impose a de facto moratorium on fracking in the Wayne National Forest from the bench, despite community support for drilling and the fact that lease sales alone have already yielded more than $8 million, a huge chunk of which stays local, funding schools and municipal projects.
Though CDB’s claims that it prompted WNF’s plan to revise its Land Management Plan with its frivolous lawsuit are erroneous, its press release serves as an important reminder that this group will attempt to take advantage of any and all opportunities to advance its objective of banning fracking in the Wayne. It also serves as a reminder that CDB doesn’t mind drawing out this already played-out saga indefinitely, much to the detriment of the communities that would benefit from shale development in the WNF.

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Wednesday, February 14, 2018

Rig Count Up 1, Producing Wells Up by 39 on Latest Utica Shale Report

New permits issued last week: 4  (Previous week: 6-2
Total horizontal permits issued: 2752  (Previous week: 2754-2
Total horizontal wells drilled: 2267  (Previous week: 2254+13
Total horizontal wells producing: 1845 (Previous week: 1806+39
Utica rig count: 24 (Previous week: 23)  +1

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Friday, February 9, 2018

Heads-Up to Ohio Landowners: Beware of Fake Coalitions

by Jackie Stewart, Energy in Depth

For the past few years, we have watched the Community Environmental Legal Defense Fund (CELDF) and other “Keep It In the Ground” (KIITG) activists employ bait-and-switch tactics to try (unsuccessfully) to stop pipeline development and ban fracking. After epic failures across the state, fringe environmental activists have turned to launching fake landowner coalitions in a new attempt to mislead the public, with a prime example being the Tri-County Landowners Coalition.
But these so-called “landowner” coalitions are nothing more than front groups for a small group of well-coordinated activists who have no interest in leasing or protecting royalty owner interests — but instead want to stop all oil and gas development in its tracks. And their overall goal is even more far-reaching than the oil and gas industry, as they have publicly stated they want to “decide what industries come in here.”
In response to these fake landowner groups in Ohio, the actual national landowner advocacy group – the National Association of Royalty Owners (NARO) – recently told EID,
“This constant drum beat by folks who do not want any fossil fuels developed under the guise of ‘local control’ is tiring, and for those of us who have a national perspective is anything but local. Most of the groups claiming to be ‘local grassroots’ organizations may have enlisted a few local residents to carry the banner, but don’t be fooled. The tell on who is behind them is the rhetoric they spew which is the exact same message developed by Food and Water Watch, Food and Water Action, Sierra Club, Green Peace, etc., who are anything but local. Don’t believe me? Just visit any of those organizations’ websites and see what they say about oil and gas, and you will find the exact same talking points these supposed local grassroots groups are using. They all point to lack of federal Safe Drinking Water Act authority over the oil and gas industry as some terrible miscarriage of justice. Look, this is NOT about local control. This is a private property issue.  This is about a few who want to control everyone else for their own selfish reasons.”
So who’s behind the fake Tri-County Landowners Coalition?
Launched by Frack Free Ohio activist Bill Baker, the so-called Tri-County Landowners Coalition“represents” three Ohio counties — Richland, Ashland, and Holmes — and includes, Hayesville Community on Fracked Gas (HCFG), Clear Fork Landowners Group (CFLG), Advocates for Local Land (ALL), and the Monroe Township Landowners Coalition (MTLC).
It’s been a while since we’ve heard from Baker and Frack Free Ohio, but he is no stranger to pushing anti-fracking activities in Ohio. Recall that Baker was behind a Community Bill of Rightseffort in 2013 in Richland County, as well.  Five years later, Baker is now attempting to launch this fake coalition, backed by what appears to be about five people, including Elaine Tanner, program director for the nonprofit Friends For Environmental Justice (FFEJ). Tanner recently claimed she has been “a lifelong resident” of Ohio, yet as recently as September 2015, she was identified as part of the Kentuckians for the Commonwealth (KFTC), in that case fighting the coal industry, and was quoted as being a resident of Letcher County, Ky.
“Our lives in Appalachia are being shortened,” pointed out Elaine Tanner of Letcher County (Kentucky), noting the ‘unimaginable damage to our environment’ coal companies are leaving behind and the ‘legacy pollution we face in our future.’ She said that coal companies should be held accountable for this damage. (emphasis added).
A recently staged press conference was clearly coordinated by OccupyEarth USA, as the event was filmed and posted to their YouTube page immediately after its conclusion. OccupyEarthUSA, in conjunction with United Citizen Action Network (UCAN), also enlisted Baker’s help to raise money to launch the epic failure of the Ohio #NODAPL copycat camp last year to stop leasing of federal minerals in Ohio’s Wayne National Forest.  For the record, the website for UCAN Ohio no longer exists, nor do the bogus copycat camps.
So why the landowner angle these days?
  1. There is no legitimate “movement” in Ohio to ban fracking.
Ohio anti-fracking activists are few and far between, as we have routinely highlighted. There is no “movement” to ban fracking, as Ohio communities have overwhelmingly rejected efforts to do so.
Recall that last year national anti-fracking groups spent weeks advertising the “three massive rallies against fracking” in Cleveland, Columbus and Marietta. But EID was on the ground in all three locations and can confirm the entire “Ohio-wide” effort garnered a total of just 47 protesters, despite being hosted by major national KIITG groups such as, Sierra Club, Earthworks, Food & Water Watch, Friends for Environmental Justice, Foundation for Economic Democracy and Appalachia Resist!.
In fact, according to an eyewitness account, the showing was so dismal that one of the protestors said,
“It’s sad there’s only 12 people here. It’s a small group because not a lot of people know about fracking.”
Such is the case today, as this fake “landowner” coalition gives the appearance of a groundswell of anti-fracking sentiment, however, in reality they are merely a well-coordinated handful of anti-fracking activists who are simply receiving headlines without any legitimate support for their cause.
  1. Ohio’s environment is improving from natural gas production and consumption — not the other way around.
Further, the arguments that fracking is harming the environment fall flat, considering that three Ohio-based studies have found no environmental impacts from hydraulic fracturing. For example, the University of Cincinnati found “no evidence for natural gas contamination from shale oil and gas mining in any of the sampled groundwater wells,” and in fact, Ohio is leading the nation in carbon emission reductions. The Environmental Defense Fund (EDF) even hailed Ohio as the “nation’s carbon-reducing powerhouse,” a distinction that can be credited to the Buckeye State’s dramatic increase in natural gas-fired electricity generation since 2005. Crain’s Cleveland Business summed it up best when they reported,
“The biggest reason for the decline, according to watchers, is the advent of shale gas drilling in Ohio. The shale drilling boom’s cheap gas has caused new natural gas power plants to come online in Ohio and nearby states that sell their power into Ohio on a shared electricity grid.”
  1. The economic benefits are undeniable.
Shale development—made possible from fracking—has led to over $63 billion spent in Ohio. The natural gas and oil industry has supported, and continues to support, hundreds of thousands of jobs, and billions in wages in the Buckeye State. According to the Ohio Department of Jobs and Family Services, core shale-related employment increased 171 percent from 2011 to 2017. That’s enormous when you consider all other Ohio industries only gained an 8 percent employment increase over the same period of time. What’s more is that shale jobs pay twice as much as any other industry in Ohio.
Event after poorly-attended Ohio anti-fracking event shows that KIITG organizers simply cannot bring out supporters to their cause in the Buckeye State, so it shouldn’t be surprising that they are now trying to use fake landowner groups to push their misinformation campaigns.
But as NARO correctly points out, these fake groups have no real intention to help landowners navigate leasing questions. They want to ban all oil and gas development, period. Here’s a tip for the landowners in the Buckeye State: buyers beware!

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FERC Grants ETP's Request, Allows Rover Drilling to Restart

From Reuters:
The U.S. Federal Energy Regulatory Commission on Tuesday authorized Energy Transfer Partners LP to recommence a horizontal drill under the Tuscarawas River in Ohio as the company works to complete its Rover natural gas pipeline by the end of the first quarter. 
FERC said in a filing it allowed Rover to start drilling again after the company provided a revised drilling plan for the second pipe under the Tuscarawas River on Sunday and some analysis on Monday of residential water wells in the vicinity of the drill.

Rover will monitor the quality of the water in the wells during and for a period of time after the drill. 
FERC ordered Rover to cease drilling of the second pipe under the river on Jan. 24 and asked the company to evaluate alternatives to the drill after Rover lost some drilling fluid - a mixture of clay and water - in the hole.
View the rest of the article by clicking here.

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City of Green Takes Money, Gives Up NEXUS Pipeline Fight

From the Akron Beacon Journal:
The Green City Council voted 4-3 Wednesday to drop the city’s legal challenges and accept money, land and other conditions to allow the Nexus natural gas pipeline to travel through the city. 
About 100 people attended a standing-room-only meeting — the third special meeting the council held to discuss the Nexus offer. 
All but one of 19 residents who addressed the council spoke against the agreement that includes $7.5 million in cash, around-the-clock monitoring of the pipeline and 20 acres west of Boettler Park that the city can use to extend a trail from the park to Koons or Thursby roads. 
Justin Leonti of East Nimisila Road said he wanted the council to continue the fight against the Nexus project. He scoffed at the money portion of the deal, saying Nexus would recoup the $7.5 million in 4½ hours of gas flowing through the Green portion of the line.
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Gulfport Energy Planning to Be Active in Utica Shale During 2018

From a press release:
Utica Shale 
During 2018, Gulfport plans to run on average approximately 2.5 operated horizontal rigs in the Utica Shale. Gulfport has budgeted to drill approximately 36 to 40 gross (26 to 29 net) horizontal Utica wells with an average lateral length of 11,200 feet. In addition, Gulfport plans to turn-to-sales 33 to 37 gross and net horizontal Utica wells with an average lateral length of 8,000 feet. 
Gulfport intends to participate in non-operated activities taking place on its acreage by other operators that plan to drill approximately 7 to 8 horizontal wells and turn-to-sales 9 to 10 horizontal wells, in each case net to Gulfport’s interest.
Read the whole release by clicking here.

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Environmentalists and Drillers United in Support of Bill to Help Cap Orphan Wells

From WKSU:
An environmental group and an oil and gas industry lobbying group are both praising a bill that passed the Ohio House that would streamline the process of capping some 600 old, unused wells that don’t have owners. Statehouse correspondent Karen Kasler reports they also want more money put toward that process. 
The Ohio Environmental Council and the Ohio Oil and Gas Association say the bill will triple the money set aside for capping those so-called “orphan” wells. Tom Stewart with the Oil and Gas Association says that’s needed, noting $62 million in severance tax revenue was transferred out of the Ohio Department of Natural Resources in recent years. 
“That includes paying for lawsuits unrelated to oil and gas development and budget transfers to other funds. The budget director said that severance tax should be used to pay for issues such as Medicaid.”
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Eclipse Resources Provides Operational & Financial Update

From a press release:
The Company has established an initial capital budget for 2018 of between $300 - $320 million, allocated approximately 84% for drilling and completions activities, 8% for midstream activities, 6% for land activities and 2% for other capital requirements. This budget incorporates the Company’s drilling joint venture with Sequel Energy, in which the Company made a pre-carry working interest election of 50% in the first 16 well program and a pre-carry working interest election of 30% in the second 17 well program. The initial capital budget assumes the drilling of 17 net (33 gross) horizontal Utica Shale wells and the completion of 18 net (35 gross) horizontal Utica Shale wells, including the drilling and completion of 1 net (1.0 gross) Flat Castle area well. The wells to be drilled in 2018 are expected to average over 16,800 feet in lateral length.
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Blue Ridge Mountain Resources, Inc. Announces $90 Million Joint Venture for Development of Utica and Marcellus Acreage in Ohio

Blue Ridge Mountain Resources, Inc. (“BRMR”) announced today it has entered into a definitive Purchase and Sale Agreement (“PSA”) with an undisclosed buyer (“Buyer”) pursuant to which Buyer will acquire from BRMR a 40% non-operated working interest in approximately 21,000 net undeveloped leasehold acres within the Utica and Marcellus shale formations located in Monroe and Washington Counties, Ohio.  The total sales price is $56 million, subject to customary closing adjustments.  At closing, approximately 22% of the unadjusted total sales price will be placed into escrow to be released on an on-going basis to BRMR as BRMR renews, replaces, or extends certain term leases in 2018 or brings such term leases to their secondary term through development and production activities.  The total sales price represents a value of approximately $7,500 per net leasehold acre for leases in their secondary term and approximately $6,000 per net leasehold acre for leases in their primary term.  At closing, BRMR and Buyer will also enter into a Joint Development Agreement (“JDA”) that establishes an area of mutual interest (“AMI”) located predominately in Benton, Ludlow and Grandview townships in Monroe and Washington Counties, Ohio.  Under the terms of the JDA, Buyer will fund its share of the first year of drilling, completion and land renewal expenditures, which share is estimated to be approximately $36 million in 2018.  Under the JDA, Buyer will have the right to a 40% participation in additional leasehold acreage acquired by BRMR within the AMI.  BRMR plans to commence a one-rig development program within the AMI in Q2 2018, which program is anticipated to continue throughout the development of the AMI.  Participation by Buyer in development activities post-2018 will be subject to the JDA and associated joint operating agreement terms and conditions.  
BRMR plans to use the cash proceeds from the transaction to fund its on-going two-rig development program, as well as consolidate its acreage position in Southeastern Ohio primarily through additional leasehold acreage acquisitions. 
The transaction is expected to close in early April 2018 and is subject to the satisfaction of customary closing conditions. 
John Reinhart, President and CEO of BRMR, commented, “We are very pleased to have entered into the PSA and look forward to closing this transaction.  Partnering with the Buyer for development of our core assets not only accelerates our development activity, but also provides us with incremental liquidity for the acquisition of additional and complimentary inventory of high-quality Utica and Marcellus leasehold acreage.  We believe the transaction will lead to further growth and value of our company for the benefit of our shareholders.” 
About Blue Ridge Mountain Resources, Inc. 
Blue Ridge Mountain Resources, Inc. and subsidiaries are an Irving, Texas based independent exploration and production company engaged in the acquisition, development and production of natural gas and natural gas liquids. Blue Ridge Mountain Resources, Inc. is active in two of the most prolific unconventional shale resource plays in North America, the Marcellus and Utica Shales, with production of 72 mmscfe/d from 105,000 net effective acres.

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Ohio Supreme Court Turns Away Landowner Challenge to Forced Pooling Statute

From the Energy and Environmental Law Blog:
On January 30, 2018, the Supreme Court of Ohio rejected a constitutional challenge to a statutory unitization order issued by the Ohio Department of Natural Resources, Division of Oil and Gas Resources Management. In State ex rel. Kerns v. Simmers, the Division issued an order under Ohio’s unitization statute, R.C. 1509.28, that consolidated the relators-landowners’ lands with other lands into a unit for oil and gas development. The landowners unsuccessfully challenged the issuance of the order before the Ohio Oil and Gas Commission. Afterwards, they commenced a mandamus action before the Supreme Court of Ohio, alleging that the Division’s order resulted in an unconstitutional taking of their property and asked the Court to require the Division to commence appropriations proceedings. 
In its decision, the Court denied the landowners’ mandamus request on procedural grounds, concluding that the landowners were not entitled to the writ of mandamus because they failed to demonstrate an adequate remedy at law. The Court concluded that following the landowners’ unsuccessful appeal to the Oil and Gas Commission, the landowners could have pursued a further appeal to the Franklin County Common Pleas Court.
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Wednesday, February 7, 2018

ETP Frustrated Over Order to Stop Rover Pipeline Drilling

From Reuters:
Energy Transfer Partners said it was “frustrated” by an order by U.S. federal energy regulators to stop drilling under the Tuscarawas River in Ohio as the company works to complete the Rover natural gas pipeline by the end of the first quarter: 
* “Rover is frustrated by the inaccurate central premise underlying the letter received from the Federal Energy Regulatory Commission (FERC) ... directing operations to cease at the Tuscarawas River,” ETP said in a filing made available on Monday 
* ETP wants FERC to allow the company to continue drilling the second hole under the river as per the pre-approved plan 
* “Rover and the capacity it represents are badly needed,” ETP said about its $4.2 billion project designed to carry up to 3.25 billion cubic feet per day of gas from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the U.S. Midwest and Ontario in Canada
And further from another Reuters article:
Energy Transfer Partners LP provided U.S. federal energy regulators with an analysis of residential water wells in the vicinity of the company’s drilling site under the Tuscarawas River in Ohio as part of its Rover natural gas pipeline project. 
In a filing made available on Monday, ETP asked the U.S. Federal Energy Regulatory Commission (FERC) to allow the company to resume drilling for a second pipe under the Tuscarawas later Monday, as it tries to complete the Rover project by the end of the first quarter. 
FERC ordered Rover to cease drilling of the second pipe under the river on Jan. 24 and asked the company to evaluate alternatives to the drill after Rover lost some drilling fluid - a mixture of clay and water - in the hole. 
Those alternatives included completing the current drilling, finding another location to cross under the river or go with just one pipe across the river.
Click here to read the rest of that article. 

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Rig Count Increases on Latest ODNR Permitting Update

New permits issued last week: 6  (Previous week: 10-4
Total horizontal permits issued: 2754  (Previous week: 2748+6
Total horizontal wells drilled: 2254  (Previous week: 2246+8
Total horizontal wells producing: 1806 (Previous week: 1801+5
Utica rig count: 23 (Previous week: 21)  +2

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ODNR Publishes February 2018 Utica and Marcellus Shale Activity Maps

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Saturday, February 3, 2018

400 Jobs Lost in Latest Round of Mass Layoffs at Chesapeake Energy

From CNBC:
Chesapeake Energy has announced it will lay off hundreds of employees as the debt-burdened natural gas driller continues to overhaul its business. 
In a letter to employees, Chesapeake said it will let go about 13 percent of its workforce, which stood at 3,247 people as of September. A company spokesperson confirmed the Oklahoma City-based company would trim back about 400 positions. 
The layoffs will occur primarily at Chesapeake's Oklahoma City campus. 
Click here to view the whole article.

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Pipeline Explodes and Causes Fire in Noble County

From WTOV9:
First responders were on the scene of a pipeline explosion and fire in Noble County early Wednesday morning. 
Officials say the incident happened around 2:30 a.m. about 3 miles north of Summerfield along State Route 513. 
The pipeline has been identified as Seneca Lateral and operated by Tallgrass Energy, although officials say there are multiple pipelines in the same footprint and several facilities in the area.

The explosion awoke a number of local residents, many of whom say the night sky was lit up like daytime.
Click here to view the whole article.

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PTTGC Announces New S. Korean Partner on Ethane Cracker, Final Decision Coming This Year

by Jackie Stewart, Energy in Depth

PTT Global Chemical America LLC (PTTGCA) announced today in a press release that it is teaming up with South Korean construction and chemical company Daelim Chemical USA, LLC, on its proposed $6 billion world-class petrochemical complex in Belmont County, Ohio. The company also announced that it will make its final investment decision on the cracker facility “by the end of 2018.”  This comes after PTTGCA announced last month that additional news would be forthcoming, which initially garnered headlines citing only “delays” of the project, today’s announcement is a signal that Ohio is “all in” to secure this multi-billion project, which would create thousands of jobs.
EID has been tracking the timeline of the PTTGCA decision compared to the Shell Chemical Appalachia timeline, and as you can see, it’s clear that the PTTGCA timeline is strikingly similar.
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.
Assuming PTTGCA keeps its promise and announces a favorable final investment decision this year, the PTTGCA project decision would actually come a year sooner than then Shell project.
So what is the significance of this news about Daelim?
The significance is huge and in fact mirrors so many other successful projects in Ohio in which a project is announced by a developer; the company begins the necessary process of due diligence, engineering studies and environmental permits; and then at some point in the process they announce a construction partner. In this case, the addition of Daelim Chemical USA, LLC to the project is enormous, considering it is a subsidiary of Daelim Industrial, one of the top Engineering, Procurement, and Construction (EPC) companies in Asia and one of the largest companies, period, in South Korea. In other words, adding Daelim to the project should be viewed as a very positive sign that Ohio will in fact secure this final investment decision this year.

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Shale Industry Struggles with Rising Costs as Production Increases

From Reuters:
U.S. crude oil production topped 10 million barrels per day (bpd) in November, according to monthly estimates published by the Energy Information Administration on Wednesday.

Crude output was the highest in 47 years and just 6,000 bpd below the record set in November 1970 (“Petroleum Supply Monthly”, EIA, Jan. 31). 
Production has doubled over the last 10 years, from a low of around 5 million bpd in 2007, reversing decades of decline since the 1970s. 
The most recent surge in output confounded some observers, who had forecast production was about to level off, though the EIA had predicted it for some time.
Even as production increases, though, there are concerns about the profitability of shale drilling.  Another article from Reuters:
U.S. shale producers are facing rising costs for everything from drilling rigs to pressure pumping equipment and labour as the cyclical expansion in oil prices and drilling matures. 
The cost of drilling oil and gas wells has increased significantly over the last year, according to the latest provisional estimates from the U.S. Bureau of Labor Statistics. 
Drilling costs have increased by more than 10 percent since hitting a cyclical low in November 2016, though they are still 27 percent below the cyclical peak set in March 2014. 
Changes in drilling costs tend to follow changes in the number of rigs employed with a lag of around 1-2 months.
Meanwhile, asks why the shale industry is not profitable:
Echoing the criticism of too much hype surrounding U.S. shale from the Saudi oil minister last week, a new report finds that shale drilling is still largely not profitable. Not only that, but costs are on the rise and drillers are pursuing “irrational production.” 
Riyadh-based Al Rajhi Capital dug into the financials of a long list of U.S. shale companies, and found that “despite rising prices most firms under our study are still in losses with no signs of improvement.” The average return on asset for U.S. shale companies “is still a measly 0.8 percent,” the financial services company wrote in its report. 
Moreover, the widely-publicized efficiency gains could be overstated, at least according to Al Rajhi Capital. The firm said that in the third quarter of 2017, the “average operating cost per barrel has broadly remained the same without any efficiency gains.” Not only that, but the cost of producing a barrel of oil, after factoring in the cost of spending and higher debt levels, has actually been rising quite a bit. 
Shale companies often tout their rock-bottom breakeven prices, and they often use a narrowly defined metric that only includes the cost of drilling and production, leaving out all other costs. But because there are a lot of other expenses, only focusing on operating costs can be a bit misleading.

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