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Monday, April 16, 2018

Rover Seeks Permission to Begin Service on New Segments of Pipeline

From Kallanish Energy:
Rover Pipeline is seeking federal approval to begin service on additional segments of the $4.2 billion natural gas pipeline across northern Ohio, Kallanish Energy reports. 
The request was filed Friday with the Federal Energy Regulatory Commission. 
Energy Transfer Partners is seeking approval to begin service on its 100-mile Market segment in northwest Ohio and Michigan, plus a major segment of Mainline B between Crawford and Wayne counties in northcentral Ohio. 
The Market segment is a 42-inch pipeline from Defiance County, Ohio, to Livingston County, Michigan, where it connects to the Vector Pipeline. 
The company also wants to begin service from two compressor stations in Crawford and Defiance counties in Ohio and one meter station in Michigan.
Read more by clicking here. 

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Good News, Bad News: U.S. Natural Gas Production Hits New Highs in 2017

From Forbes:
The good news is that the oil and gas industry will set a new record for natural gas production in 2018. 
The bad news is that the oil and gas industry will set a new record for natural gas production in 2018. 
Wait, what?  Yes, really. 
First, the good news:
  • When natural gas is abundant and cheap, utility bills are lower in most areas, with the notable exception right now of the New England area, where politically-motivated pipeline constraints have led the absurd outcome of residents of the states north of New York paying much higher prices than the rest of the country, and having to actually import LNG from Russia in order to meet the region's natural gas demand.
  • The EIA report is also good news for the state of Texas, where Saudi Aramco announced on Tuesday its plans to invest as much as $10 billion in new capital in its Beaumont-based Motiva refining and petrochemical operations to take advantage of low U.S. natural gas prices.
  • Obviously, the report is great news for the petrochemical industry as a whole, and for the myriad other industries that use natural gas as a feedstock.  The low natural gas prices have already resulted in a massive manufacturing boom in the U.S. over the last half-decade, and the prospect of ongoing record production levels promises to keep that boom going.
So, what's the bad news, you ask?  Here you go:
Read the bad news by clicking here.

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Cyberattacks Expose Pipeline Vulnerabilities, May Lead to Calls for More Regulation

From Bloomberg Quint:
A cyberattack that U.S. natural gas pipeline owners weren’t required to report has lawmakers taking a closer look at how the industry is handling such threats, raising the prospect of tighter regulation.

In website notices to customers this week, at least seven pipeline operators from Energy Transfer Partners LP to TransCanada Corp. said their third-party electronic communications systems were shut down, with five confirming the service disruptions were caused by hacking. But the companies didn’t have to alert the U.S. Transportation Security Administration, the agency that oversees the nation’s more than 2.6 million miles of oil and gas conduits in addition to providing security at airports.

Though the cyberattack didn’t disrupt the supply of gas to U.S. homes and businesses, it underscores that energy companies from power providers to pipeline operators and oil drillers are increasingly vulnerable to electronic sabotage. It also showed how even a minor attack can have ripple effects, forcing utilities to warn of billing delays and making it more difficult for analysts and traders to predict a key government report on gas stockpiles.

“These attacks are a wake-up call that addressing our aging energy infrastructure needs to be a priority,” Congressman Robert Latta, a Republican from Ohio who serves on the House Committee on Energy and Commerce, said in an emailed statement on April 5. “Bad actors are looking at any way to weaken the American energy sector.”
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Increasing Gas Output Means $170 Billion in Infrastructure Investment is Needed

From Bloomberg:
Bottlenecks on the U.S. natural gas super highway are starting to stack up, raising concerns about whether infrastructure can be built fast enough to meet surging supplies.

Gas output will expand by 24 billion cubic feet, or 32 percent, through 2025 from last year, according to U.S. Energy Information Administration estimates. To support that growth, the country’s gas industry needs to spend $170 billion over the next seven years on pipelines, compressor stations, export terminals and other related infrastructure, said Meg Gentle, chief executive officer of gas exporter Tellurian Inc.

“One threat to the U.S. being able to export LNG and expand its export capability is the overall commitment to invest in infrastructure to move natural gas,” Gentle said in an interview at the Bloomberg New Energy Finance Future of Energy Summit in New York Tuesday.

It’s a warning that for parts of the country the pipeline woes aren’t over yet. Appalachian producers have been grappling for the better part of the shale boom of the past decade with limited pipeline access. Spot prices there slumped to record lows last year and have started to rebound as new capacity starts up.
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Epic Fail: Sierra Club ‘Pipeline Pillage: Petrochemical Hub’ Event Draws Just Eight Attendees

by Jackie Stewart, Energy in Depth

Just one week after a Sierra Club event in West Virginia attracted meager attendance despite the host group offering to pay people to attendjust eight people showed up to an April 12 Appalachian Ohio Sierra Club event dubbed “Pipeline Pillage: The Appalachian Petrochemical Hub.”
The event’s dismal attendance cannot be blamed on a lack of publicity, as the event was featured in the newspaper and across the group’s social media platforms.  However, these efforts were so ineffective that the Sierra Club has since yanked the event off its webpage, likely hoping nobody would notice that no one showed up! Newsflash, Sierra Club: Considering your event’s attendance, it’s clear no one even noticed when the event was on the webpage.

Taken together, these two events further highlight the fact that the Sierra Club has no traction in the Appalachian Basin — particularly in Ohio and West Virginia. The people who actually live and work in these states are wise to the Sierra Club’s “Keep It In The Ground” agenda, preferring the economic and environmental benefits provided by shale development over the misinformation touted by Sierra Club and similar fringe environmental activist groups.  As Belmont County Port Authority (BCPA) Executive Director Larry Merry told EID,
“Most of the Sierra Club leaders I know were given a sock full of money from their trust funds and billionaires in California, and now they don’t want any of the rest of us to have anything in Appalachia. They don’t want to give us a chance.” (Emphasis added)
This sentiment is echoed from county to county along the Ohio River, and it’s why fringe environmental activists have struggled to gain any influence in this region of the country. Even when these groups pay attendees to show up, they fail to make any significant headway, as they are so far removed from understanding the local men and women who support and depend on oil and gas development – especially since the introduction of shale development. Perfectly illustrating this fact, the “petrochemical hub” that Sierra Club’s April 12 event was fighting against could lead to an estimated 100,000 permanent petrochemical-related manufacturing jobs in Kentucky, Ohio, Pennsylvania, and West Virginia, according to a new report by the American Chemistry Council.
Good luck finding anyone in the Ohio Valley – or any rational person, for that matter – who would sacrifice these good paying jobs and economic security in order to perpetuate an anti-fossil fuel agenda.

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About 30 People Show Up to Protest Injection Wells in Brookfield

From The Sharon Herald:
Walking in her backyard, Gloria Douglas points to a mound of earth 100 yards away. 
That mound is the location for an injection well, to be drilled by Highland Field Services, for the storage of waste from the extraction of shale gas through the process of hydraulic fracturing.

“See how close it is,’’ Douglas said. 
Douglas, 74, is among a group of Brookfield residents trying to halt the drilling of injection wells in the township. Highland Field Services has gotten approval from Ohio Division of Natural Resources to drill two wells on 75 acres in the township. However, no drilling has been done so far. 
The property is next to Wyngate Manor, a manufactured home park with more than 200 residences, including Douglas. 
When crews started clearing land last year, Douglas said she knew something was up.
“It didn’t take us long to figure out what was going on,’’ she said.
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Democratic Lawmakers Pushing for More Money to Communities with Injection Wells

From NGI:
Two Democratic lawmakers from Northeast Ohio have introduced a bill that would see the communities they represent and others where injection wells are located receive more of the fees collected to dispose of oil and gas waste. 
State Reps. Glenn Holmes and Mike O’Brien, both of Trumbull County, introduced House Bill (HB) 578 last week. Under the proposal, 37.5% of the out-of-district injection well fees collected by the state would be redirected to the municipalities and townships where the wells are located. The Ohio Department of Natural Resources (ODNR) regulates underground injection wells and collects all fees from the state’s operators. 
Under current law, ODNR receives 5 cents/barrel for waste that’s been produced and injected inside a regulatory district. When the injected waste is produced outside of a regulatory district, but disposed inside it, ODNR collects 20 cents/barrel. 
“All we are asking for is that ODNR and the injection well industry be good community partners in dealing with this very sensitive issue,” Holmes said. “We think it is only fair that the community see some type of remediation for the impacts of dumping in our communities. Furthermore, we need to explore the technologies to stop the need for injection wells altogether.”
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Opposition and All, NEXUS Pipeline on Track for Completion This Year

From the Fremont News Messenger:
The NEXUS pipeline should become operational later this year, as the company completes work on an approximately 255-mile project that carries fracked natural gas through several counties in Ohio and Michigan. 
Adam Parker, a spokesman for NEXUS Gas Transmission, said the pipeline's status in Sandusky County generally involves land preparations at this time. 
He said that after more than three years of public and regulatory review, NEXUS has obtained all necessary authorizations and permits to begin construction and reached mutual agreements on easement with all affected landowners in Sandusky County. 
The pipeline has sparked opposition from hundreds of landowners along the route, including Kathy Schoen, a member of the No NEXUS Pipeline in Michigan & Ohio Facebook group. 
But Schoen, whose centennial family-owned 46-acre farm is in the pipeline's path, acknowledged Thursday that the pipeline appears to be a done deal.
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Latest Wayne National Forest Leasing Auction Lands with a Thud

From MDN:
The fifth auction by the federal Bureau of Land Management (BLM) of federally-owned acreage in Wayne National Forest (WNF) to allow shale drilling was, in a word, a bust. The first four auctions offered up a total of 2,396 acres in total, and sold for over $8 million (average of $3,354 signing bonus per acre). The fifth auction of two smaller parcels–39.6 acres in Monroe County, and 305.8 acres in Noble County–sold for a piddly $2 and $3 signing bonuses per acre, respectively. What in the world happened?
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Tuesday, April 10, 2018

ODNR Releases First New Utica and Marcellus Activity Maps in Two Months

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Permitting Slows to a Crawl in Utica Shale, But Rig Count Continues Rebound

New permits issued last week: 1  (Previous week: 6-5
Total horizontal permits issued: 2800  (Previous week: 2799+1
Total horizontal wells drilled: 2315  (Previous week: 2314+1
Total horizontal wells producing: 1882 (Previous week: 1871+11
Utica rig count: 24 (Previous week: 23)  +1

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Friday, April 6, 2018

EV Energy Partners Officially Files for Bankruptcy

From an EV Energy Partners press release:
On March 14, 2018, EV Energy Partners, L.P. (NASDAQ:EVEP) and its subsidiaries (collectively, “EVEP” or the “Company”) announced that the Company entered into a restructuring support agreement (“RSA”) with certain holders of approximately 70 percent of its 8.0% senior notes due 2019 (the “Senior Notes”) and lenders holding approximately 94 percent of the principal amount outstanding under the Company’s reserve-based lending facility on March 13, 2018. The RSA was also signed by EnerVest, Ltd. (“EnerVest”) and EnerVest Operating, L.L.C. (“EnerVest Operating”) as they will continue to provide services to the Company. In addition, the Company filed its Form 10-K for 2017 with the Securities and Exchange Commission.

The RSA contemplates a comprehensive restructuring of the Company’s capital structure, to be implemented through a proposed pre-packaged plan of reorganization (the “Plan”) that will significantly deleverage the Company’s balance sheet. In order to implement the terms of the RSA, the Company today filed voluntary petitions for restructuring under Chapter 11 of the Bankruptcy Code (“Chapter 11”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Neither EnerVest nor EnerVest Operating is seeking Chapter 11 bankruptcy relief. 
The Company commenced solicitation of the Plan on March 14, 2018. As of the March 30, 2018 voting deadline, each class of claims entitled to vote had voted to accept the Plan. 100 percent of the lenders under the Company’s reserve-based lending facility voted to accept the plan, and noteholders holding more than 99 percent in amount of Senior Notes that voted on the Plan voted to accept the Plan. The Plan, which is subject to confirmation by the Bankruptcy Court, contemplates the equitization of all of the Company’s Senior Notes and the entry into an amended reserve-based lending facility with the Company’s existing lenders. Additionally, the Plan contemplates that suppliers, customers and other holders of general unsecured claims will be paid in full in the ordinary course of business and otherwise be unimpaired. The Company does not plan to reject any of its existing contracts as part of the restructuring. 
The Company expects EnerVest Operating to continue as the primary operator for its oil and natural gas properties in the Barnett Shale, San Juan Basin, Appalachian Basin, Michigan, Central Texas, Permian Basin, Monroe Field and Karnes County, TX. 
EVEP has filed various customary motions with the Bankruptcy Court in support of its financial restructuring. The Company intends to continue to pay employee wages and provide healthcare and other defined benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms provided on or after the Chapter 11 filing date.

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Rex Energy's Financial Problems Continue to Mount as Company Can't Make Interest Payments

From NGI:
Rex Energy Corp. said in a regulatory filing this week it failed to make a semi-annual interest payment that was due on Monday (April 2) for its senior notes, necessitating a forbearance agreement with lenders to prevent the acceleration of other debt obligations. 
The company entered the forbearance agreement through April 16 with a lending group led by Angelo, Gordon & Co. It prevents the lenders from taking any enforcement actions, such as accelerating obligations under Rex’s $300 million credit agreement, which was violated by the interest payment default. 
Rex said it entered the forbearance to allow more time for talks with its lenders about financial alternatives that could strengthen its balance sheet, including the possibility of filing for bankruptcy to restructure. 
“There can be no assurance that the company will reach any agreement with any stakeholders on a financial restructuring of the company by the end of the forbearance period, if at all, or that the forbearance period will be extended,” the company said in a filing made late Tuesday with the U.S. Securities and Exchange Commission.
Read more of this article at NGI by clicking here.

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Utica Midstream Conference Gives Updates on Development in the Play

From The Canton Repository:
Ohio has produced more natural gas than it uses since early 2015. Driven by prolific Utica Shale wells, the state produced a record 1.7 trillion cubic feet of natural gas last year. 
Much of the regional economic development around that production has been in the form of pipelines and processing facilities. 
Two interstate natural gas pipelines — Energy Transfer’s Rover project and the NEXUS Gas Transmission pipeline — cross Stark and neighboring counties. 
Marathon Petroleum also has built or acquired assets in the region to supply its Canton refinery with liquids from Utica Shale wells 
Ohio’s industry boosters want to turn the state’s natural gas reserves into even more economic development, but are facing headwinds from Wall Street and Washington, D.C. 
Attendees of the fifth annual Utica Midstream conference on Wednesday heard updates on natural gas production, local pipeline projects and efforts to sell the Ohio River valley as the world’s next petrochemical hub. 
The Canton Regional Chamber of Commerce and presented the conference at Walsh University’s Barrette Center.
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Cyber Attack Impacts Rover Pipeline

From the Pittsburgh Post-Gazette:
A system that digitally processes customer transactions for a major pipeline network in the U.S. was shut down Monday after a cyber attack. 
The electronic data interchange provided by third-party Energy Services Group LLC for Energy Transfer Partners’s natural gas pipeline system was attacked Monday and will be hobbled until “further notice,” Energy Transfer said in a notice to shippers. 
The shutdown could affect a network of major pipelines owned by subsidiaries, including Panhandle Eastern Pipe Line Company, which owns lines from Michigan to Texas, Transwestern Pipeline Company and Rover Pipeline. The EDI system, designed to cut costs and boost speed, is used to conduct business through a computer-to-computer exchange of documents. 
Though it’s not clear who was responsible for the attack, it comes after U.S. officials warned in March that Russian hackers are conducting a broad assault on the nation’s electric grid and other targets. Last month, Atlanta’s municipal government was hobbled for several days by a ransomware attack.
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Blue Ridge Mountain Resources, Inc. Announces Recent Utica Well Results Delivered Through Development and Delineation Activities

Blue Ridge Mountain Resources press release:
Blue Ridge Mountain Resources, Inc. (“BRMR” or the “Company”) announced positive well results from newly completed Utica wells in Ohio.  
In December 2017, BRMR successfully completed two delineation wells in the Utica Retrograde window, located in Washington County, Ohio.  The Farley 1304 and 1306 wells were drilled in 2014 to average lateral lengths of 5,600 ft and completed in December 2017 utilizing the latest generation stimulation designs.  First sales from the wells commenced in late January, and, through controlled flowback, the wells have achieved a combined average production of 11 MMcf/d of gas, 660 bbl/d of condensate, and 760 bbl/d of NGLs assuming 35% ethane recovery at an average flowing tubing pressure of 3,500 psi.  The condensate yield of 60 bbl/MMcf is higher than the expected yield of 20 bbl/MMcf based on well results to the south.  
Based upon these initial well results, BRMR has successfully de-risked and high-graded approximately 6,700 net acres, unlocking potential development of 40-50 gross wells.  With the adjustment to a flat IP gas profile and improved deliverability realized, the Company’s projected half cycle rate of return for wells in the Utica Retrograde window improves from 10% to 30% at $3.00/mcf gas and $60/bbl oil pro forma for future 10,000 ft laterals.  Over the next few months the Company will continue to monitor performance and utilize analytical modeling to evaluate further upside to overall metrics in the area. 
BRMR also recently completed two dry gas Utica wells in southern Monroe County, Ohio.  The Ormet 11-15 and Ormet 7-15 wells were drilled to average lateral lengths of 5,450 ft and completed utilizing the latest generation stimulation designs.  First sales from the wells commenced in March 2018, and the wells are producing at an average rate of 18 MMcf/d of gas per well with flowing casing pressures of 7,200 psi.  These initial results are strongly outperforming the type curve estimates and the Company will be evaluating upside to the type curve area over the next few months. 
Total BRMR unconventional production has increased by 90% since January 2018 to approximately 100 MMcfe/d.  BRMR is currently completing a six well Marcellus pad in Tyler County, West Virginia, with first production anticipated in June.  In addition, BRMR is currently drilling seven additional Utica dry gas wells off of two pads in Monroe County, Ohio utilizing the Company’s two active drilling rigs, with production from these pads expected by the end of the year. 
John Reinhart, President and CEO of BRMR, commented, “We are very excited with the initial well performance of our latest Utica wells.  These results have been achieved by pairing up high quality acreage with an experienced operations team who can develop these resources to deliver optimum well performance.  Through our development and delineation activities, we continue to unlock the value of our largely undeveloped, consolidated acreage footprint in these areas.  Our Retrograde delineation efforts unlock value and well inventory to the Company that was previously risked and allow more optionality for inclusion of Utica condensate wells in our development planning.  Management looks forward to sharing the upside potential of our Utica acreage position with upcoming type curve improvement assessments based on the results of these new Utica wells.”

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Cabot Oil & Gas Prepares to Explore 100 Miles North of Utica Shale Play's Core

From the Ashland Times-Gazette:
Cabot Oil & Gas is getting ready to drill test wells in Ashland and surrounding counties in north-central Ohio.

“We’ve got a really neat group of geologists who think they see something in Ohio,” said George Stark, a Cabot spokesman based in Pittsburgh. “They see something, and we want to go touch it.”

Cabot is looking for natural gas and oil a hundred miles northwest of the Utica Shale play’s core in eastern Ohio.

The Houston-based company has filed paperwork with the Ohio Department of Natural Resources for two well pads in Ashland County, and plans to drill up to five test wells in an area that includes parts of Richland, Knox, Wayne and Holmes counties.

“You don’t want one test to be the smile face or the frown face,” Stark said. “You need more data.”
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Wednesday, April 4, 2018

Rig Count on the Rise for Second Straight Week in Utica Shale

New permits issued last week: 6  (Previous week: 14-8
Total horizontal permits issued: 2799  (Previous week: 2797+2
Total horizontal wells drilled: 2314  (Previous week: 2307+7
Total horizontal wells producing: 1871 (Previous week: 1870+1
Utica rig count: 23 (Previous week: 20)  +3

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