Friday, September 13, 2019

NEXUS Pipeline Ruling Could Have Broader Implications

From NGI:
While unsuccessful in their request for rehearing at FERC and before a U.S. district court, Oberlin, a small college city in northern Ohio, and landowners in the state that formed the Coalition to Reroute Nexus, won what ClearView Energy Partners LLC called a “precedential opinion” last week before the DC Circuit in the case City of Oberlin, Ohio v. Federal Energy Regulatory Commission, No. 18-1248. 
Nexus secured precedent agreements with eight different entities for 825,000 Dth/d, or just 59% of the pipeline’s capacity. Two of the agreements were signed with Canadian companies serving customers in Canada, according to court documents. 
Without the foreign agreements, the DC Circuit noted that only 42% of the project would have been subscribed. “…Because the Commission never considered whether the public benefits of the Nexus pipeline would outweigh its adverse impacts if it were only subscribed for 625,000 Dth/d, we may affirm its finding of public convenience and necessity only if the Commission’s inclusion of the export precedent agreements in its analysis was proper,” the court said. 
But the panel of judges said the Commission failed to explain during oral arguments and in other proceedings why it is lawful to credit demand for export capacity in issuing a certificate. In order to receive a certificate approval under the Natural Gas Act (NGA), a developer must show that its project is in the public interest and meets unserved market demand.
Read more by clicking here. 

Thursday, September 12, 2019

Under New CEO Toby Rice, EQT Lays Off Almost 25% of Workforce

From the Pittsburgh Post-Gazette:
Nearly 200 employees of EQT Corp. were cut from “Team EQT” on Tuesday as part of an effort to “transform EQT into a modern, technology-driven and efficient natural gas producer.” 
The Downtown-based oil and gas company, fresh off a shareholder coup that installed Toby Rice as the CEO and replaced nearly all the senior managers with former Rice Energy Inc. executives, sent a letter to its 850 or so employees Tuesday morning saying the layoffs are “difficult but necessary.” 
Mr. Rice, who came to power at EQT on the campaign promise of better planning, warmer relationships with stakeholders, and the ability to track everything at the company through a real-time digital lens, wrote to employees that EQT’s new, slimmed-down structure will “better challenge, empower and support [remaining] employees.” 
EQT bought Rice Energy in 2017, making it the biggest natural gas producer in the U.S. and making Mr. Rice and his family, who founded Rice Energy, large shareholders of EQT.
Click here to read the rest of the article. 

ODNR Looking for Contractors to Plug Old Wells

From the Akron Beacon Journal:
The state has millions of dollars to spend on plugging old and potentially hazardous oil and natural gas wells. Now, it’s looking for more contractors to do the work. 
Prolific shale wells and a change in state law have boosted the Ohio Department of Natural Resources fund for plugging so-called orphan wells. 
The orphan well program has nearly $25 million this fiscal year — $10 million more than the previous year — and is looking to have $28.1 million next fiscal year. 
“We’ve got a lot of money to spend, and we want to plug a lot of wells,” Rick Simmers, chief of ODNR’s Division of Oil and Gas, told a group of plugging contractors Wednesday during a meeting at Portage Lakes State Park. 
“We need more contractors,” Simmers said.
Read on by clicking right here. 

Wednesday, September 11, 2019

FirstEnergy Going All Out to Stop Nuclear Bailout From Being Overturned

After Ohio lawmakers passed a measure requiring electric customers in the state to pay for a massive bailout which would prop up dying FirstEnergy power plants, the company has taken steps to fight back against efforts to pass a referendum which would overturn the controversial law.

Part of the company's effort is a $1 million scare ad campaign that a front group for FirstEnergy named Ohioans for Energy Security is running, which makes the rather bizarre allegation that the natural gas plants poised to take up the slack for electric generation in the state if the referendum is successful are backed by China, and thus Ohio's electric grid would be controlled by China if the law is repealed.

Here is the ad:

Not surprisingly, The Columbus Dispatch investigated these claims and did not find substance to them:
LoParo sent along items from Power Finance & Risk, a website covering the power industry in the Americas. One, from Jan. 30, was related to financing for a project to build a natural-gas-powered generating facility in Lordstown by Macquarie Infrastructure Partners, Siemens Financial Services and Clean Energy Future. That last company is significant because the man who runs it, Bill Siderewicz, also is involved with the anti-bailout effort, Ohioans Against Corporate Bailouts. 
The news item said that a $534.4 million loan for the project was being put together by a group of banks led by Credit Agricole of France and the Industrial and Commercial Bank of China, which is controlled by the state. LoParo said he didn’t know how much of the Chinese bank’s money was going into the project. 
But that project was cancelled. As The Dispatch reported last week, Siderewicz pulled the plug on the project because of the passage of the nuclear bailout. 
It’s still the case that some Siderewicz gas-generation projects in Ohio have been financed in part by the Chinese bank. But there’s an important difference between financing a project and investing in one. In the first instance, the bank acts a lender. In the second, the company becomes part owner. 
In any case, LoParo didn’t provide The Dispatch with any evidence that the Chinese government intends to play a role in a possible repeal of House Bill 6. 
“It’s a ridiculously wrong statement to distract voters from the penalties this bill (will inflict) on Ohio consumers,” said Gene Pierce, spokesman for Ohioans Against Corporate Bailouts.
In an interesting example of hypocrisy, FirstEnergy has received financing from this exact same Chinese bank on other projects.

The group behind the ad also lobbied for the passage of the bailout, and also worked on the campaign for state Attorney General Dave Yost (who launched his own action against the referendum by rejecting the measure because of what he stated were errors and imprecise language).

The Energy and Policy Institute, an anti-fossil fuel organization, took a long look at Ohioans for Energy Security and followed the money to find out who is really behind the group.  Beyond the links to FirstEnergy, the investigation also found ties to coal magnate Robert Murray and his company, Murray Energy.  Murray has already been vocal in his opposition to the bailout referendum.

Click here to read about the investigation by The Energy and Policy Institute.

Now FirstEnergy is taking the fight to the Ohio Supreme Court.

From The Columbus Dispatch:
Last month, it was scary television commercials telling voters that they could avoid a Chinese takeover of power generation in Ohio by not signing petition forms for a ballot initiative. 
Now, FirstEnergy Solutions is asking the Ohio Supreme Court to block the referendum petition drive, which seeks to overturn a $1 billion bailout of the utility’s Ohio nuclear power plants that the state legislature and Gov. Mike DeWine approved in July. 
The filing Wednesday contends that an increase charged to all Ohio electricity ratepayers to fund the bailout constitutes a tax, and the Ohio Constitution bars a public vote on a tax increase. 
The constitution says “laws providing for tax levies ... shall go into immediate effect. ... The laws mentioned in this section shall not be subject to the referendum,” says the court action filed by Columbus attorney John Zeiger.
This argument is very interesting, because proponents of the bailout were very adamant during the process of getting it passed about stating that it was not a tax.  Now that it is passed, they are doubling back on that and saying that it is in an effort to keep it in effect.

Click here to read that whole article.

Construction Set to Begin on Massive $1.6 Billion Gas-Fired Power Plant in Guernsey County

From The Daily Jeffersonian:
Caithness Energy announced that it has successfully closed a $1.6 billion financing for the construction of a fully-permitted 1,875 megawatt combined-cycle natural gas electric generating facility located in Guernsey County.

The financing for the Guernsey Power Station clears the way for the project to move forward to construction.

The proposed facility south of Byesville that will produce enough electricity to power nearly 1.5 million homes.

“Caithness is proud to deliver this state-of-the-art electric generating solution for cleaner, more efficient power into the PJM Market,” said Ross Ain, Caithness Energy president. “Our energy design is cleaner, providing maximum power with minimal impact on the surrounding environment with a dry cooling system that reduces water use by 95 percent compared to traditional facilities.

“We have worked closely with our partners, suppliers and contractors to complete financing and begin construction of this important project. The local community will benefit from up to 1,000 jobs at peak construction and approximately 30 permanent high-tech jobs, all while providing vital funds committed to the Rolling Hills School District that will enable a major school infrastructure construction project.”
Click here to continue reading this article. 

September Utica and Marcellus Shale Activity Maps Published by ODNR

Utica Wells in Production Figure Jumps by 51 on Latest ODNR Report

WEEK ENDING 08/31/19

New permits issued last week: 6 (Previous week: 15)  -9
Total horizontal permits issued: 3157 (Previous week: 3157 +-0
Total horizontal wells drilled: 2690 (Previous week: 2684)  +6
Total horizontal wells producing: 2317 (Previous week: 2266)  +51
Utica rig count: 14 (Previous week: 12)  +2

Wednesday, September 4, 2019

OOGEEP Enlightens Ohio Teachers on the Oil and Gas Industry

From Cleveland Patch:
Thanks to the Ohio Oil and Gas Energy Education Program (OOGEEP), teachers from 42 Ohio counties are heading back to their classrooms with an insider's look into Ohio's thriving natural gas and oil industry. Equipped with a first-class curriculum, classroom supplies, science labs and experiments, materials kits and more, teachers who attended OOGEEP's STEM and Geology Teacher Workshops are more prepared than ever to bring energy education to Ohio's students. 
Charlene Hopkins-Bey, a teacher at Miles Elementary in Cleveland Metropolitan School District, participated in the STEM workshop held in Marietta. 
OOGEEP holds teacher workshops throughout the year to help foster energy education by connecting STEM and geology education and the energy industry. The curricula for both of OOGEEP's workshops were designed by teachers, for teachers, to be integrated directly into Ohio's educational standards. Teachers spend a full day in the classroom learning from industry professionals and award-winning educators alike before heading out on a unique, industry-related field trip to see Ohio's energy development in action.
Click here to continue reading. 

ODNR Releases 2019 Utica Shale 2nd Quarter Production Data

From the Ohio Department of Natural Resources:
During the second quarter of 2019, Ohio's horizontal shale wells produced 5,813,755 barrels of oil and 614,218,362 Mcf (614 billion cubic feet) of natural gas, according to the figures released today by the Ohio Department of Natural Resources (ODNR). 
Compared to a year ago, oil production increased by 29.54% and natural gas production showed a 10.81% increase over the second quarter of 2018. 

The ODNR quarterly report lists 2,365 horizontal shale wells, 2,317 of which reported oil and natural gas production during the quarter. Of the wells reporting oil and natural gas results: 
  • The average amount of oil produced was 2,509 barrels.
  • The average amount of natural gas produced was 265,092 Mcf.
  • The average number of second quarter days in production was 86.
All horizontal production reports can be accessed at
Click here to read the whole release.

Click here to download the spreadsheet containing full all of the quarter 2 data. 

Op-ed Attacks Ohio's First Energy Nuclear Plant Bailout

From the Toledo Blade comes an op-ed by Leah Vukmir, Vice President of the National Taxpayers Union:
It was disappointing to see the Ohio legislature cave to special interest pressure with the passage of the “Ohio Clean Air Program” or House Bill 6, a massive bailout for FirstEnergy Solutions and its failing nuclear power plants. 
FES has maintained that their Ohio plants Davis-Besse and Perry are unprofitable and need assistance from the government to remain operational. Despite these claims, the company did not provide documents to show their financial well-being and fought an amendment requiring FES to open its financial books to prove they’re unprofitable. If a company is unwilling to be transparent it is safe to assume their intentions are not in consumers’ interests. 
Instead of making a compelling argument, FirstEnergy defaulted to crony capitalism and rolled out a misleading public relations campaign. Ohio residents received glossy mailers urging them to contact their senators to support H.B. 6.
Read on by clicking right here. 

Utica Rig Count Takes a Dive on Latest ODNR Report

WEEK ENDING 08/31/19

New permits issued last week: 15 (Previous week: 8)  +7
Total horizontal permits issued: 3157 (Previous week: 3148 +9
Total horizontal wells drilled: 2684 (Previous week: 2678)  +6
Total horizontal wells producing: 2266 (Previous week: 2262)  +4
Utica rig count: 12 (Previous week: 16)  -4

Diversified Acquires Ohio Utica Assets from EdgeMarc

From a press release:
Diversified Gas & Oil PLC (AIM: DGOC), the U.S. based owner and operator of natural gas, natural gas liquids, and oil wells as well as midstream assets, is pleased to announce that the asset purchase agreement with EdgeMarc Energy Holdings, LLC, and certain of its subsidiaries, ("EdgeMarc" or the "Seller") as announced on 25 July 2019 (the "Acquisition") has been approved by the Seller and the United States Bankruptcy Court. Accordingly, subject to satisfaction of certain remaining closing conditions, DGO will acquire EdgeMarc's natural gas development, production and exploration assets for a total cash consideration of $50 million (subject to customary purchase price adjustments). The assets to be acquired include 12 gross producing unconventional Utica natural gas wells and related facilities (the "Assets") in Monroe and Washington counties within the State of Ohio, as well as certain undeveloped lands containing deep Utica rights.

Acquisition Highlights:

· Current production (~99% gas) of approximately 46 MMcfe per day (~7.7 MBoepd)1
· Purchase price represents a multiple of less than 3x projected cash flow
· Proved-Developed-Producing ("PDP") reserves of approximately 13.5 MMBoe valued at approximately $58 million on a PV10 basis2 (unhedged)
· Purchase price (gross) equates to an approximate PV14 value on only the PDP reserves
· Low Base LOE4 of $1.56/Boe ($0.26/Mcfe), which is 59% lower than DGO's consolidated rate at 30 June 2019
· No incremental administrative expense required
· Production has direct access to multiple interstate pipelines with the potential for higher realised pricing
· High average working interest and net revenue interests approximating 99% and 79%, respectively
· Wells require no near-term maintenance capital expenditures
· Three Drilled-and-Uncompleted ("DUC") wells valued at approximately $14 million in aggregate on a PV10 basis2, net of future completion costs3 - DGO has allocated no purchase price value to the DUCs and will explore monetisation options to effectively further reduce the net purchase price of the PDP reserves
· DGO to acquire EdgeMarc's 2019 and 2020 natural gas financial hedge book for additional consideration of approximately $2.0 million
· Acquisition consideration to be funded from existing debt facilities resulting in net debt-to-Adjusted EBITDA of approximately 2.1x
· Target completion date of mid-September with an effective date of 1 August 2019
Read the entire release by clicking here. 

Bernie Sanders Wants to Prosecute Oil and Natural Gas Companies, But Doesn't Know What Laws They Violated

by William Allison, Energy in Depth

2020 Democratic presidential candidate Bernie Sanders is out with yet another climate proposal, this time to prosecute fossil fuel executives for causing climate change. In a tweet, the Vermont senator laid out his plan to go after certain energy companies:
Fossil fuel executives should be criminally prosecuted for the destruction they have knowingly caused.
17.7K people are talking about this
The attack continues on his campaign website:
“Bernie promises to go further than any other presidential candidate in history to end the fossil fuel industry’s greed, including by making the industry pay for its pollution and prosecuting it for the damage it has caused.”
The problem? Sanders didn’t explain what laws these companies have broken. Spoiler alert: Providing affordable, reliable energy isn’t a crime anywhere, least of all in the United States.
But because Sanders personally doesn’t like what these companies do, he believes they should be taken to court.
To achieve this, Sanders would direct the U.S. Department of Justice and Securities and Exchange Commission to pursue criminal and civil charges. This sets a dangerous precedent of the President of the United States directing independent law enforcement organizations that are traditionally outside the scope of partisan politics to target companies based on the personal preferences of elected leaders.
News flash: that’s not how democracy works. And that’s not how our justice system works.
Walter Olson, a senior fellow at the Cato Institute, critiqued Sanders’ blatant misrepresentation of conspiracies and illegal actions:
It seems to be widely believed in the land of that not only were doctrines of civil liability changed retroactively in the 1990s to nail tobacco companies (which is true) but that criminal law was changed retroactively as well, and tobacco execs sent to prison.
Another common belief in the land of is that there is a general criminal law against "conspiracy" that floats free of any need to establish the illegality of the planned actions.
See Walter Olson's other Tweets
Sanders’ latest proposal hasn’t only faced criticism from conservatives, but also liberals who lament it as “designed to fail.”
Mother Jones columnist Kevin Drum gave the plan a “D-” and said:
“If you’re going to propose a massive, $16 trillion plan, the first thing you should do is get as many people on board as possible. Instead, Sanders practically revels in pissing off as many stakeholders as possible. He’s going to tax the rich. He’s going to hobble the fossil fuel industry. He’s going to ban nuclear power. He’s going to nationalize electric generation and turn it over to the federal government.” (emphasis added)
Even those who oppose fossil fuels acknowledged that Sanders’ plan doesn’t have a leg to stand on. Leah Stokes, an assistant professor of environmental politics at the University of California at Santa Barbara said:
I don’t think he can back it up with the law. But the fossil fuel industry does need to wake up, and his rhetoric is helpful in that regard.” (emphasis added)
The Washington Post editorial board also rejected Sander’s plan that “elicited eye rolls.”
Their editorial said:
“We do not know, precisely, what the most efficient path looks like. We are also certain that Mr. Sanders does not.”

Serious solutions are needed to keep the American economy strong while making progress to protect the environment. It’s clear that Sanders does not offer that. Instead he seems intent on releasing unrealistic proposals, making up the law as he goes along, to prosecute those he doesn’t like. That’s a dangerous threat to the American economy and our democratic and judicial systems.

President Trump's Trade War Begins to Wear on the Oil Industry

From Forbes:
President Donald Trump has done much to support the U.S. oil and gas industry since moving into the White House in 2017, but his approach to trade policy threatens to undo much of the good. 
Trump escalated the trade war with China when he announced tariffs on an additional $300 billion worth of imports earlier this month. Beijing retaliated this past week with new tariffs on $75 billion worth of U.S. goods, including a 5 percent tariff on crude oil imports beginning September 1. 
China, which is the world's fastest-growing energy market, now has tariffs on U.S. oil, liquefied natural gas (LNG) and liquefied petroleum gas (LPG), which includes fuels like propane and butane. 
The trade war has now effectively cut off the U.S., the world's top oil and gas producer, from the most coveted market in the world for energy suppliers.
Read the rest of the article by clicking here. 

US Shale Industry Credited with Driving 10% of US GDP Growth

by Jack Anderson, Energy in Depth

The shale industry alone drove 10 percent of the growth in the U.S. economy’s gross domestic product from 2010 to 2015, according to a new study by the Federal Reserve Bank of Dallas showing how oil and natural gas deliver wins for the larger economy.
During the same years, crude oil production jumped from 5.5 million barrels per day (bpd) to 9.4 million bpd, notes the Journal of Petroleum Technology. This surge in output brought massive economic benefits to regions experiencing shale industry growth, and spread economic benefits throughout much of the country:
“As the shale boom flooded the market with light crude, oil and oil-product prices declined, refiners took in as much domestically produced light oil as they could, and oil imports declined nearly 2 million B/D. Fuel prices in the US and abroad fell 14% as consumers benefited from free trade in refined products…”
As the following graphic from the Dallas Fed shows, the shale industry grew rapidly from 2010 to 2015, and since then its output has risen to new heights. Altogether, the United States produces more than 12.2 million bpd of crude oil alone, largely from shale basins. As a result, the Dallas Fed concluded that a “decline in [oil] imports generated a major improvement in the trade balance for oil, amounting to about 1 percent of GDP.”
The shale revolution has also driven tremendous growth in American natural gas production leading the International Energy Agency to forecast that within a few years, the United States will become the world’s top liquefied natural gas exporter. America is already a net exporter of natural gas, a sharp turnaround from many years of being one of the world’s top importers.
Reporting on the Dallas Fed’s research, the Journal of Petroleum Technology notes that increased domestic shale oil and natural gas production led to lower energy prices for U.S. consumers, who in turn used their cost savings to increase other types of consumption spending by 0.7 percent , and households were able to consume 3.6 percent more fuel because its price dropped so precipitously. Additionally, the JPT found, “Not only did households benefit from having more disposable income due to lower fuel prices, but industries were able to boost their output of non-oil-related goods and US aggregate investment rose.”
States with the highest shale production also enjoyed massive employment growth. For example, the Dallas Fed calculated that North Dakota experienced annual job growth of 5.3 percent and Texas employment rose 3 percent from 2011 to 2014, beating the U.S. average of just 1.7 percent during that time span. Other states, such as West Virginia and New Mexico, have experienced tangible economic benefits as well.
The Dallas Fed concludes its study by putting the results of the shale revolution in context:
“Given that the actual increase in U.S. GDP was 10 percent over the [2010 – 2015] period, the shale boom accounted for one-tenth of the overall increase. Although the oil sector makes up less than 1.5 percent of the economy, our results suggest that the shale boom generated significant positive spillovers.”
The positive spillovers are all but certainly continuing, and likely growing, benefiting the U.S. economy even more. In 2018, the United States became the world’s top producer of oil and gas, an achievement that would not have been possible without the development of shale energy resources.
There are already strong signs that the shale industry’s economic engine is continuing to accelerate. In 2018, oil and gas extraction contributed $218 billion to the U.S. economy, according to the National Bureau of Economic Research. Meanwhile, the United States has achieved massive reductions in greenhouse gas emissions, largely thanks to the rising use of natural gas, replacing other fuels that cause greater emissions. The rising use of natural gas to power the U.S. electrical grid has helped America become a global leader in emissions reductions among all developed economies.

NEXUS Pipeline Upgrade in Green Brings Blowback

From the Akron Beacon Journal:
An $8.5 million project to replace a half-mile of the Nexus pipeline is fueling criticism even before an excavator breaks ground at the Green site. 
Enbridge, the company that owns and operates the natural gas line, notified Green officials last week it would replace pipeline in the section less than a year after the gas began flowing. The project is expected to begin by Oct. 1. 
The pipeline was completed last year despite ardent opposition from opponents in Green and other areas along its 255-mile route. A Medina County-based group, for instance, claimed in April that emissions at the Nexus Wadsworth Compressor Station were harmful to public health. 
Enbridge and Ohio Environmental Protection Agency officials denied the allegations and said the station was operating according to acceptable standards. Sustainable Medina County said, however, that it would continue to monitor the station. 
Green Councilman Steve Dyer, a vocal opponent of the pipeline and a critic of the city’s $7 million settlement with Enbridge, said recent events have stoked his fears after hearing of the company’s plans in Green.
Click here to read more.