Tag Archives: Marcellus

FirstEnergy plans $35 million in upgrades for shale gas facilities | TribLIVE

FirstEnergy Corp. will spend $35 million over the next two years on several transmission and substation projects aimed at improving electrical service around Marcellus shale gas development.

The upgrades, which include a $31 million substation in Washington County to support a new gas processing facility, also will improve reliability for West Penn Power customers in the area, the utility’s Akron-based parent company said Monday. In addition to the substation, the company this spring will start $1 million worth of work on a transmission substation near Houston in Washington County, and next year will upgrade a 9-mile transmission line between Burgettstown and Weirton, W.Va.

via FirstEnergy plans $35 million in upgrades for shale gas facilities | TribLIVE.

Natural gas shale drillers in US undaunted by 32% price plunge

US natural gas production is poised to reach a record for a fifth year as shale drillers boost efficiency, driving prices toward a low of more than a decade.

Output will rise 3.2% in 2015, led by gains at the Marcellus formation, the nation’s biggest shale deposit, according to the Energy Information Administration. Marcellus production will increase 2.8% through February after a 21% gain in 2014, a year when prices tumbled 32%. Producers in Pennsylvania and West Virginia have cut break-even costs by half since 2008, according to Oppenheimer & Co.

Drilling more wells at one site and extending the length of horizontal wells are among the efficiencies that have helped gas companies cope with falling prices. The EIA expects Marcellus to climb to about 20% of production in the lower 48 states from about 2% in 2007. Cabot Oil & Gas Corp, the biggest Marcellus producer, plans to increase output by at least 20% this year.

“The Marcellus has been a game changer in terms of production, reserve potential, everything,” said Fadel Gheit, a senior energy analyst for Oppenheimer & Co in New York. “They are not waiting for higher gas prices to bail them out.”

Natural gas futures fell 2.1 cents to $2.579 per million British thermal units on Friday on the New York Mercantile Exchange, the lowest settlement since June 2012. Gas has declined 81% from a high in 2008 as production from shale formations increased, touching $1.907 in April 2012, the lowest since 2002.

Break-even prices for Marcellus producers have dropped below $2 per thousand cubic feet ($1.95 per million Btu) from around $4 in 2008, Gheit said in a February 3 interview.

US gas production growth was projected to slow to 1.4% last year, the least since a decline in 2005, the EIA said in December 2013. Instead, output jumped 5.6%.

via Natural gas shale drillers in US undaunted by 32% price plun...

Consol Energy announces trimmed capital budget

Following the trend of other oil and gas companies that have already announced their capital budgets for 2015, Cecil-based Consol Energy Inc. said it would spend $1 billion drilling for oil and gas this year, a drop from the $1.3 billion it spent last year.

Coal spending for the year is projected to be around $220 million, Consol said.

The oil, gas, and coal producer reported fourth-quarter earnings this morning, posting net income of $74 million, or 32 cents per share, for the fourth quarter of 2014. During the same time in 2013, Consol had a profit of $738 million, or $3.20 per share.

Revenue was $936 million, up from $825 million during the year before quarter.

Consol achieved and surpassed its goal of growing oil and gas production by 30 percent in 2014, a target it plans to reach again in 2015 and 2016.

via Consol Energy announces trimmed capital budget.

1 Great Way for Kinder Morgan to Grow Its Empire (KMI, MWE)

Kinder Morgan (NYSE: KMI  ) made big news during its recent earnings call when it announced the $3 billion acquisition of the Bakken midstream MLP Hiland Partners. This is in line with management’s stated goals of increased growth through acquisitions courtesy of Kinder’s $55 billion in tax breaks it will receive thanks to its recent merger with its MLPs.

With Kinder Morgan now clearly on the acquisition prowl, I’d like to point out one of my favorite midstream MLPs, one that analysts believe may be next up on the merger hit list.

The biggest reason Kinder Morgan might buy MarkWest Energy Partners

According to Jason Stevens at Morningstar, MarkWest Energy Partners (NYSE: MWE  ) might make a mouth-watering acquisition target.

via 1 Great Way for Kinder Morgan to Grow Its Empire (KMI, MWE).

Pipelines key to growth in shale industry | TribLIVE

Natural gas producers struggling with prices that recently hit two-year lows are increasingly looking to pipeline builders for relief.

They hope projects such as the Constitution Pipeline and Atlantic Sunrise being built by Tulsa-based Williams Cos. will ease a glut of gas in Appalachia by expanding how much fuel they can deliver to profitable markets.

“The infrastructure we build is a key ingredient to bringing reliability and price stability to growing markets in the Northeast and along the Eastern seaboard,” said Ryan Savage, vice president and general manager for Williams’ northeast gathering and processing business based in Findlay.

Savage, 39, who moved to Pittsburgh after stints in energy hotspots of Tulsa, Houston and New Mexico, will talk to other industry leaders Thursday at Hart Energy’s Marcellus-Utica Midstream conference at the David L. Lawrence Convention Center, Downtown. He’ll discuss opportunities for companies connected to the acquisition of pipeline firm Access Midstream Partners.

He gave the Tribune-Review some of his thoughts on how midstream companies are responding to increased shale gas production.

Trib: Tell us about the pressure that pipeline and midstream companies face from producers and potential consumers looking to ship gas out of the basin.

Savage: The shale revolution has generated huge infrastructure demands as the appetite for natural gas continues to grow for home heating, electric-power generation and industry. Our job is building and operating pipelines that connect the best basins with the best markets, thus satisfying the needs of the producers and the consumers. Our focus is making these connections in a timely, safe and cost-effective manner.

Trib: How has that pressure increased with the recent drop in gas prices?

Savage: Our commitment to providing natural gas infrastructure remains consistent regardless of short-term fluctuations in natural gas prices. Last winter, when temperatures in New York City fell into the single digits, natural gas delivered in the city spiked to a record $123 per thousand cubic feet on the spot market. Not far away, in Pennsylvania’s Marcellus shale area, the price was about $4. This isn’t a supply problem; it’s an infrastructure problem. And that’s bad for consumers, especially during peak-demand periods in the winter. Williams is helping solve this problem with a multibillion-dollar pipeline expansion program.

Trib: What has been the largest impediment to getting pipelines built?

Savage: The biggest challenge that is outside of our control is the permitting process, which can require long periods of time in order to (certify) new projects.

Trib: Do you expect to see more midstream companies in the future, fewer, or a steady roster?

Savage: I can tell you that Williams is focused on being big — No. 1 or No. 2 in our markets. As part of this strategy, Williams last year acquired Access Midstream Partners, a midstream company with a large presence in the Marcellus and Utica. We started out in the Marcellus and Utica shales with fewer than 200 employees — today we’re at almost 1,100 people in Pennsylvania, West Virginia, New York and Ohio.

via Pipelines key to growth in shale industry | TribLIVE.

Driller cuts back on new wells in Marcellus Shale – Pittsburgh Business Times

Add one more company to the rolls of natural gas firms that are cutting back in the wake of lower energy prices.

PennEnergy Resources LLC stopped drilling new wells in October, according to a report over the weekend in the Beaver County Times. Penn Energy has leases in Beaver, Butler and Armstrong counties.

via Driller cuts back on new wells in Marcellus Shale – Pittsburgh Business Times.

Magnum Hunter to significantly reduce capital expenditure | Shale Energy Insider

Independent oil and gas company, Magnum Hunter Resources, which is active in the Utica, Marcellus and Bakken shale gas plays, has said it is to cut capital spending on its projects, citing low commodity prices.

In a conference call last week, chief executive Gary Evans said the expectation was that natural gas prices were expected to remain low until at least the end of the year.

Evans said that the board will meet this week to discuss the fiscal plans for the year, but expects expenditure not to exceed $100 million.

He explained that “when you’re in a death spiral of prices in this business, you’re crazy to be spending money… we’re not spending any money right now.”

The company is set to produce the equivalent of between 30,000 and 35,000 barrels of oil per day in 2015.

via Magnum Hunter to significantly reduce capital expenditure | Shale Energy Insider.

Energy Transfer Eyes Texas, Appalachia Growth in Regency Merger, will become second-largest MLP in the United States

Energy Transfer Partners LP (ETP) and affiliate Regency Energy Partners LP on Monday agreed to merge in a transaction estimated to be worth $18 billion, creating one of the largest master limited partnerships (MLP) with operations in nearly all major producing areas of the United States.

Set to close by the end of June, the transaction includes a one-time cash payment to Regency unitholders and $6.8 billion in debt and liabilities. The combination would create the second-largest MLP in the United States after Kinder Morgan Energy Partners LP.

“ETP and Regency expect to capitalize on the full breadth of the combined gathering and processing platforms in several prolific producing regions, including the Permian Basin and Eagle Ford Shale,” management said. ETP altogether controls about 35,000 miles of natural gas and natural gas liquids (NGL) pipelines.

Among the benefits of the Regency merger “is the likelihood” of further NGL volume growth in Texas for their joint venture, Lone Star NGL LLC, which is expanding volumes into ETP’s intrastate pipeline system (see Daily GPI, Nov. 17, 2014).

Appalachia business also is seen benefiting with the merger, where Regency’s growing operations are seen as a complement to ETP’s 3.25 Bcf/d Rover pipeline now under construction (see Shale Daily, Oct. 31, 2014; Oct. 11, 2013).

“The presence of ETP and Regency in these shales will also be complemented by the significant activity of Sunoco Logistics Partners LP, another member of the Energy Transfer family, as it builds on its asset base in that area,” ETP management noted. ETP purchased Sunoco in 2012 (see Shale Daily, May 1, 2012). “Overall, ETP intends to become a major player in the Marcellus and Utica shales,” and said the Regency merger positions it to achieve that goal in the near term.

For Regency, the deal provides more financial assurance in uncertain times.

via Energy Transfer Eyes Texas, Appalachia Growth in Regency Merger | 2015-01-26 | Natural Gas Intelligence.

Crowdsourcing the shale | eaglefordtexas.com – Anya Litvak

Oil and gas companies may have the money to pay research analysts for quality data, but public interests have the numbers on their side.Several crowdsourcing efforts have sprung up to generate, hone or analyze data about shale gas development in Pennsylvania, and they all rely on volunteers to contribute time and knowledge.As more people participate, the information, whether it’s about environmental impacts, traffic counts or lease terms, gets refined, and a broader picture emerges — one that is available to the public for free.SkyTruth’s FrackFinderSince 2002, SkyTruth, a West Virginia-based nonprofit, has been using the copious amounts of publicly available aerial and satellite images collected as frequently as twice a day from every point on earth to diagnose and chronicle environmental concerns. It has tracked landscapes that are changing because of strip mining coal, oil spills and natural gas flares in shale fields.In FrackFinder, a project launched last year, SkyTruth wrote an algorithm to parse through data from state regulatory agencies in Pennsylvania and Ohio and developed a tool that would enable volunteers to easily identify well pads and frack ponds, which are giant man-made lagoons where oil and gas companies keep either freshwater or wastewater from drilling and fracking. SkyTruth then engaged volunteers to go through aerial images of these sites.Another effort, Project Dart Frog required seven out of 10 people to agree that an object was a frack pond before it would be considered as a candidate and verified internally.A few hundred volunteers scanned the images and what emerged was a map of 529 ponds in 2013, showing an increase from just 11 such impoundments in Pennsylvania in 2005. It also showed the ballooning size of such ponds over the years.The findings, released in October, already are being used by researchers at Johns Hopkins University who are studying the health impacts of living close to shale gas development sites.SkyTruth calls its FrackFinder approach “‘armchair citizen science’ that you can do from the comfort of your own home.”

via Crowdsourcing the shale | eaglefordtexas.com.

Forced pooling policies remain unclear in Pennsylvania’s shale plays – Powersource

The first modern test case of a controversial section of Pennsylvania’s dusty Oil and Gas Conservation Law ended with a fizzle in 2014 when the drilling company that sought to use it withdrew its application.

Hilcorp Energy Co. wanted to use the “forced pooling” provisions of the law to drill and hydraulically fracture the Utica Shale beneath property in northwestern Pennsylvania where a fraction of the property owners had refused to lease their drilling rights.

Observers had hoped the case would clear up critical questions about how the 53-year-old law applies to gas production from the Utica Shale, but the application didn’t get far enough to answer many of them.

The 1961 law is designed to limit excessive drilling and stranded gas by divvying up the land into orderly blocks based on how much area can be drained by a well. It applies only to wells drilled through the Onondaga Horizon, a geologic layer sandwiched between the Marcellus and Utica shales, so it doesn’t factor in Marcellus operations.

Under the Conservation Law, a company must take several steps if it wants to extract gas from properties that have been leased to another operator or not leased at all. The first step — the one Hilcorp took — is to apply to the Department of Environmental Protection for a well spacing order that will define the discrete pool of gas and the fewest number of wells needed to drain it most efficiently.

This first issue is more geological than political. Hilcorp’s spacing order hearing would have featured geologists, petroleum engineers and an energy economist, among other experts, to determine the extractable limits of 3,267 acres of gas-bound Utica Shale in Lawrence and Mercer counties known as the Pulaski Accumulation.

Only after the spacing units are set can a company or mineral owner within the unit apply for an integration order — a separate step, with a separate hearing, that allows for incorporating unwilling landowners into the unit and setting the terms for compensating them.

Hilcorp had not reached that controversial stage when it withdrew its application, but the company made no secret that it was heading in that direction and dread of forced pooling drove much of the public backlash against the proposal.