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Several large natural gas interstate pipeline projects have come online in recent years to support the shifting geography of domestic natural gas production. The Marcellus and Utica shale plays in the Northeast, where production has grown and resources are abundant, are major drivers for pipeline development. In 2016, the Federal Energy Regulatory Commission (FERC) certificated 17.6 billion cubic feet per day (Bcf/d) of new natural gas pipeline capacity. So far in 2017, FERC certificated more than 7 Bcf/d of new pipeline capacity before losing its quorum following the departure of one commissioner in February, which left just two sitting commissioners and three vacant seats.FERC oversees the interstate transmission of natural gas, which includes the regulation of interstate transportation rates and services for natural gas pipelines, natural gas pipeline construction, and related pipeline environmental matters. Pipeline certification involves reviewing applications for the construction and operation of natural gas pipelines and ensuring that applicants comply with safety standards.Receiving a certificate is just one step in the process of building and operating a new pipeline; pipelines receiving certification in 2017 will not necessarily come online in 2017.The seven projects certificated during the first few weeks of 2017 include more than 1,500 miles of natural gas pipeline construction and expansions, involving combined additions of more than 7 Bcf/d of capacity. The pipeline projects are concentrated in the eastern half of the United States to improve access to markets for growing eastern natural gas production, and they have projected 2017 and 2018 in-service dates.
Cheniere Midstream Holdings is looking to build a 200-mile pipeline that would move 1.4 billion cubic feet of natural gas from Okarche to Bennington.This includes three compressor stations, with one in Bryan County and in Garvin county.”Right now we’re estimating it could be up to a $1 billion project that could potentially bring up to 1,000 jobs during production.” Director of Government and Public Affairs for Cheniere Midstreams said.
The correction in U.S. natural gas production has finally arrived. Volumes are down close to 5% since peaking in late 2015, driven by declines in associated gas and higher-cost legacy areas as well as ongoing curtailments and pipeline constraints across the Northeast United States. Natural gas prices have rallied as a result, with 2017 Henry Hub futures increasing almost 15%, to an average of $3 per thousand cubic feet.
The appointment of Oklahoma Attorney General Scott Pruitt to head the Environmental Protection Agency (EPA) reveals that President-elect Trump is dead serious about his campaign promises to rein in environmental regulations and revive the coal industry. Pruitt is a vocal critic of the EPA’s Clean Power Plan (CPP), which seeks to cut carbon dioxide emissions from power plants, and he has threatened to dismantle CPP to end the “war on coal.”AuthorsDDevashree SahaSenior Policy Associate and Associate Fellow – Metropolitan Policy ProgramSSifan LiuResearch Assistant – Metropolitan Policy ProgramHowever, the war on coal is a false narrative that oversimplifies what is happening in the energy economy. In blaming environmental regulations under the Obama administration as the sole reason for the recent turmoil in the coal industry, Trump and Pruitt are ignoring fundamental market realities that are buffeting the industry.
DENVER, July 14, 2016 /PRNewswire/ — Antero Resources (NYSE: AR) (“Antero” or the “Company”) today provided its second quarter 2016 operations update.
U.S. natural gas prices have risen by a third since hitting a two-decade low in the first quarter, amid signs supply and demand are rebalancing and excess stocks left over from an unusually warm winter are being worked down.The volume of gas in working storage hit a record 4.01 trillion cubic feet in November 2015 and is still at 3.18 trillion cubic feet, according to the U.S. Energy Information Administration (tmsnrt.rs/29AF787).Gas stocks are 513 billion cubic feet (19 percent) higher than in the same week in 2015. But the build has shrunk steadily from a record 1.014 trillion cubic feet (69 percent) in March (tmsnrt.rs/29tgsGw).In response to the earlier slide in prices, the number of rigs drilling for oil and gas across the United States has fallen to the lowest level since World War Two.By the start of June 2016, there were just 82 rigs drilling for gas, down from over 300 in June 2014, according to services company Baker Hughes.Output from the unusually productive wells drilled into the Marcellus and Utica shale formations underneath Pennsylvania and Ohio has continued to increase.But output from older gas-producing states including Texas, Louisiana and Oklahoma has fallen sharply as drilling activity has dried up.For the United States as a whole, there are no longer enough new oil and gas wells being drilled to replace declining gas output from old wells.
Houston-based Enterprise Products Partners LP (NYSE: EPD) continues to expand its natural gas footprint as natural gas production and piping continues to grow in the U.S.The midstream energy company announced June 20 it plans to build a cryogenic natural gas processing facility — its third facility announced in less than 24 months — as well as additional natural gas and natural gas liquids pipelines. Enterprise’s target: the NGL-rich Delaware Basin in West Texas and southeastern New Mexico. The facility’s site hasn’t been determined, but the plant is expected to have a nameplate capacity of 300 million cubic feet per day and extract more than 40,000 barrels of NGL daily. The facility is expected to start up in the second quarter of 2018.The project also includes building rich natural gas gathering lines, a residue pipeline to Texas’ Waha oil field and an NGL pipeline to Enterprise’s Mid-America Pipeline system, all of which will integrate with Enterprise’s Delaware Basin infrastructure.“The South Eddy facility began operations earlier this year, while our joint venture processing plant at Waha is expected to begin service in the third quarter of 2016,” A.J. “Jim” Teague, CEO of Enterprise’s general partner, said in the company’s statement. “Altogether, these initiatives are expected to increase our processing capacity in the Delaware Basin to 800 MMcf/d, compared to 40 MMcf/d in 2012.”Enterprise is the fourth-largest Houston-based public company, based on its $47.95 billion in revenue in 2014, according to Houston Business Journal research. It reported nearly $27.03 billion in revenue for 2015.
Due to the continuous buildup in natural gas (UNG) (UGAZ) inventories in the US, natural gas prices have been in a steep downtrend. Higher production levels from natural gas producers and weak demand during the recent mild winter have dragged down natural gas prices even further.Meanwhile, the lower-for-longer trend in natural gas prices we’ve seen in the past two years has driven natural gas to decline by ~72% and has taken its toll on producers. Remember, when natural gas prices are in decline, cash margins for natural gas producers feel the burn.
A partnership controlled by Marathon Petroleum Corp., a refinery and pipeline company, will buy MarkWest Energy Partners LP for $15.8 billion in one of the biggest oil-patch deals since crude prices began to slump last summer.
The deal will marry Marathon’s oil pipeline network with MarkWest’s business separating natural gas into fuels such as propane and ethane.
The combined company would have a market capitalization of $21 billion, making it the fourth-largest master limited partnership. These partnerships, which typically own infrastructure like pipelines that earn steady revenue from long- term contracts, have fared better than traditional drilling companies during the energy downturn but still have faced headwinds.
Shares of MPLX closed 15% lower to $59, while shares of MarkWest rose nearly 14% to $68. Shares of Marathon Petroleum Corp. rose 7.9%.
The deal is the latest consolidation between energy partnerships, which don’t pay corporate income taxes but distribute their available cash to shareholders. The need to keep these hefty payouts growing means the partnerships are always looking to expand.
Gary R. Heminger, Marathon’s chief executive, said the deal would allow the partnership to boost its annual distribution by 25% through 2017.
“The combination significantly increases our size, scale and the opportunity to grow over a very long period of time,” Mr. Heminger told analysts during a conference call on Monday.
Refiners have been among the newest energy companies to form these partnerships. Marathon Petroleum, of Findlay, Ohio, owns refineries in Texas, Louisiana, and throughout the Midwest. It launched MPLX in 2012 to own and operate pipelines and other fuel transportation assets.
But recently, refiner-backed partnerships have started to branch out beyond their parent companies—and beyond oil. Last year, a partnership controlled by Tesoro Corp., the refiner based in San Antonio, bought a natural gas gathering and processing company for $2.5 billion.
Executives from Marathon and MarkWest said Monday that they began to explore the idea of combining after the two companies worked together on projects in the Northeast, where fuels known as natural gas liquids are commonly produced along with gas in the shale fields of Ohio and Pennsylvania.
The combination illustrates that region’s allure, even as a glut of oil and gas has sent prices for these fuels plummeting in recent months and sparked concern that production could slow down. MarkWest is one of the largest natural- gas processors in the U.S., with a particularly large presence in the Northeast.
As oil prices continue to languish, diversifying into other fuels like natural gas and liquids including propane and ethane becomes more attractive, said Brandon Blossman, a managing director at Tudor Pickering Holt & Co., an energy investment bank based in Houston.
“Low oil prices and the implication that oil volume growth slows or stops has put pressure on the oil-focused midstream players think about diversification towards gas,” he said.