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Ohio Utica Shale

Eclipse Resources to complete 24 Utica wells in 2016

By Bob Downing Published: June 29, 2016

From Eclipse Resources on Tuesday:

STATE COLLEGE, Pa.--(BUSINESS WIRE)--Eclipse Resources Corporation (NYSE: ECR) (the “Company” or “Eclipse Resources”) today is pleased to provide the following operational update, revised capital expenditure plan for 2016 and amended guidance.

Benjamin W. Hulburt, Chairman, President & CEO commenting on the operations, “The Company has recently made the decision to accelerate our operated drilling and completion activity, ahead of our previously announced third quarter 2016 original start. Looking at current forward strip prices, we anticipate lifting our self-imposed production curtailment program and bringing our production back on line at the end of the third quarter of 2016. Based on where current forward strip prices are, we expect to continue to complete our drilled uncompleted wells through the remainder of the year and into the first quarter of 2017, and to continue to run our operated rig continuously going forward. We continue to forecast production growth in 2017 between 40% to 60% as compared to our forecasted production for 2016. Since recommencing our drilling in the Dry Gas area of our acreage, we have already finished drilling the Holliday A 1H well with a 10,000 foot completed lateral length in 18 days from spud to TD, and I remain extremely proud of our team’s operational excellence, along with the efficiency and cost structure they can provide. Lastly, while we can never completely eliminate commodity risk, we believe we have significantly reduced that risk next year by substantially increasing our hedge position, while at the same time structuring our hedge portfolio to not eliminate our exposure to further commodity price increases.”

Guidance

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Location, tax incentives swayed Shell's cracker decision

By Bob Downing Published: June 29, 2016

Royal Dutch Shell chose to build its planned ethane cracker plant in Beaver County, Pa., because of location and tax incentives, a Shell executive said this week.

He also offered additional company insights.

Click here to read more from the Pittsburgh Tribune-Review.

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Energy Transfer announces termination of merger pact

By Bob Downing Published: June 29, 2016

From ETE today:

DALLAS--(BUSINESS WIRE)--Jun. 29, 2016-- Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE” or the “Partnership”) today announced that it has terminated its merger agreement with The Williams Companies, Inc. (“Williams”) effective June 29, 2016.

As previously announced, on Friday, June 24, 2016, the Delaware Court of Chancery issued an opinion finding that ETE is contractually entitled to terminate the merger agreement with Williams in the event ETE’s counsel Latham & Watkins LLP (“Latham”) were unable to deliver a required tax opinion prior to the June 28, 2016, outside date in the merger agreement. Latham advised ETE that it was unable to deliver the opinion as of the outside date. Consistent with its rights and obligations under the merger agreement, ETE subsequently provided written notice terminating the merger agreement due to failure of conditions under the merger agreement, including Latham’s inability to deliver the required tax opinion, as well as the other bases detailed in ETE’s filings in the Delaware lawsuit referenced above.

Williams has appealed the decision by the Delaware Court of Chancery to the Delaware Supreme Court.

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Williams Cos. respond to ETE merger termination notice

By Bob Downing Published: June 29, 2016

From the Wiliams Cos. today:

TULSA, Okla.--(BUSINESS WIRE)--The Williams Companies, Inc. (NYSE: WMB) (“Williams”) today confirmed that Energy Transfer Equity, L.P. (NYSE: ETE) (“ETE”) has provided notice that it is attempting to terminate the Merger Agreement based on an alleged failure to satisfy the closing condition requiring delivery of a Section 721(a) tax opinion from Latham & Watkins LLP.

Williams issued the following statement:

Williams does not believe ETE had a right to terminate the Merger Agreement because ETE breached the Merger Agreement by (among other reasons) failing to cooperate and use necessary efforts to satisfy the conditions to closing, including delivery of Latham & Watkins LLP’s Section 721(a) tax opinion. Accordingly, on June 27, 2016, Williams filed an appeal with the Delaware Supreme Court in connection with the Delaware Court of Chancery's June 24, 2016 ruling relating to the Merger Agreement between Williams and ETE.

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Stripper wells produce 10% of U.S. oil production in 2015

By Bob Downing Published: June 29, 2016

From the U.S. Energy Information Administration today:

Stripper wells, or wells that produce small volumes, represent an important but decreasing share of total U.S. oil and natural gas production. These wells are characterized as producing no more than 15 barrels of oil equivalent per day (boe/d) over a 12-month period. EIA estimates that there were about 380,000 stripper oil wells (so called because they are stripping the remaining oil out of the ground) in the United States operating at the end of 2015, compared to about 90,000 nonstripper oil wells.

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Tags: liquid fuels , oil/petroleum , production

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30 mayors speak out for local control of fracking

By Bob Downing Published: June 29, 2016

From a Tuesday press release:

INDIANAPOLIS - Following the United States Conference of Mayors here this weekend, over 30 mayors from more than a dozen states issued a statement today urging state and federal leaders to uphold local control of drilling.

In their statement, the mayors said they opposed moves by both state and federal officials limiting the ability of communities to protect themselves from the harms of industrial fracking. “The growing trend of preemption is alarming,” the mayors wrote.
 
Many of fracking’s impacts – from air and water pollution to earthquakes and ruined roads – are felt more heavily at the local level, prompting over 500 communities across the country to restrict the practice. But the oil and gas industry and their allies in government are fighting back.

Last year, a federal court weighed in on local control of fracking for the first time, striking down a fracking ban in Mora County in rural New Mexico.

“This notion of local control – that we have the right to come together with our neighbors and make our own choices on issues that threaten our public health or quality of life– is a long-standing American tradition, and we should reject attempts to limit it,” said Mayor Javier Gonzalez of Santa Fe, New Mexico, one of the statement’s signers.

The Colorado Supreme Court struck down fracking bans in Longmont and Fort Collins in May. 

"It's essential that local municipalities have control because local elected officials understand the pulse of their community and voice of their constituents," said Mayor Nicole Nicoletta from Manitou Springs, just outside of Colorado Springs. "Studies have shown the potential negative impacts of fracking and we need to be able to examine that at the local level."

In Florida, a state senate committee narrowly defeated a bill that would have preempted local government control.
 
“As fracking continues to become a relevant discussion in our communities, it is more practical that cities and counties have local jurisdiction and control,” said Mayor Randall P. Henderson, Jr. of Fort Myers, Fla. “Citizens have an outright interest in receiving respectful due process and understanding of the facts of fracking, and therefore, an opportunity to weigh in as stakeholders.”  
 
State governments in Ohio, North Carolina, Texas and Oklahoma have also acted to limit local control of fracking.
 
The battle over who regulates fracking comes as the scientific evidence against the drilling technique continues to mount. A draft analysis by the U.S. Environmental Protection Agency on fracking’s impacts to drinking water revealed that every stage of the fracking water lifecycle is vulnerable to water contamination.
 
“The best way for states to protect public health from fracking is to follow the lead of states like Vermont and New York and put a stop to the dirty drilling practice altogether,” said Rachel Richardson, Stop Drilling program director at Environment America, the group that organized the statement. “Until then, city and county governments should have the chance to protect their citizens from harm.”

“We urge our state and federal leaders to affirm the ability of localities to protect the health and quality of life of residents against the widespread expansion of industrial fracking into their communities. The best policy is to leave decisions over these local impacts to local governments and let the democratic will of their residents and other stakeholders be heard,” concludes the mayors’ statement.

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DUCs are providing money-saving option for shale drillers

By Bob Downing Published: June 29, 2016

Drillers across the United States are not drilling new wells but working to complete DUCs or drilled but uncompleted wells as prices remain low.

That's especially true in shale-drilling areas, said Ponderosa Advisors LLC managing partner Bernadette Johnson speaking at a recent Pittsburgh conference.

The number of DUCs across the U.S. has fallen to about 3,1000, down from an estimated 4,600 late last year, according to estimates.

DUCs piled up even as new drilling plunged, said Johnson in stories in Kallanish Energy and Natural Gas Intelligence.

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Kinder Morgan adds partner on Utopia liquids pipeline

By Bob Downing Published: June 28, 2016

Kinder Morgan Inc. is getting a partner on its planned Utopia Pipeline across northern Ohio.
The Texas-based pipeline giant announced on Tuesday  that it had sold a 50 percent equity interest in the project to Riverstone Investment Group LLC of New York City.
To acquire its ownership interest, Riverstone agreed to an upfront cash payment provided at closing, consisting of reimbursement to Kinder Morgan for its 50 percent share of prior capital expenditures related to the project and a payment in excess of capital expenditures to recognize the value created by Kinder Morgan in developing the project to this stage.
Riverstone has also agreed to fund its share of future capital expenditures necessary to complete construction and commissioning of the pipeline.
The $500 million pipeline is planned to carry liquids from Ohio’s Utica Shale to Fulton County near Toledo where it would connect to an existing pipeline. It would run about 215 miles from the eastern terminus in Harrison County. Locally, it would pass through southern Stark and Wayne counties.
The pipeline, 12 inches in diameter, will ship about 50,000 barrels of liquids per day. That could be boosted in the future.
Construction would likely take place in 2017 and the line could begin services in late 2017 or early 2018.
The name Utopia stands for Utica To Ontario Pipeline Access.
The liquids, including ethane and propane, would be shipped to NOVA Chemicals Corp. for use as feedstock for producing plastics at its plant in Corunna, Ontario. There is capacity for additional customers.
“The Utopia pipeline will connect growing ethane supply sources in Ohio to the expanding petrochemical market in Sarnia,” said Don Lindley, president of Kinder Morgan’s Natural Gas Liquids, Products Pipelines.
Added Steve Kean, Kinder Morgan president and chief executive officer: “This agreement also demonstrates our ability to originate projects with attractive returns that partners are willing to pay to participate and invest in.”
The pipeline must be approved by several federal and state agencies but it does not require approval of the Federal Energy Regulatory Commission, as is required for the Nexus and Rover pipelines across northern Ohio. That is because the Utopia Pipeline does not cross state lines and it is not transporting natural gas.
Kinder Morgan has scrapped plans for a second 12-inch pipeline for natural gasoline originally planned along the same Ohio route. The Utopia West Pipeline would have connected with the existing Cochin Pipeline in northwest Ohio to transport that liquid to Kankakee, Ill., and on to Alberta in western Canada to be used by Canadian tar sand producers.

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SEC issues new transparency rule for oil, natural gas, mining

By Bob Downing Published: June 28, 2016

From an Earthrights International press release:

SEC Issues Long-Awaited Transparency Rule for Oil, Gas and Mining

June 28, 2016, Washington, D.C. - The Securities and Exchange Commission (SEC) issued a landmark transparency rule yesterday requiring oil, gas and mining companies listed on U.S. stock exchanges to disclose the payments they make to the U.S. and foreign governments. In 2010, Congress mandated the rule in Section 1504 of the Dodd-Frank Act, in order to provide critical information to investors and help communities in resource-rich countries hold their governments accountable for the responsible management of billions of dollars in extractive resource revenues.

Members of Congress, investors worth nearly $10 trillion in assets under management, civil society groups, and citizens of resource-rich countries voiced support for a strong rule, emphasizing the need for detailed payment information. While some oil companies have sought to keep the payments they make to governments secret, other companies are already disclosing payment information voluntarily, or under similar regulations in other jurisdictions.

“The baseless arguments and doomsday predictions made by certain oil companies and industry groups to try to maintain payment secrecy have been thoroughly undermined by the rulemaking record and transparency developments in the rest of the world,” said Michelle Harrison, Staff Attorney at EarthRights International (ERI). “The SEC weighed the evidence and rightfully rejected calls for certain sweeping rule-based exemptions and anonymous, highly-aggregated disclosures that would deprive investors and communities of precisely the information they need. While we are still reviewing the details, we are pleased to see the SEC finally take action on this critical transparency rule.”

The final rule has been delayed for years, prompting ERI, on behalf of Oxfam America, to sue the SEC twice for dragging its feet. Last year, a federal judge ordered the SEC to issue the rule promptly, finding that the SEC had “unlawfully withheld” the final rule. “Our successful lawsuit made sure the SEC could no longer delay action that Congress required it to take years ago,” said Harrison.

“Extractive industry payments have been secret for too long. This rule is a huge victory for investors and citizens who have long called for such information,” said Ian Gary, Associate Policy Director at Oxfam America. “The final rule aligns with the rules in other markets by requiring public disclosure of project-level payments to governments and enables the U.S. to reassert itself as a leader in transparency.”

Section 1504 inspired similar disclosure laws around the world, setting a new global standard for transparency. While the U.S. rule faced delay, the European Union, Canada and Norway plowed ahead, adopting similar mandatory disclosure laws. Many U.S.-listed extractive companies are also covered by the regulations in other markets. Some companies, like Shell, Total and Statoil, are already reporting on their project-level payments in all countries of operation under those regulations without consequence, while others have voluntarily disclosed their payment information. The SEC’s rule intentionally aligns with those rules to ensure consistent reporting obligations.

ERI has submitted numerous comments to the SEC during the 6 year rulemaking process on its own, on behalf of Oxfam, and as part of the U.S. Publish What You Pay Coalition (PWYP-US).
 

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Ohio has 10 Utica rigs at work, two new Utica permits

By Bob Downing Published: June 28, 2016

Ohio has approved 2,185 Utica Shale permits, as of June 25.

That total includes 1,751 drilled Utica wells and 1,328 producing Utica wells, the Ohio Department of Natural Resources said.

Ten rigs are working in Ohio, the state said.

Two new permits were approved: one in Carroll County and one in Jefferson County.

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.