Preview pages for the Marcellus and Utica Shale Databook 2013, Volume 2. This second volume (of three) features 74 detailed maps and multiple charts showing where Marcellus & Utica Shale well permits have been issued throughout PA, OH and WV for May through August of 2013. Each detail map shows major natural gas pipelines, the location of compressor stations, and the locations for each permit issued appended with the driller's name. NEW in this edition: A comprehensive list of 111 midstream/infrastructure projects announced for the Marcellus/Utica region. Each project identifies the company building it, timeline, description of where it's being built, and approximate capital expenditure being made for the project. Many other special features make this an indispensable tool for those with an interest in drilling in the Marcellus/Utica. Visit this page for more details: http://marcellusdrilling.com/databook.
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Natural Gas Commodity Price & Infrastructure From the U.S. Energy Information Administration: “Daily natural gas spot prices between Tennessee Gas Pipeline (TGP) Zone 4 Marcellus and Henry Hub have diverged recently largely due to rising Marcellus production, which has outpaced the growth of available take-away pipeline capacity in northern Pennsylvania. As a result, the spot price of natural gas at the TGP Zone 4 Marcellus trading point has fallen—at times considerably—below the spot price at Henry Hub in Louisiana, and is currently the least expensive wholesale natural gas in North America. “To address this rapid growth in natural gas production, several Northeast interstate pipeline projects were completed in 2011, adding nearly 1.5 billion cubic feet per day (Bcf/d) of capacity in Pennsylvania. Many additional pipeline projects have been proposed or are in various stages of completion in the Northeast to reduce transportation constraints caused by growing Marcellus natural gas production.
“Dry natural gas production in Pennsylvania, a key part of the Marcellus supply basin, continues to grow and according to Bentek Energy is now approaching 6 Bcf/d. Estimated June 2012 Marcellus dry natural gas production (5.7 Bcf/d) has nearly doubled since June 2011 (2.9 Bcf/d) and represents about 9% of overall U.S. dry natural gas production. Further, Bentek Energy estimates that there are over 1,000 natural gas wells that have been drilled in northern Pennsylvania but which are not yet producing natural gas because there is not enough interstate and gathering pipeline infrastructure to accommodate the new production.” At What Commodity Price is it Unprofitable to Drill? Energy producers are less willing to drill when the commodity price is at a level where profits are small or non-existent. Gas storage and pipeline company Spectra Energy estimates the breakeven price drillers need to receive just to stay in the black is $4.26 MMbtus for drilling in the central Marcellus region, and $3.44 MMbtus in the less-expensive-to-drill area of northeastern PA. Energy consulting firm Enercom pegs the average breakeven number for the entire Marcellus at $2.88 MMbtus. Only the drillers themselves know the real breakeven price—it’s different for each driller (closely guarded information they generally don’t share). The price of natural gas varies—it’s different at each point along a pipeline where’s it bought and sold. However, many use the Henry Hub of southern Louisiana as a benchmark by which to measure the entire industry. Recently Cabot Oil & Gas CEO Dan Dinges said Cabot’s northeast PA operation breakeven price is an incredible $1.20 MMbtus. Such a low breakeven gives Cabot a distinct competitive advantage. Cabot and other Marcellus drillers are innovating new ways to make drilling more profitable at very low commodity prices.
In this brand new section of the Databook, we take a look at the number of permits issued by period—by “halfs” for 2012, or Jan-Jun and Jul-Dec, and by “trimesters” for 2013, Jan-Apr and May-Aug—for each driller active in either the Marcellus and/or Utica Shale. The numbers reflect a permit received by that driller for a distinct, unique well (not pad, but individual well). That is, if the driller applied for and received a permit for any purpose—to begin drilling, to continue drilling, to frack, to re-drill, etc.—that is considered a permit. We filter out multiple permits for the same well and show only unique, distinct well locations. So a driller with a “42” for a given period means that driller received permits for 42 different, distinct wells for some purpose. Use this information to spot trends and get a high-level overview of activity for a particular driller—where they drill, when they drill, and how much they drill.
West Virginia Permitting and drilling in West Virginia is regulated by the West Virginia Department of Environmental Protection (WVDEP). Future Fund Initiative: Each year the West Virginia legislature meets for 60 days. They concluded their session for 2013 in April with no new major oil and gas legislation—but not for lack of trying. A number of oil and gas bills introduced did not pass. One of those bills included a new “Future Fund” that would set aside 25% of the increase in severance tax revenue the state receives from an increase in drilling that would “benefit all residents” of the state. In August, a group of 19 WV legislators took a trip to North Dakota (at a cost of $25,000) to review and discuss their state’s Legacy Fund, a similar concept. The legislators hope that next time the measure it brought before the full legislature (in 2014) they will have enough support to pass it. The trip to ND was an effort at building that support. Air Quality Study – No New Regs: The WV Natural Gas Horizontal Well Control Act, passed and signed into law in Dec. 2011, directed the WVDEP to conduct three studies. The third and final study was released this summer, titled “Air Quality Impacts Occurring from Horizontal Well Drilling and Related Activities.” According to the WVDEP, based on the findings in the study, no new regulations are required to control air pollution around drilling sites. Those findings were later disputed by the WVU professor who oversaw the raw report given to the WVDEP, however, there is no new effort among legislators (at this time) to create stricter air emissions standards. New York Permitting and drilling in New York is regulated by the Department of Environmental Conservation (DEC). Fracking Still on Hold: Shale gas drilling in New York has been on hold since 2008—now over 5 years. The DEC was supposed to release a final set of new drilling rules, called the Supplemental Generic Environmental Impact Statement, or SGEIS, no later than Nov 29, 2012 (exactly one year from the last public hearing on the new rules). The DEC instead chose to file for a 90-day extension, which expired at the end of February 2013, to allow time for a mini-review of potential impacts shale drilling may have on public health. The State Health Commissioner, Nirav Shah, still has not supplied his health review as of this edition of the Databook (September 2013), so the de facto moratorium remains in place. If Gov. Cuomo decides to move forward with shale drilling now that the public comment period is expired and the deadline passed, it’s not clear whether or not the approval process would need to restart from the beginning. DEC Commissioner Joe Martens seems to have indicated in public statements that he would be willing to issue permits for some wells as a test, without having the SGEIS officially adopted. NY High Court to Hear Two Ban Cases: Apart from the question of whether or not the governor and legislature will allow drilling, a major court battle has ensued over whether or not local municipalities have the right to completely ban hydraulic fracturing. Two NY towns—Dryden and Middlefield—banned fracking and were subsequently sued—in one case by a driller, in the other by a landowner. The towns won the initial lawsuits at a lower court and the cases were appealed. On appeal, the towns won a second time with unanimous decisions (the court decision was handed down in April 2013). The cases were appealed to the highest court in New York—the NY Court of Appeals. In August, the Court of Appeals agreed to hear the twin cases which are being tried together. Accounting for paperwork, oral arguments and the inevitable slow pace such cases take, a final decision will likely not be handed down before summer of 2014. The issue of local bans and moratoriums has already created nasty political infighting at the town board level in many Upstate New York towns, a trend that will continue through at least the November 2013 election cycle—and likely beyond.
operator name is followed by two sets of numbers, with the second number in parentheses. Example: Center – 7 (6). The first number - “7” in this case - shows the total number of permits issued. The second number - “(6)” in this case - indicates how many wells the permits were issued for. Usually a single well requires several permits during drilling, to allow the driller to continue to the next stage.
#2 – A purple dot indicates
where a well pad is located. Each well pad can have from one to ten wells on it. Typically a pad will contain 2-4 wells. Because of the size of the maps (vastly reduced to show an entire county), sometimes the purple dots will be “on top of each other” and sometimes will not be labeled with a driller’s name.
#3 – The boundary of each
county is indicated with a blue outline.
#4 – Major gas pipelines are
indicated with red lines and the name of the pipeline somewhere along the line.
#5 – The location for pipeline
compressor stations is indicated by a green triangle–the name is next to it.
Marcellus/Utica Shale Midstream & Infrastructure Projects – Planned & Under Construction We are excited to bring you what we consider the most comprehensive and authoritative list of midstream and infrastructure projects planned for the Marcellus and Utica Shale region in existence—a staggering 111 major multi-million dollar projects. What follows is largely research from the Marcellus Drilling News (MDN) website which daily chronicles the happenings in northeastern U.S. shale drilling. In addition to MDN, we have added other publicly available sources, including statements made by the companies themselves and from independent news accounts. Please be advised that the information that follows is only as good as the source documents. While we’ve made every effort to verify the information using multiple sources, we could not do so in every case. We cannot guarantee 100% accuracy. Projects change! Some announced projects never materialize, and sometimes the scope of an announced project changes—please bear that in mind as you use this list. For projects with an announced capital expenditure (capex) amount we indicate the amount in the CapEx column. For those projects where we could not find any mention of planned expenditure, we made our own best guess. If you see an amount followed by (est.) that means “estimated” and it is our own estimate based on what competing similar projects have announced as their capex and based on our own experience in closely tracking the industry. We expect some of those estimates will not be accurate—but we thought giving you a general idea (our opinion) would be more useful than leaving it blank. Who This List is For We’ve tabulated this list first and foremost for companies in the shale supply chain. It is a handy guide of projects you may want to consider becoming a supplier for. That is, this is your “opportunities” list. Be aware that any project that shows an in-service date of this year is likely already well underway and almost completed. However, there may still be opportunities for some supply chain companies beyond the initial construction. Following the list of projects is a Directory of Midstream/Infrastructure Companies contact list, which will make it easier for you to begin the process of figuring out who you need to speak with about becoming a supplier. Midstream and infrastructure companies will find this list indispensable. It is a handy reference to what your competitors are planning. We think you may surprised at the scope and number of major projects on the way in the northeast. For drillers (“producers” in industry parlance), this list will help answer the vitally important questions of what capabilities will be arriving with new infrastructure buildout. Use the list as a checkpoint against your company’s planned project files. Government officials will also be interested in knowing where and when projects will be heating up—especially those in your geography or region. With a typical investment of $250-$350 million per project, and some in the billions, when an infrastructure project becomes active, it infuses an area with a huge amount of money (and jobs) that ripple throughout that area’s economy. Many projects also bring challenges—increased truck traffic, packed hotel rooms, etc. This list will help you predict what’s coming down the road for your area—and when.
Law firms are a big buyer of the Databook, and for good reason. The information in the Databook and particularly in this list will help law firms know when to expect an uptick in demand for their services—and which companies to talk to about those services. Each of these midstream/infrastructure projects contain mountains of legal work—from securing real estate for processing plants and pipeline easements—to labor law, compliance and a host of other legal issues. No law firm with an energy practice should be without the Databook and this list! Updates If you have updated information or corrections for this list, please send them to [email protected]. In the subject line use "Update: Infrastructure List". If we receive a meaningful number of updates we will issue an addendum to ensure you have the latest and greatest and most accurate information. Industry Abbreviations Used: bbl/d = barrels per day bcf/d = billion cubic feet of gas per day dth/d = dekatherms per day jv = joint venture mmcf/d = million cubic feet of gas per day NGL = natural gas liquids State Abbreviations Used: CT = Connecticut IN = Indiana KY = Kentucky LA = Louisiana MD = Maryland MI = Michigan MO = Missouri NY = New York OH = Ohio PA = Pennsylvania RI = Rhode Island TX = Texas WV = West Virginia