The Daily Digger

Bloomberg:   Schlumberger CEO Sees 'Full-Scale Cash Crisis' in Oil Sector   -    "Schlumberger Ltd. cut more jobs in the first quarter as the world’s largest provider of oilfield services sees the industry in an unprecedented downturn. The global headcount dropped to 93,000 at the end of the first quarter with the..." Business Journal Daily:   ODNR Officials Tout Well Oversight at Chamber Event   -    "The plugging of the injection well blamed for a dozen tremors of the Mahoning Valley in 2011 should be on its way to being completed, an official with the Ohio Department of Natural Resources said Tuesday. The plugging of the Northstar No. 1 well, one of the assets of the former D&L Energy, went through the appeals process..." WTOV News:   Oil and Gas Expo Draws Thousands to Belmont County   -    "It's an industry meeting of the minds each year; the annual Belmont County Oil and Gas Expo is underway. Belmont County h...

From the Marietta Times: Heavy rain and heavy construction created a perfect storm for one Coal Run resident’s car to slip into a muddy, watery ditch last weekend, creating a clash with the company working to lay 9,000 feet of pipeline through local rural areas.  Mitchel Barth, a 22-year-old in the process of purchasing his family’s home on Weppler Road, claims that the construction company’s project is destroying the roadway and making it unsafe for residents and drivers.  The firm, Two Guns Consulting and Construction out of Dallas, was recently awarded a project to lay 8-inch pipeline in a right-of-way along Weppler Road or Blue Racer Midstream, which develops and operates oil and gas assets, and will likely be in the area into early summer.  “There was about two inches of rain that (Friday) night, and when I was coming home Saturday I went straight into a ditch,” Barth said. “They did the tracks about three months ago and put gravel across for my driveway, but...

From Newsweek: Why would a public research university boasting a top-100 geology program deliberately hide its work? Because, as lead researcher Amy Townsend-Small explained, "our funders, the groups that had given us funding in the past, were a little disappointed in our results. They feel that fracking is scary and so they were hoping our data could point to a reason to ban it."  That an environmentalist ideologue would see evidence of fracking's safety as "disappointing" is to be expected. But that a university would so flagrantly put politics before science is deeply troubling.  Hydraulic fracturing has significantly bolstered America's energy independence by unlocking an abundance of domestic oil and gas. In fact, our country has officially surpassed Russia and Saudi Arabia as the global leader in natural gas and oil production, respectively.  Just as important, these newfound energy resources have delivered economic benefits to Americans. In 20...

From The Intelligencer/Wheeling News-Register: Today, contractors working for FirstEnergy Corp. are demolishing the shuttered power plant to make room for the massive petrochemical complex, which would cover nearly 500 acres between the Ohio River and Ohio 7. Instead of watching pipelines ship lucrative Marcellus and Utica shale ethane to cracker plants along the Gulf Coast or in Canada, the Upper Ohio Valley could see a manufacturing renaissance if PTT Global Chemical proceeds with its planned multibillion-dollar petrochemical complex.  A final investment decision is expected by the end of this year.  “We have made great progress over the past year,” Belmont County Commissioner Mark Thomas said. “We have held numerous meetings with the company leaders and their representatives. Everyone is working collaboratively to make sure we have everything in place.”  Toasaporn Boonyapipat, president and CEO of PTT Global Chemical America, agreed with Thomas in terms of the ...

From the Akron Beacon Journal: Three appeals court judges today heard 33 minutes of oral arguments in the continuing fight over survey access in Medina County for the $2 billion Nexus Pipeline.  The Akron-based 9th District Court of Appeals will decide the case at sometime in the future, Judge Donna Carr said at the conclusion of the short hearing. About 35 Medina County landowners attended the session.  Also hearing the arguments were Judges Carla Moore and Beth Whitmore.  The Texas-based Nexus Gas Transmission LLC has won 17 court decisions on access in 11 counties along the pipeline’s route including appeals’ court decisions, said attorney James Hughes of Bricker & Eckler LLP in Columbus, who was representing the pipeline company.  Ohio state law grants the pipeline companies access to private property to determine if it is suitable for a pipeline, he said. The rest of the article can be read by clicking here. Connect with us on Facebook and Twitt...

by Jackie Stewart, Energy in Depth Thanks to the Utica Shale formation’s staggering production and associated infrastructure needs, Ohio is experiencing an enormous influx of investment.  Last year, EID investigated Ohio’s newly announced pipeline and natural gas-fired power plants, and found that billions were slated to come into the state from these projects. The natural gas-fired power plants, either currently under construction or planned, will provide over $6 billion and more than 4,000 jobs to Ohioans, all while generating power for up to 5.85 million homes. With approximately 4.5 million homes statewide, that means that natural gas plants will literally  fuel the entire state of Ohio .  Here’s a look at the newly announced projects along with those currently under construction. Ohio Natural Gas Power Plants Company Project Investment Megawatts Households Serviced Jobs Status Advanced Power Services Carroll County Energy $900 million 700 750,000 730 Under Con...

From Gas & Oil: Just two years ago, the Appalachian region in Ohio suffered one of the most devastating job losses of 2013: the  Ormet aluminum smelting plant in Monroe County, located along the Ohio River closed, leaving 1,000 people  out of work in Ohio and West Virginia. If the job losses weren’t bad enough, the closure also meant that millions in tax revenues would also be lost. But then along came the development of Ohio’s Utica Shale.  Thanks to natural gas development in the area, Monroe County has had an over 340 percent increase in tax revenue, which has not only filled the void left by the plant closure, but has also brought back hope to the community that had been shattered two years ago. Today, natural gas development has been said to be the “lifeline” for Monroe County.  Tax revenues increased from $1.5 million in FY2010 to a whopping $6.8 million in FY2015. The tax loss from Ormet, during the same period of time, would have created a $4.5...

From a T. Boone Pickens article written for Forbes: Thankfully, we’re now a nation with options. Credit stunning advances in horizontal drilling and fracking that position us rich in energy resources. We’re now the number one natural gas producer in the world, and in the top three for crude oil production.  America’s potential energy future has never been brighter. But there’s a challenge, and that’s whether we – as a nation – are willing to learn a lesson we should have learned 40 years ago, and that’s putting our own energy future in our own hands.  The best way to do that is to utilize free market principles and inject serious fuel competition in the transportation mix. Governments at all levels can and should lead the way. One way to start: Open their fleet vehicle and fuel purchasing to competing domestic fuels. Let the cleaner, cheaper, domestic option – and taxpayers – win. Let’s make OPEC and those other oil-producing nations irrelevant. Read the whole article b...

From Rex Energy : Rex Energy Corporation (Nasdaq:REXX) announced that it has closed two privately negotiated exchange transactions with certain holders of the company's securities, including the 8.875% Senior Notes due 2020 ("2020 Notes"), the 6.250% Senior Notes due 2022 ("2022 Notes"), the Series A 6.00% Convertible Perpetual Preferred Stock ("Preferred Stock"), and the 1.00%/8.00% Senior Secured Second Lien Notes due 2020 (the "Second Lien Notes"), in which those holders agreed to exchange their existing securities for shares of the company's common stock. 2020 Notes and 2022 Notes  Rex Energy executed a privately negotiated exchange pursuant to which the holder exchanged $26.9 million in aggregate principal amount of the 2020 Notes and 2022 Notes and waive all accrued and unpaid interest for approximately 5.2 million shares of common stock. With this transaction, the company's interest savings in 2016 and 2017 will be $1.8 m...

From Seeking Alpha: If there was a publicly traded equity security that the market knew was worth $0 -- or even had negative equity value from discounted cash flows or some other valuation methodology -- in theory the security should trade at or near $0. However, if the business has some cash flow to offset debt service costs for few months or so, in reality, the security will trade slightly above $0. That's because investors know that the company can kick the can down the road for the time being, and there is "option value" on the equity. As to how large this option value should be, that's largely a function of how much time the business has until it has to throw in the towel, and how big of an upside the business has when you reach or get past the inflection point.  Many E&P companies are currently in an analogous situation, trading on option value, with perhaps a few months or about a year left before they are forced to default (not covenant breaches that w...

From the Parkersburg News & Sentinel: The Obama administration’s clampdown against the flaring of natural gas from shale wells has been heralded by environmental groups because they say it will reduce greenhouse-gas emissions. But these new regulations may wind up doing just the opposite.  Gas flaring is an integral part of oil and gas production operations when a new well is drilled and completed. Petroleum engineers and geoscientists work together to test the new well so they know the pressures and volumes of crude oil and natural gas the well is capable of producing. This is necessary so they can properly design the equipment on location and pipelines that must be constructed to handle the volumes produced.  During the testing period, liquids must be captured in tanks on site while natural gas, which is primarily methane, must be flared because pipeline connections typically are not designed and available until after the potential of the well or wells on the pad h...

Utica shale permitting has been slow for quite some time, but it has been a rare week that the Ohio Department of Natural Resources has had no new permits to post on the weekly activity report.  Last week, though, that was the case.  The rig count remains down at 11.  There are currently 2159 active permits for Utica shale drilling in Ohio, with 1727 wells drilled and 1270 wells producing. View the report below or by clicking here . Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

From Bloomberg: On April 25 the prince is scheduled to unveil his “Vision for the Kingdom of Saudi Arabia,” an historic plan encompassing broad economic and social changes. It includes the creation of the world’s largest sovereign wealth fund, which will eventually hold more than $2 trillion in assets—enough to buy all of Apple, Google, Microsoft, and Berkshire Hathaway, the world’s four largest public companies. The prince plans an IPO that could sell off “less than 5 percent” of Saudi Aramco, the national oil producer, which will be turned into the world’s biggest industrial conglomerate. The fund will diversify into nonpetroleum assets, hedging the kingdom’s nearly total dependence on oil for revenue. The tectonic moves “will technically make investments the source of Saudi government revenue, not oil,” the prince says. “So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”  For 80 years oil has underwritten the social compact on which Saudi ...

From Gas & Oil: Under Ohio law, oil and gas leases constitute contracts. As a general matter, the rights and remedies of the parties entering into a contract must be determined by the terms of the written agreement. Over the years, however, Ohio courts have determined that oil and gas leases should include a number of “implied covenants”—provisions which the courts will assume the parties meant to include, even if the contract does not specifically address the issue. These implied covenants include a producer’s obligation: (1) to drill an initial exploratory well; (2) to protect the lease from drainage from wells on neighboring properties; (3) to reasonably develop the land; (4) to explore further after an initial well is drilled on a large tract of land; (5) to market the oil and gas produced; and (6) to conduct all operations that affect the mineral owner’s royalty interest with reasonable care and due diligence. Of these implied covenants, the covenant to reasonably develop th...

From the Akron Beacon Journal: In 2010, coal produced 82 percent of Ohio’s electricity.  At that time, Ohio had 20 plants that each could produce at least 200 megawatts of power. That was more coal-fired units than any other state in the country.  By the end of 2015, that percentage had dropped to 59 percent, according to a recent analysis by the Cleveland-based Institute for Energy Economics and Financial Analysis.  Ten of those 20 coal-fired units have closed: five owned by Akron-based FirstEnergy Corp., two by Duke Energy, one by Columbus-based American Electric Power, one by NRG Energy and one by American Municipal Power.  American Municipal Power also cancelled plans to build a new coal-fired plant in Meigs County in southern Ohio. Click here to read more. Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

From TribLIVE: The global crash in oil prices and resulting squeeze in financing available to energy companies have raised questions about whether two companies will build ethane cracker plants in the Marcellus and Utica shale regions.  The head of one of the top shale gas producers in the area, however, predicts both petrochemical facilities will be built in the next decade.  “We will see one to two ... I believe two cracker plants built in this region,” Consol Energy Inc. CEO Nick DeIuliis said Friday during the University of Pittsburgh's Energy Law and Policy Institute gathering Downtown.  Such facilities would take ethane — a liquid that comes up with natural gas from many shale wells in Western Pennsylvania, Northern West Virginia and Eastern Ohio — and convert it to ethylene and polyethylene, the building blocks of many common plastic products. Continue reading about this by clicking here. Connect with us on Facebook and Twitter! Follow @EnergyNewsBlo...

From The Canton Repository: A Texas-based pipeline company has started to sue Ohio landowners who won’t let the company’s new pipeline cross their properties.  Kinder Morgan says it can use eminent domain to take easements for its $500 million Utopia East pipeline.  Earlier this month, Kinder Morgan filed 10 lawsuits against landowners in Carroll County and a dozen lawsuits against landowners in Wayne County. More court actions could be coming.  “We do anticipate there will be some filings in Stark County and frankly across the route,” said Allen Fore, Kinder Morgan’s vice president of public affairs.  Kinder Morgan wants to build 240 miles of new pipeline to carry propane and ethane from Cadiz to the Ohio-Michigan border west of Toledo.  Locally, the proposed route for the 12-inch-diameter Utopia East pipeline crosses Stark, Tuscarawas and Carroll counties. The pipeline would carry up to 50,000 barrels per day, but could be upgraded to ship more tha...

From Fuel Fix : U.S. rig contractor Seventy Seven Energy plans to file court papers for Chapter 11 bankruptcy protection next month with a prepackaged deal with creditors in hand, the company said Tuesday.  Seventy Seven’s agreement with lenders would wipe debt off its books by turning $1.1 billion in debt into equity and the company would operate as normal. It said job cuts were not part of the deal.  The company is the nation’s 14th largest land driller and the 11th largest pressure pumping company, according to Spears & Associates, but the company gets the bulk of its revenue from Chesapeake Energy, the oil and gas explorer it spun out of in 2014. Stone Energy could be joining Seventy Seven Energy in the list of companies that do not survive this downturn.  From NGI : Stone Energy Corp.’s credit facility has been reduced from $500 million to $300 million, resulting in a borrowing base deficiency of $175.3 million, which could lead to a breach of its lendin...

Haynes and Boone, LLP Oil Patch Bankruptcy Monitor - April 2016 edition from Marcellus Drilling News Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

Townhall:   Authors of UK Fracking Study Dismayed that Fracking is Safe   -    "The authors conclude that heavy truck traffic from fracking operations has a negligible impact on the environment. Here’s the funny part: the authors aren’t all that happy with their own findings. But to their credit, the researchers don’t..." Pittsburgh Business Times:   Beaver County Prepares for Shell Cracker   -    "Beaver County’s actively getting ready for Royal Dutch Shell’s arrival, whether or not the energy giant ultimately decides to build an ethane cracker plant in Beaver County.  That’s the word from a panel who spoke at..." Energy in Depth:   Activists Push Phony Talking Points on Injection Well ‘Exemptions’ and Drinking Water   -    "Recently, activists and researchers with close ties to the anti-fracking echo-chamber have been pushing claims that oil and natural gas producers are injecting “toxic chemicals” into drinking w...

From Bloomberg : General Electric Co. could become one of the top players in the oil services and equipment industry if it decides to bid for Baker Hughes Inc.  A Justice Department lawsuit filed this week against Halliburton Co. to stop the merger of the world’s second- and third-largest oilfield service companies could soon put Baker Hughes back in play, with GE seen as the most likely bidder. Halliburton and Baker Hughes have said they plan to contest the government’s case, which could delay the timing of any future takeover offers. In December, GE was said to be exploring bids for various assets Halliburton was marketing in an attempt to secure antitrust approval for the deal.  "This is one way you could really accelerate yourself in the oil and gas industry," J. David Anderson, an analyst at Barclays Plc, said Thursday in a phone interview. "Buy Baker to fill in the gap and all of a sudden, you’re one of the more dominant oil service companies out there."...

From Market Realist: According to Baker Hughes ( BHI ), the Utica Shale currently has 11 active rigs, down from 13 in February 2016. In comparison, 31 rigs were in operation in the shale in March 2015.  From March 2008 to March 2016, additional natural gas production per rig at the Utica Shale rose from ~0.20 MMcf (million cubic feet) per day to 6.9 MMcf per day, or by ~33x. In the 12 months to March 2016, natural gas production addition per rig rose 25%.  Utica Shale energy operators  Steady Utica Shale production can positively affect oilfield equipment and service providers such as RPC ( RES ), Precision Drilling ( PDS ), Baker Hughes ( BHI ), as well as contract drillers such as Patterson-UTI Energy ( PTEN ). These companies may continue to improve revenues and profits from operating in the Utica Shale if drilling activity rises. Notably, RES accounts for 4.0% of the SPDR S&P Oil & Gas Equipment & Services ETF ( XES ). Read more by clicking here. ...

From The Motley Fool: While spring is typically a time for optimism and new beginnings, many energy investors had an ominous feeling this spring. That's because the sector's banks would be reviewing the credit they had extended to producers and were expected to be very stringent given the significant deterioration in oil and gas prices since banks last reviewed credit in the fall. There was a grave concern that banks would be so stringent that it could lead to a mass casualty event with a number of producers being forced into bankruptcy.  Those concerns, however, haven't been realized after banks have been far more lenient than expected, at least with Chesapeake Energy ( NYSE:CHK ). That's after they reaffirmed the company's $4 billion credit line and agreed not to review it again until June 2017. That provides the company with clear visibility on liquidity for more than a year, which is a huge relief given the company's grave credit concerns.  Clarity on ...

The latest weekly permitting report from the Ohio Department of Natural Resources can be viewed below or downloaded by clicking here . Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

Connect with us on Facebook and Twitter! Follow @EnergyNewsBlog

From NGI: After nearly two years of contending with historically low commodity prices, a majority of the Appalachian Basin's leading producers have retreated almost exclusively to their dry natural gas acreage, where low breakeven prices and prolific wells are being used to defend against the downturn.  In the nation's leading gas basin, the move is no surprise. But it marks a shift away from touting natural gas liquids (NGL) growth and what was recently a balance for rigs that were spread more evenly across wet, condensate and dry gas fairways throughout Ohio, Pennsylvania and West Virginia. The precipitous fall in oil prices that began in June 2014 and weighed heavily on the markets for ethane, butane and propane is not the only factor underlying the move.  Prolific wells, production beats, better economics and a desire to maintain momentum during the slump have all aligned to shape a trend that points to the likelihood of more natural gas production this year in a bas...