Archive for Marcellus Shale News
PITTSBURGH, PA – The Marcellus Shale Coalition (MSC) recently released the results of its annual workforce survey. The findings – based on 2013 data – were provided by a large majority of MSC member companies, representing nearly 95 percent of Pennsylvania’s shale production.
Key survey highlights include:
- 26.5 percent of new hires work in engineering and construction, 23 percent of new hires work in equipment operations; 15.2 percent in operations and maintenance, 8 percent in administration, 7 percent in land and 5 percent in environmental, health & safety;
- 83 percent of new hires came from Marcellus Shale states: Pennsylvania, Ohio, West Virginia, New York and Maryland
- Positions most difficult to fill
- Workforce diversity; and
- Recruitment methods and challenges, including educational and professional training needs.
According to the survey data, MSC member companies expect to hire more than 2,000 new employees in 2014. The survey also indicates that the majority of new hires are in three sub-sectors and are weighted more so in southwestern Pennsylvania: engineering and construction; midstream and pipeline; and operations and maintenance.
“Attracting and retaining a high-quality, local workforce is a key tenet of our Guiding Principles. By nearly all metrics – and with Pennsylvania’s unemployment at its lowest level since September 2008 and well below the national average – we continue to make positive progress on this important commitment, helping to create opportunities for those seeking work in our growing industry. And while some challenges still exist, this survey helps identify gaps to refine and better direct our collective efforts aimed at boosting local job growth for years to come.”
HARRISBURG, PA (AP) — A Pennsylvania court has further limited the reach of a major 2012 law that modernized drilling regulations, ruling Thursday that state public utility regulators cannot review how local zoning restrictions affect the natural gas industry.
The Commonwealth Court decision threw out the Public Utility Commission’s newly authorized power to withhold drilling fee revenue from municipalities whose zoning it deems to illegally restrict drilling activity.
The decision is another blow to an effort by Gov. Tom Corbett and the Republican-controlled Legislature to respond to the drilling industry’s complaints about municipal zoning. It follows a state Supreme Court ruling in December that said the law could not strip local zoning authority over drilling activity, such as the placement of rigs, pipelines, waste pits and compressor stations.
John M. Smith, a Pittsburgh-area lawyer who helped represent the seven municipalities that sued, said they were pleased that the court “once again protected the rights of local governments and Pennsylvania citizens.”
The Commonwealth Court ruling rejected three other challenges in the lawsuit to elements of the sprawling law.
Those three victories led Corbett’s office to say the opinion “speaks volumes to the constitutionality of state regulation of oil and gas activities.” A spokesman would only say that the office is evaluating the impact of the ruling on the intended role of the utility commission.
The court left intact limits on what doctors may reveal about the proprietary contents of hydraulic fracturing solutions.
Still, Smith said that while the court did not find the “medical gag rule” to be unconstitutional, the court interpreted the law to allow certain disclosures that alleviated much of the plaintiffs’ concerns over the secrecy. Those disclosures include to patients who suffer chemical exposures from drilling operations, to other treating physicians and in medical records, Smith said.
The court also refused to require the state to notify people who rely on private water sources of the potential for drilling contamination and it rejected the argument that the law authorized illegal private eminent domain for natural gas pipelines and storage.
In addition to the seven municipalities — four in Washington County, two in Bucks County and one in Allegheny County — the plaintiffs include environmental advocacy group Delaware Riverkeeper and Dr. Mehernosh Khan, a former Pittsburgh-area physician who is now practicing in Massachusetts.
The 2012 law grew out of a desire to modernize Pennsylvania’s 20-year-old drilling laws to account for a Marcellus Shale drilling boom made possible by innovations in technology, most notably horizontal drilling and hydraulic fracturing.
The law did not include a severance tax on the industry, but it did allow counties to impose an impact fee. Most of the revenue goes to local governments that host the gas wells, while state agencies and grant programs get the rest.
After the industry descended on Pennsylvania in 2008 to tap into the Marcellus Shale, companies began complaining that some municipalities were exploiting a legal gray area and using zoning rules to illegally limit drilling.
Corbett, a Republican, backed the industry, arguing that a 1984 state law had intended to outlaw municipal regulation of oil and gas operations anyway.
The law’s provisions effectively told municipalities where they must allow various types of drilling activity, but they were put on hold by a lower court and were never enforced before the Supreme Court ruled 4-2 in December that the state had overstepped its bounds.
BY JULIE BENAMATIMarcellus Business Central Editor
SHAWVILLE, PA – NRG Energy Inc., based in Houston, Texas and Princeton, NJ, recently announced plans to convert the currently coal-fired Shawville Power Plant to a natural gas operation.
According to David Gaier, spokesman for NRG, the plant will shutter its doors as planned in April 2015 – but will re-open one year later after the facility undergoes a conversion to natural gas.
It was announced in 2012 that the Shawville Power Plant, formerly owned by GenOn Energy, that the plant would be deactivated and about 80 employees would lose their jobs. It was one of eight plants, including four others in Pennsylvania, that were slated for shutdown.
NRG Energy completed the merger with GenOn Energy in December 2012, creating the largest competitive power generator in the nation. The Shawville plant alone has been providing about 600 megawatts of power annually to the Pennsylvania-New Jersey-Maryland grid for more than 55 years.
Gaier said company officials considered economic and environmental factors before making the decision in mid-May to convert the Shawville plant to natural gas.
“We found the coal units could be converted to operate on natural gas,” Gaier said. “This will improve the plant’s emissions profile and comply with environmental regulations.”
All four coal units will be converted to natural gas and a gas pipeline will be drilled to transport the gas to the plant.
When the plant closes, about 80 employees will be jobless. However, Gaier said he anticipates about 40 employees being needed when the plant reopens in April 2016. He did not say if the furloughed employees will be given first opportunity to return to the plant.
But in good news, Gaier said about 100 to 150 jobs will be created to perform the conversion, which is expected last about one year before the plan reopens.
“I can’t predict where the workers will come from in any particular project, but it’s been our experience that many jobs often come from the local and regional areas,” Gaier said. “The main driver of the jobs is the availability of skilled labor in the trades that are needed. There will be about 100-150 jobs during the approximate one-year construction period.”
BY JULIE BENAMATIMarcellus Business Central Editor
PITTSBURGH, PA – It appears that the summer months are becoming more attractive for hosting gas & oil conferences.
More than 3,200 attendees and 321 exhibitors participated in the recent DUG East conference and exhibition in early June at the David L. Lawrence Convention Center.
In response to requests both exhibitors and attendees, DUG East was staged earlier than in the past, changing to a June date instead of the usual November dates. Warmer weather facilitated more interaction among sponsors, exhibitors and conference delegates.
The change was a success, and has already prompted expo coordinators to begin planning for next year’s event, which is scheduled June 23-25, 2015 in the David L. Lawrence Convention Center.
The most recent conference offered in-depth presentations from executives who lead many of the top operators in the Marcellus and Utica shale plays.
Oil and gas experts are typically booked in advance as speakers on various topics in an effort to draw crowds. At the most recent DUG East conference, top management from CONSOL Energy, Magnum Resources, Stone Energy, Anadarko and Talisman Energy USA addressed the conference. Rice Energy CEO Daniel J. Rice IV was the closing keynote speaker.
As an added attraction, former CIA Director Leon Panetta was shared firsthand accounts of his White House experiences as the conference’s keynote luncheon speaker on June 4.
“Hart Energy events provide a platform for information exchange,” Barry Haest, Hart Energy vice president of events, said in a statement. “This conference, like all of our DUG series forums, focuses on the business side of the oil and gas industry – economics, activity levels and investment plans. It also affords great networking opportunities for operators and service companies who work in this region.”
Two week after DUG East, Mansfield University in Tioga County was the site of the fifth annual Northern Tier Marcellus Shale Business Expo held on Wednesday, June 18. This was the first time the event was held at the university. Prior expos were held in nearby Troy, Bradford County.
The event hosted a barbecue the night prior to the expo after exhibitors set up.
“Overall, MU was very happy with the Expo and the turnout, especially because we sold out vendor space this year,” said Lindsey Sikorski, director of the Marcellus Institute at Mansfield University. “Holding an expo on a college campus brings unique challenges that convention centers and fairgrounds do not have, but we felt we did our best to turn the facilities into a suitable exhibit space.”
She said inviting people to visit the campus as either a vendor or an attendee is also a huge benefit for MU.
“When I spoke with vendors, they indicated that they made some really good contacts from the event and established some worthwhile new business leads,” Sikorski said. “MU is extremely pleased to have helped facilitate these new relationships. “
Original plans for a golf outing the day before the expo fell through due to scheduling conflicts at Corey Creek Golf Course, but the expo did host a networking BBQ on campus the evening of June 17.
In a few more weeks, Pennsylvania Independent Oil & Gas Association (PIOGA) is hosting a PIOGA Pig Roast, Equipment Show and Conference on July 22-23 at Seven Springs Mountain Resort in Seven Springs, Somerset County.
The event will not only be educational, but entertaining.
Golf, sporting clays, Texas Hold ‘Em, food and fireworks are on tap for Tuesday, July 22, and the conference is scheduled on Wednesday, July 23 from 9 a.m. to 3:30 p.m., featuring PA conventional formations with horizontal drilling potential, horizontal drilling with air/foam, water disposal options for state producers, hydraulic fracturing of horizontally drilled conventional formations, LNG for high horsepower applications and alternative fuel vehicles.
And mark calendars for Williams third annual Barbecue Cook-Off to benefit four United Way agencies in Susquehanna County, Wyoming County, Wyoming Valley, and Broome County, NY on Friday, Sept. 12 at the Nicholson Carnival Grounds, Wyoming County.
Teams from the area will compete for best pork rib, pulled pork or beef brisket barbecue. Bragging rights include plaques and trophies – and all proceeds are matched dollar for dollar by Williams, according to Mike Atchie, public outreach representative at Williams,.
While the event is not exactly an expo, many Marcellus-related companies attend as cookers and/or judges, and often bring corporate displays to the event.
BY JULIE BENAMATIMarcellus Business Central Editor
NICHOLSON, PA — Williams will be making a significant contribution to local United Ways by hosting its third annual Marcellus Barbecue Cook-Off at the Nicholson Carnival Grounds, Wyoming County on Friday, Sept. 12.
Companies in the natural gas industry in northeast Pennsylvania will have the opportunity to compete to see who makes the best barbecue in three categories: Pulled Pork, Beef Brisket and Pork Ribs.
All proceeds from the competition will be divided between the United Ways of Wyoming County, Susquehanna County, Wyoming Valley and Broome County, N.Y. In addition, Williams will match every dollar raised from the event.
According to Mike Atchie, public outreach representative at Williams, the inaugural event in 2012 raised more than $20,000 from tickets and sponsorship. Last year, the event garnered $50,000, which was matched dollar for dollar by Williams for a total of $100,000 – or $25,000 for each United Way.
“Last year’s was bigger than our first year, and we raised twice as much money,” Atchie said. “The idea is to continue to build on this and make it our signature event for the Northeast.”
He said most entries are from natural gas companies, local businesses, catering companies or restaurants.
“It’s bragging rights,” Atchie said. “We give plaques to the winners, and one entry is given a Grand Champion award where they not only win in their category, but also raises the most money through the People’s Choice voting.”
The Grand Champion award is a traveling trophy, which has the company’s name engraved on it. The winner has to return the award the following year to have the trophy engraved with the new winner’s name.
Atchie said the event is mostly attended by gas industry members, but the public is invited to participate.
“This is much different than going to a gas & oil expo,” Athie said. “It’s a totally different environment, but you can still promote your business.”
Atchie said the United Way is the target of Williams’ largest community contributions.
“We wanted to do something to drive interest in (United Way)”, Atchie explained. “Some companies do golf outings, but this is our industry. Many Marcellus-related companies have cooking equipment like giant grills or smokers to cook for their workers. So we bring them in for a fundraiser, make it a compettion and have some fun.
“The idea is to continue to build on this and make it our signature event for the Northeast,” Atchie said.
Williams, a leading energy infrastructure company, has partnered with Cabot Oil & Gas, Piedmont Natural Gas, and WGL Holdings to develop a major transmission pipeline project to connect natural gas supplies in northern Pennsylvania with major northeastern markets.
The approximately 124-mile Constitution Pipeline is being designed with a capacity to transport 650,000 dekatherms of natural gas per day — enough natural gas to serve approximately 3 million homes. The 30-inch pipeline would extend from Susquehanna County to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, N.Y. The proposed project route stretches from Susquehanna County into Broome County, N.Y., Chenango County, N.Y., Delaware County, N.Y., and terminates in Schoharie County, N.Y.
The Constitution Pipeline is being designed to transport natural gas that has already been produced in Pennsylvania. The pipeline is not dependent upon nor does it require the development of new natural gas wells along the project’s proposed path. The pipeline is already fully contracted with long-term commitments from established natural gas producers currently operating in Pennsylvania.
And while the pipeline continues to move forward, Williams is hoping their third annual Marcellus Barbecue Cook-Off grows again.
There will be a minimum donation of $150 for the entry of a four person barbecue team. Teams are asked to provide their own meat, grill, and sauce.
Each barbecue team will have their samples judged by those who enter into any of four VIP judging levels: Grill Baby, Grill (minimum donation of $2,000), Smokin’ ($1,500 – $1,999), Mesquite ($1,000 – $1,499) and Hickory ($500 – $999). Each category provides entry into the event for the judges, additional general admission tickets for guests and extra perks based on the category level. Judge teams are also provided a dedicated area and table to display their company’s products or services.
The competition includes a People’s Choice category, which allows anyone attending to play a part in the judging. Everyone can vote for the People’s Choice Award by placing any denomination of bills into People’s Choice buckets to be located at each team’s station. The proceeds from the People’s Choice will go to the United Way designated by the winning team, and every dollar raised will be matched by Williams.
(AP) — Rice Energy Inc. said on Monday that it signed an agreement to acquire 22,000 leased acres and 12 developed Marcellus shale wells in western Greene County from Chesapeake Appalachia LLC and partners for about $336 million in cash and debt.
Cecil-based Rice Energy said it expects to complete the purchase in August. It will increase acreage by 24 percent, Marcellus well locations by 47 percent and production by about 20 million cubic feet of natural gas a year, with five wells in various stages of development.
CEO Toby Rice said the company is evaluating raising additional capital for the acquisition by selling stock. Rice remains on track to add a total of 30,000 leased acres this year, he said.
(AP) — Vantage Energy Inc., a natural gas drilling company with holdings in the Marcellus shale formation, is planning a $400 million initial public offering of stock, according to a filing with the Securities and Exchange Commission. The company, which holds about 50,000 acres in Greene County, did not provide pricing of its shares in the filing. The Englewood, Colo.-based company said it will trade under the ticker symbol “VEI.”
PITTSBURGH, PA (AP) — Houston-based driller Noble Energy is settling into a headquarters across the street from Range Resources Corp., the largest landholder among shale drillers in Western Pennsylvania, and Consol Energy Inc., the oldest local company working the Marcellus shale.
The six-story building in Cecil’s Southpointe development that Noble will lease sits among a cluster of peers and service contractors, with easy interstate access to its well sites in Washington County and West Virginia.
The Marcellus “is quickly shaping up to be a world-class play,” said Bob Ovitz, senior operations manager for Noble’s Marcellus business unit. “Southpointe is sort of the nexus, the epicenter of what’s going on out here. … This is a great regional hub for the industry.”
That hub stretches from the Washington County business park to Cranberry in Butler County. About a dozen drilling companies, big and small, and most of the biggest Marcellus shale-gas producers in Pennsylvania chose to be here, even some that drill mostly in Eastern Pennsylvania and those, such as Noble, that do a lot in West Virginia.
It’s a unique opportunity for the region, putting Pittsburgh atop the Appalachian energy industry’s supply chain, economic experts said. Rigs move and field offices close when the rigs go, but the corporate presence taking root in Pittsburgh is a constant that can withstand the whims of a boom-and-bust industry, they said.
The drilling companies draw pipeline companies such as Williams and MarkWest, and service companies such as Halliburton. Law firms and engineering and environmental consultants follow. Clustering in Pittsburgh offers them access to finance, skilled workers and culture, centrally located between drilling hot spots in Pennsylvania, West Virginia and eastern Ohio, experts said.
“Pittsburgh is the place that has all of that at once,” said Kurt Rankin, an economist with PNC Financial Services Group. “Any firm that has hopes of being part of the natural gas revolution in the United States, and in particular focused on the Marcellus shale, is going to want to be a regional presence (here), with people on the ground who understand the marketplace in Pittsburgh.”
There’s hope that petrochemical makers and manufacturers will locate here as well, to take advantage of cheap natural gas. The gas industry could become like the coal industry that brought natural resource companies and steel-making that has survived in the region for more than 100 years, said Chris Briem, regional economist at the University of Pittsburgh.
“It’s a fortunate accident of geography, millennia old,” he said.
About a dozen shale drillers are in the Pittsburgh area, most along Interstate 79, including Royal Dutch Shell plc and Exxon Mobil Corp. and midsized companies such as Cabot Oil & Gas Corp. and Talisman Energy Inc. Suburban locations give them quick access to Pittsburgh International Airport and field sites around the countryside.
The trend — building for a while — is ongoing. Chevron Corp. spent $17.5 million last year to buy land in Moon, closer to the airport. Township officials have said it could be a regional headquarters with 1,000 to 1,500 workers, though Chevron has yet to confirm that.
Rice Energy Inc., which just went public, has a headquarters under construction in Southpointe and plans to move in June 1.
“For us, it’s proximity to our acreage in Washington and Greene counties … and Belmont County in Ohio,” said Jamie Rogers, a vice president at Rice, which is outgrowing a suite at Southpointe. “So many of the service companies have now migrated to Southpointe, especially, it really does simplify doing business.”
PITTSBURGH, PA (AP) — Marcellus shale drillers need more pipelines to get their bountiful supply of gas to market, but improving the delivery infrastructure could cause them growing pains.
The challenge of growing the delivery network without pressuring prices with more supply is something on the minds of industry officials who are attending a conference in Pittsburgh this week.
“All these supplies that we’re growing on the gas production side are at risk if we can’t connect them to markets,” Alan S. Armstrong, CEO of the Williams Cos., a pipeline and processing group, told the Marcellus-Utica Midstream Conference & Exhibition on Wednesday.
The industry has made progress, especially in the past 18 months, at getting pipelines to more wells. But with gas production growing so fast, the pipeline investment will have to go on into the next decade and maybe longer to keep pace, experts at the conference said.
It’s a tricky balance that can cause hesitation for gas producers, said Bradley Olsen, managing director for midstream research at Tudor Pickering Holt & Co. in Houston. They commit to putting gas in these pipelines to help fund their expensive construction.
But if they commit big to help connect another part of the country where gas sells at higher prices, they risk the influx of Appalachian gas pushing down prices there, too, sticking the company with a bad investment for more than a decade, Olsen said.
“Producers don’t sign up for projects until prices get worse,” Olsen said. “It’s hard to do unless there’s some serious pain locally.”
That pain did hit big time in the fall. The growing local supply pushed prices down at natural gas hubs in Pennsylvania to $2 to $3.50 per unit below the national benchmark price, according to data from UGI Corp.
Three months after a new pipeline took Appalachian shale gas into Manhattan, industry experts said the local gas industry is going to have to keep pushing new links all over the country to sustain its growth.
“With all the promise of the shale revolution, it’s certainly not a slam dunk that we can make the most of it,” said Armstrong, referring to the challenges of connecting shale drillers to new markets. “It’s certainly going to take a long-term commitment.”
That’s likely to cost about $3 billion a year — maybe more — in Pennsylvania, Ohio and West Virginia, according to several estimates at the conference.
The threat of lower prices can make the gas industry look hard at connecting to broader markets, Olsen said. Pipeline projects to address it will take about three years, and that means the industry is probably vulnerable to price shocks and well shut-ins until 2016, he said.
The gas industry has made progress on this persistent problem in the last two years. In June 2011, 38 percent of the state’s unconventional wells were producing, many because they lacked pipeline connections, according to data gathered by the Penn State Marcellus Center for Outreach and Research. By 2013, two-thirds of all the wells in the state were connected and producing.
There have also been several new transmission pipelines, the superhighways of natural gas. Spectra Energy’s 30-inch line into Manhattan opened Nov. 1, making big news about doubling the island’s supply, according to Bloomberg. It quickly dropped prices there 40 cents per unit below the national benchmark price.
“Appalachian producers are very actively contracting pipeline capacity during project open seasons,” said Dave Messersmith a Penn State extension educator who was not at the conference, but tracks pipeline projects. “I can’t think of a midstream project in the Marcellus in 2013 that wasn’t booked soon after it was announced.”
Armstrong, the Williams CEO, warned of price volatility if the gas industry didn’t keep building up its pipelines to meet new customers. Price crashes lead drillers to pull back, either by slowing their drilling or shutting in wells they’ve drilled — common issues in Pennsylvania in 2011 and 2012. That can limit supply and cause prices to jump again. That up-and-down cycle can make new customers, especially big industrial customers the industry has been courting, skeptical about the reliability of natural gas, Armstrong said.
Coordination between drillers and pipeline companies is key, said Randall L. Crawford, who oversees midstream and commercial operations for Downtown-based EQT Corp., which has both production and pipeline arms. While there may be lags, producers and their pipeline companies are doing a better job of collaborating to ensure pipelines are ready to go to support development, he said.
“Most production companies … are economically driven, and the fact is that when you’re investing in these wells, it’s important to be able to get those returns, generate those cash flows by getting (gas) to market,” Crawford said. “I’m not going to say there’s not going to be lags because there needs to be a coordinated effort and a commitment to the pipeline capacity to get that gas to market.”