Archive for Marcellus Shale News

Who’s Who in Marcellus: The Rice Family & Rice Energy Inc.

In January, Rice Energy Inc. made an initial public offering, which made 62-year-old Rice Energy Founder Daniel Rice III a billionaire.

The shares in the IPO, which includes natural gas gathering and compression systems in Pennsylvania, represent 43.5 percent of its limited partner interest. Rice Energy Inc. is an independent natural gas and oil company engaged in the acquisition, exploration and development of natural gas and oil properties in southwestern Pennsylvania and eastern Ohio. The company is headquartered at Southpointe Business Park in Canonsburg.

Rice Energy - Core Assets_FC

Rice owns 42.7 million shares of the company directly and through two entities, Rice Partners and Rice Holdings. The company’s value rose 14 percent since the IPO, which made Rice’s personal stake grow to $1.02 billion. The company now has over $1.2 billion in its capital budget to invest in drilling and pipelines.

Rice, who now lives in Boston, spent seven years managing energy assets for BlackRock Inc., a national investment firm.

Two of Rice’s sons, Rice Energy CEO Daniel Rice IV, 33, and Chief Operating Officer Toby Rice, 31, also own shares in the company. A third son, Derek Rice, 28, is vice president of exploration and geology.

Daniel Rice’s three sons, who hold management positions at Rice Energy Inc., bring their experience and expertise to the company.

Daniel Rice’s three sons, who hold management positions at Rice Energy Inc., bring their experience and expertise to the company.

Rice Energy Inc. was founded in 2007 and produces about 161 million cubic feet of dry natural gas a day from a 100 wells in southwestern Pennsylvania. Last November, the company drilled its 100th horizontal shale-gas well, which has a lateral length of 10,200 feet and was drilled from the starting point to its target in less than five days.

“Among the chief reasons for Rice’s success is the diversity of backgrounds and expertise the three Rice brothers bring to their management positions, which complement each other perfectly for a natural gas exploration and production company,” said Kimberly Orcho, community relations director for Rice.

Daniel Rice IV, who holds a BS in finance from Bryant University, joined Rice Partners in October 2008 and served as the VP and the CFO of Rice Energy until October 2012. From October 2012 through September 2013, he served as the Chief Operating Officer of Rice Energy.

Prior to joining Rice, he worked as an investment banker for Tudor Pickering Holt & Co., an energy investment bank in Houston, Texas, and before that as a senior analyst of corporate planning for Transocean Inc., where he was responsible for mergers and acquisitions and business development. He was appointed CEO in October 2013.

Toby Rice, who holds a Bachlor’s degree in chemistry from Rollins College, has served as president and COO since October 2013. He joined Rice Partners in February 2007 and later became president and CEO in February 2008 through September 2013. From September 2005 until March 2008, he also served as founder and president of ZFT LLC, a consulting company specializing in the application of new hydraulic fracturing technologies for unconventional shale and tight sandstone reservoirs.

Derek Rice, who holds a Bachlor’s degree in geological sciences from Tufts University and a Master’s degree in geology from the University of Houston, has served as Rice Energy’s VP of exploration & geology since 2009.

Prior to joining Rice Partners and Rice Energy in August 2009, he worked as a wellbore geologist for a large oilfield service company, where he analyzed Marcellus, Haynesville, and Barnett shale plays.

“When we started the company, our focus was just trying to getting through to the end of the week, then the end of the month, then the end of the year,” said CEO Daniel Rice IV.

“What helped us grow beyond that point was making long-term plans while executing the short-term actions we had to take to keep our heads above water.”

Rice holds 85,000 Marcellus acres, less than 5 percent of which have been developed. The company also holds 55,000 net Utica acres, with less than 1 percent developed. This year, Rice will be drilling its first Utica well in Belmont County, Ohio.

Marcellus in the Community

Marcellus in the Community - Anadarko_FC

Gas companies support natural habits and fire safety in Pennsylvania

By R. Brock Pronko

Besides providing jobs and economic stimulus to Pennsylvania communities through an influx of well-paid workers, Marcellus shale gas operators also give back to the communities they operate in a variety of ways.

Anadarko is among the largest independent oil and natural gas exploration and production companies in the U.S., with a significant portion of its production coming from the Marcellus shale in north-central Pennsylvania, where the company currently produces more than 600 million cubic feet of natural gas per day — enough to satisfy the daily heating and cooling needs of more than three million American homes.

Anadarko’s community investment projects not only contribute funding to local organizations, but they also provide sustainable and long-term benefits to local communities and habitats. Volunteers from the company often help to facilitate these projects.

In 2014, for the fourth consecutive year, Anadarko’s Williamsport employees worked with the state Department of Conservation and Natural Resources’ Bureau of Forestry and Fish and Boat Commission to restore a new section of the Wallis Run stream bank in Loyalsock State Forest. Together, they built a variety of in-stream habitat structures to help reduce erosion and sedimentation in the stream and increase aquatic life.

“Classroom to Conservation” is an Anadarko educational program in partnership with Loyalsock Township High School, which is aimed at sharing Pennsylvania’s conservation heritage with high school students. With Anadarko’s support, Loyalsock’s engineering tech-ed class designed and built 150 songbird nesting boxes. Anadarko compiled information on the nesting boxes along with pipeline rights of-way into a publicly available educational pamphlet.

Anadarko employees also provided career presentations and assembled nesting boxes with the students during an “Anadarko Cares” classroom day. Partnering with the National Wild Turkey Federation, the company supplied the leased camps an acre allotment of native wildflower pollinator seed mix to enhance the habitat surrounding the installed nesting boxes.

“We’ve traditionally supported numerous organizations in our operating area, and we’re continuing to support them this year,” said Patrick Marty, Anadarko’s government relations advisor. “Our employees and management take servant leadership very seriously – it’s ingrained in the way we look at the world.”

Rice Energy Inc., headquartered in Canonsburg, is a fast growing exploration and production gas company operating in Southwestern Pennsylvania and Eastern Ohio. Rice currently employs 306 people and produces about 161 million cubic feet of dry natural gas a day from a 100 wells in Washington and Greene counties.

Each year, the company holds “Marcellus Mania” — a large company picnic and fundraiser.

Marcellus in Community - Rice Energy_FC

“Marcellus Mania is a two-pronged event where we have free food all day and music, and we gather our business partners to raise money to donate to the local volunteer fire departments who are in our footprint,” said Kimberly Orcho, community relations director for Rice Energy.

“The first year, we raised $30,000, which we donated to the Lone Pine Volunteer Fire Department, which was in the center of our operational area in Washington County.

“The second year, we raised $110,000, which was distributed among a variety of fire departments, and last year was monumental for us, our 49 sponsors raised $456,150, with Rice kicking in the rest for a total of $461,000.”

The largest donation – $35,000 – was given to the Washington County Department of Public Safety.

Thirteen volunteer fire companies each received the next-highest amount, $30,000. Nine of those companies were in Washington County – Amwell, Bentleyville, California, Cokeburg, Ellsworth, Fallowfield, Lone Pine, Richeyville and Valley Inn. Four were in Greene County – Center Township, Graysville, New Freeport and Richhill.

In addition, Washington Ambulance & Chair, Fort Cherry Ambulance, Nottingham Safety Focus and South Strabane VFDs each received $7,250, and McDonald and Midway VFDs received $3,500 each.

Companies that store and move frack sand are in demand

(AP) — One company situated on the edge of the Ohio River is about to pump $1.3 million into creating a better barge dock, spurred by the massive impact that the shale drilling industry has had on the business.

McKees Rocks Industrial Enterprises (MRIE) is set to begin construction on a 380-foot expansion to its main site’s existing barge services. The company moves and stores large amounts of sand used by drillers during the hydraulic fracturing process to prop open cracks in the ground to extract natural gas from the Marcellus and Utica shale plays.

Jim Lind, CEO of MRIE, said the upgrade, which includes the addition of a second dock, will increase the number of barges that can be unloaded per day from one or two barges up to three or four barges. Most of the upgrade, expected to begin in mid-May, is being funded by a more than $900,000 award from the Pennsylvania Department of Transportation.

The 100-acre facility, where frack sand shipments account for half of operations, receives sand by barges and on railroad cars dubbed small cube-covered hoppers. Each year, about 6,500 rail cars pass through the main facility.

But in the past 18 months, traffic of sand shipments by barge have increased dramatically, prompting Lind to apply for the PennDOT award.

Last year, the company unloaded about 200 barge shipments of all materials on a single river dock. With the upgrade, the company expects that number to reach more than 300 shipments by the end of the year.

MRIE isn’t the only company seeing more frack sand shipped by water.

At the S.H. Bell Co., a Pittsburgh-based company specializing in storing and moving a number of materials, both barge and rail transportation are on the rise.

Its largest facility in East Liverpool, Ohio, has seen a 137 percent year-over-year increase in sand arriving by barge. The sand coming in by rail, which makes up about 75 percent of sand deliveries, is up about 80 percent year-over-year.

Other products that flow through S.H. Bell are also on the rise. Steel and steel-related products arriving by river climbed 113 percent year over year. Meanwhile rail operations are at “close to capacity,” according to Sales and Marketing Manager Adam Bell.

Bell attributed this increase to a strong U.S. dollar and increased demand for the products by oil and gas firms.

“The fact that companies like ours can receive both barge and rail is appealing to [sand customers] because they have the option should anything happen to either of the supply chain modes,” Bell said.

Recently, frack sand deliveries across the country have been mired by shortages in the number of railroad cars available to move the material, causing some suppliers and end users to look to alternative transportation. But those shortages are easing up.

As late as the fourth quarter of 2014, analysts predicted that there would be a shortage through 2015 in small cube-covered hoppers dedicated to frack sand delivery. Some predicted that those shortages would continue as late as 2017.

However, those projections have since taken a big haircut due to dropping oil prices, according to Samir Nangia, a director at IHS Inc., who estimated that there could be an oversupply of hoppers this year due to a predicted 14 percent decrease in frack sand demand coupled with increasing car supplies.

“Prior to the recent downturn in the market, strong demand in not only the Marcellus and Utica shales, but also other shale plays… led to some car shortages,” said Ryan Fischer, assistant vice president for emerging markets for Genesee & Wyoming Railroad Services Inc. “This prompted sand shippers to seek more efficient use of cars through strategies such as dedicated unit trains, as well as creating more sand storage at their rail destinations, versus using railcars as storage.”

Fischer said these strategies are still on the rise. G&W Railroad, a Connecticut-based short-line railroad company, serves a number of transloading facilities in the region, including MRIE.

In 2009, over 760,000 carloads of crushed stone, sand and gravel, which includes frack sand, were moved across the country, according to the Association of American Railroads. Over the years, that number has steadily risen. Last year, it was at 1.2 million carloads. The movement of these materials accounts for about 4 percent of total rail traffic in the United States.

At Middleton Properties West, LLC, an Aliquippa-based company that originally opened with a focus on barge deliveries, frack sand has grown the business dramatically. Two years ago, the company received about 10,000 tons of frack sand per month by both barge and rail. Now, the company receives about 50,000 tons per month — 20,000 tons by rail and 30,000 tons by barge. Frack sand deliveries now make up about 80 percent of the company’s business.

Both Bell and the owner of Middleton Properties, Jim Lambert, said while many suppliers and end users would ideally use rail, barges provide a reliable method of transportation.

“A year ago when the fuel prices were high and they were drilling for oil, you just couldn’t get rail cars,” Mr. Lambert said. “Still just [barge] or [rail] wouldn’t be able to handle demand. You need both to keep up with it.”

Northeast Oil & Gas Awards, Industry Summit prepare for third conference

oilgas award can

The new Oil & Gas Awards trophies are a one-third scale barrel in highly polished aluminum. (photo provided) 

PITTSBURGH, PA – The 3rd Annual Northeast Oil & Gas Awards Industry Summit is making final preparations for its highly anticipated event to be held at the Westin Convention Center on Penn Avenue in Pittsburgh.

Pennsylvania Independent Oil and Gas Association (PIOGA) President Louis D. D’Amico is this year’s guest of honor.

The event recognizes the outstanding achievements within the upstream and midstream sectors of the North American oil and gas industry. The awards are a platform for the industry to demonstrate and celebrate the advances made in the key areas of environment, efficiency, innovation, corporate social responsibility and health and safety.

Hundreds of companies submitted nominations for this year’s annual awards. Finalists were announced and notified in January, including publication in media partner Marcellus Business Central’s January edition.

Winners will receive new trophies – a one-third scale oil barrel in highly polished aluminum. Kerr Pumps & FlowValve designed and manufactured the trophies, which will be handed out to winners this year.

This year there are 25 categories:

  • Award for Drilling Excellence
  • Award for Excellence in Corporate Social Responsibility
  • Award for Geophysical Excellence
  • Award for Excellence in Health & Safety
  • Award for Excellence in Well Completion
  • Breitling Energy Future Industry Leader
  • Construction Company of the Year
  • Corporate Consultancy of the Year
  • E&P Company of the Year
  • Engineering Company of the Year
  • General Industry Service Award
  • Industry Leader
  • Industry Supplier of the Year
  • Law Firm of the Year
  • Manufacturer of the Year
  • Midstream Company of the Year
  • New Technology Development of the Year
  • Oilfield Services Company of the Year
  • Operational Consultancy of the Year
  • Recruitment Agency of the Year
  • Risk Management Company of the Year
  • The Oil & Gas Financial Journal Transaction of the Year
  • Trucking Company of the Year
  • VZ Environmental Award for Excellence in Environmental Stewardship
  • Water Management Company of the Year

 

The Northeast Industry Summit will be held during the day, immediately before the awards gala dinner. The summit will provide an extended platform to deliver strategic and operational business insights that have clear commercial benefits, as well as an extended network opportunity. The summit builds on the significant success of the Oil & Gas Awards, a unique series that has become a must-attend industry event.

Keynotes and panel discussions include Health & Safety, Corporate Social Responsibility, Environmental Stewardship, Lawmaking Through Litigation and Innovation and Infrastructure Delays. The Industry Summit will ensure that attendees are kept abreast of what the leading companies in the Northeast are doing.

Click here to see a full list of award finalists.

DEP’s oil and gas advisory committee to see sweeping changes

John Quigley, acting secretary of the state Department of Environmental Protection, is making a clean sweep of his agency’s oil and gas technical advisory board. He’s replacing all of the board members and creating a second board to advise the department about regulations impacting conventional drilling.

DEP Sweeping Changes - Quigley

Quigley

Quigley, who was nominated by Governor Wolf to lead DEP, was secretary of the state Department of Conservation and Natural Resources from 2009 to 2011.

The new board, which is called the conventional oil and gas advisory committee, will consist of seven members: three appointed by the DEP secretary, one appointed by the DEP’s Citizens Advisory Council, and three members from conventional oil and gas operators.

The DEP is seeking nominations for the oil and gas technical advisory board, which includes engineers and geologists who represent the drilling industry, the coal mining industry and the general public. The five outgoing members of the board had served in their positions between seven and 26 years.

These changes came less than three weeks before the technical advisory board was scheduled to review the latest draft of wide-ranging changes to the state’s oil and gas regulations on March 5. The meeting was rescheduled for March 20. The draft of the final rules are informed by the DEP’s responses to thousands of comments submitted by the public on the new rules.

Quigley said the changes to the committees will help the technical advisory board give greater attention to shale gas drilling, which didn’t exist when the board was created in 1984. It will also strengthen participation and transparency in the state’s environmental regulatory process.

“We want to make sure that our stakeholders, which includes the regulated community, affected municipalities and environmental interests, are represented in a focused way for both conventional and unconventional development,” Quigley said.

The revisions to the state’s rules for oil and gas surface operations began long before the recent change in PA DEP’s leadership. On Dec. 14, 2013, Pennsylvania’s Environmental Quality Board proposed new regulations for surface activities related to oil and gas well development. Once finalized, these proposed regulations will set new requirements for oil and gas operations to ensure increased protection of public health, safety and the environment.

The proposals modify and update existing requirements to surface activities related to the development of oil and gas wells, including containment of regulated substances, waste disposal, site restoration, and reporting releases. In addition, the regulations establish new provisions for borrow pits, oil and gas gathering pipelines, identification of abandoned wells, and the road-spreading of brine.

These proposals also add new provisions for unconventional gas wells to help identify impacts to public resources, standards for freshwater and wastewater impoundments, well site containment systems, wastewater processing, and water management plans.

The new regulations will address some areas where the DEP was found to be lacking. In January 2013, Pennsylvania’s Auditor General Eugene DePasquale announced he would be conducting an investigation into the effectiveness of state regulators in overseeing the impacts from shale gas drilling. His year-and-a-half long investigation showed the state’s environmental regulators were remiss in at least eight major areas, including failing to cite drillers who broke the law.

DePasquale detailed the agency’s shortcomings in a 158-page report, which included the DEP’s use of a legal “loophole” to avoid inspecting wells. The report also described the agency’s failure to fulfill its duty to track the industry’s toxic waste and faulted the agency for a reliance on voluntary measures in policing the industry.

 

Tri-State Alternative Fuels Expo & Conference showcases company success stories

MONROEVILLE — The 2015 Tri-State Alternative Fuels Expo & Conference was held at the Monroeville Convention Center Feb. 24-26.

Alternative Fueling Expo 2

Exhibitors at the Tri-State Alternative Fuels Expo and Conference are pictured in the Monroeville Convention Center Feb. 24-26. (photo by Paul Wells)

The event is an annual trade show, hosted by a team of industry advocates and professionals with a common goal of reducing foreign oil use.

The conference showcased exhibitors from not only the natural gas and propane industries but also all types of alternative fuels and energy companies. Educational seminars spanned the different types of alternative fuels and energy utilization, as well as live demonstrations and displays of alternative energy technology.
The 2015 Expo & Conference was themed “Success Stories” and featured large scale fleet operation examples of alternative fuel success.

Founder and managing partner of “O” Ring CNG Fuel Systems, L.P., Robert H. Beatty, Jr., said there were more than 100 exhibitors at the event.

Beatty is chairman of the Alternative Fueling Expo & Conference advisory board and was also a keynote speaker at this year’s conference. He spoke about the development of compressed natural gas (CNG) infrastructure, and how companies can gain a foothold in Pennsylvania.

Beatty’s company, “O” Ring CNG Fuel Systems, L.P., was also one of the event’s many exhibitors.

This year’s event featured a similar agenda as the previous year’s show, but featured more variety and changes in vendors.

Business owners, government officials and citizens attended and learn how using cleaner, local fuel sources can save consumers money at the gas pump. Attendees also heard first-hand from two companies as to how they implemented alternative fuels into their fleet operations and the significant financial impacts that have resulted.

Featured agenda items included a petroleum reduction technology followed by a “Building and Expanding the CNG Refueling Infrastructure in the Tri-State Area”; a presentation about the Marine Inland Waterway & Virtual Pipeline presented by David Kailbourne and a seminar about CNG truck choices, challenges and opportunities.The following day, events included a Department of Energy “A-Fleet” Program followed by “A CNG Success Story for Waste Management.”

Additional speakers also delivered keynote addresses during the event.

Layoffs hit field services companies as drillers cut production

A study released last month by the outplacement firm of Challenger, Gray and Christmas showed the oil & gas industry lost 21,000 jobs in January. Field services companies, which support oil and gas field operations on a contractual basis, were hit particularly hard since demand for their services is solely based on oil and gas prices. The layoffs were the result of a precipitous drop in oil prices, which have fallen by over 60 percent because of a global glut in oil supplies.

Larson

Larson

Halliburton, a major oil services company, plans to cut 6,400 jobs, most of which will be in Canada. The Canadian Association of Oilwell Drilling Contractors forecast an average of 167 fewer active drilling rigs in Canada this year, resulting in 23,000 fewer direct and indirect jobs than last year.

Schlumberger, another major oil services company, announced it would lay off 9,000 workers. Baker Hughes said it planned to lay off 7,000 workers, and Weatherford International plans to cut 8,000 jobs this year.

“The impact will be felt across all areas of Halliburton’s operations, and we continue to make adjustments to our workforce based on current business conditions,” said Halliburton Spokesman Chevalier Mayes in Houston, Texas. “We value every employee we have, but unfortunately we’re faced with the difficult reality that reductions are necessary to work through this challenging market environment.”

Other major field services companies could also face layoffs, including China Oilfield Services, Nabors Industries, National Oilwell Varco, Saipem, and Transocean, a leading offshore drilling service company, which announced the shutdown or sale of 10 of its oil rigs last month.

Schappeli

Schappeli

Some major field services are oil and gas exploration, preparing wells for production, and maintaining and increasing the output of producing wells. Other services include: well surveying; cleaning out, bailing, and swabbing of wells; and operation of workover rigs, which are used to increase production.

The profitability of field services companies depends on technical expertise and efficiency of their operations. Some larger field service companies also manufacture oil and gas field equipment.

Smaller local and regional companies such as heavy equipment operators, electrical contractors and waste management firms also provide support for oil and gas operators. While large companies can offer a broad range of services, smaller firms can compete by specializing in a particular services or geographic areas.

Newalta Environmental Services is a field services firm company with two locations in – one in Montgomery, Lycoming County, which services operators in the Northern Tier, and one in Washington, Washington County, which services operators in western Pennsylvania, eastern Ohio and northern West Virginia.

Newalta workers maintain and repair the company’s field services equipment at yards in Montgomery and Washington and transport the equipment to the drill pads after the rig has been set up. Later, they manage the waste fluids used in drilling and the drill cuttings coming from the well.

“Our business in Pennsylvania has experienced some softening, but we’re already seeing additional activity picking up both in the dry and wet gas regions,” said Quay Schappell, northeast district manager at Newalta.

“Most of that is enhancing takeaway capacity – gathering lines and storage tanks – in preparation for transporting gas to the major transmission lines being built in the state.

“Our expectation is that over the next two to three years, as these transmission pipelines are connected to existing lines going to major markets, a lot of our customers’ wells that are now capped will be producing, and our Marcellus shale work will pick up again.

“Right now, most of our work is in wet gas play in eastern Ohio,” Schappell said.

Newalta also has oilfield operations in North Dakota, Texas and throughout Western Canada.

“A significant amount of the work we do in those oil plays is post-drilling. We recover the different waste streams from those oil plays, primarily sediment that accumulates at the bottom of storage tanks,” said Schappell. “We recover oil from what they consider waste, and we send the solids to a landfill and sell the oil we recover.

“The company has experienced a drop in our oilfield services work due to the low oil prices. It’s not detrimental at this point, but it’s lean and could worsen if the oil prices remain low.”

Oil prices have risen slightly in March due to a changeover to spring-mix gasoline, which costs more to produce than winter-mix.

K.C. Larson of Williamsport supports the gas companies at their home bases. The company was hired to do mechanical and electrical construction work for the buildings that gas companies bought or built when they first came to Pennsylvania. Now Larson is maintaining multiple systems in those buildings and adding improvements as needed.

The major trend Larson is seeing in the shale gas industry is operators learning to do more with less.

“They’re continuously focused on increasing efficiency, which means that field services companies have had to up their game to keep pace with the industry’s demand for greater efficiency,” said Keevin Larson, president of K.C. Larson.

The low price of natural gas is driving this trend.

“When you’re operating costs are fixed and the price you’re paid for natural gas drops or remains low, you’ve got to squeeze every bit of production from each well in order to remain profitable, otherwise, you’d have to cap the well,” Larson said.

“The oil and gas industry progresses step by step, but not always in sequence, sometimes one step gets ahead of the other and you end up what we have now, a glut of oil and Marcellus gas stored in tanks and gathering lines because there’s no way to get all of it to market until the Pennsylvania transmission pipeline system is completed.

“The U.S. is set up to import oil and liquid natural gas, not export them, but all that is about to change as the U.S. transitions from a major importer of energy to a major exporter.

“Things have progressed so quickly with the shale plays and fracking has become so efficient that the industry is now taking a breath and trying to catch up with itself, and unfortunately, there will be layoffs during this transition.”

The story behind Hickory Bend

Pennant Midstream has built a 55-mile wet gas gathering pipeline system in northeast Ohio and western Pennsylvania to transport the wet gas to the company’s Hickory Bend cryogenic natural gas processing plant in Springfield Township, Mahoning County.

A map of the Hickory Bend Gathering System. (photo provided)

The project, which began operation in August 2014, came at a $375 million price tag. The plant is capable of processing up to 200 MMcf/d (million cubic feet per day) of natural gas liquids. Hickory Bend has 15 employees, most of whom who were hired locally when the plant opened.

Gathering lines are small-diameter pipelines that move natural gas from the wellhead to the processing plant or to an interconnection with a larger gas transmission pipeline. The gathering pipeline is connected to a producing well, converging with pipes from other wells where the natural gas stream may go through an extraction process to remove water and other impurities. Natural gas that is being transported from the production field is referred to as “wet” natural gas if it still contains significant amounts of hydrocarbon liquids and contaminants or “dry” natural gas if gas is “pipeline quality.”

At this stage, the wet gas is a mixture of methane and other hydrocarbons plus some non-hydrocarbons co-existing in a gaseous state or in a solution with wet gas or crude oil. The chief hydrocarbons usually found in the natural gas mixture are methane, ethane, propane, butane and pentane. Typical non-hydrocarbon gases include water vapor, carbon dioxide, helium, hydrogen sulfide and nitrogen. At the cryogenic processing plant, hydrocarbons are separated from non-hydrocarbons using low temperature distillation.

For economic reasons, most cryogenic plants do not currently include fractionation, which is the breakdown of wet gas into its individual hydrocarbon components. Instead, the NGL stream is transported as a mixture to a fractionation plant often located near refineries or chemical plants that use the components for feedstock.

Columbia Midstream Group (CPG), a Columbia Gas affiliate, and Hilcorp Energy Company’s midstream affiliate, Harvest Pipeline, jointly own Pennant Midstream. CPG operates the Hickory Bend plant, while Hilcorp provides a large portion of the gas for processing. The wells feeding the plant are located in Lawrence and Mercer counties and the NGL pipeline goes to a plant in Kensington, Ohio to fractionate the gas and send the separated liquids to markets.

Hilcorp, founded in 1989, is one of the largest privately-held independent oil and natural gas exploration and production companies in the nation.  Hilcorp has over 1,100 employees at operations across the United States including the gulf coast of Texas and Louisiana, Northeast U.S. and Alaska’s Cook Inlet. Hilcorp has continued to grow by actively acquiring and exploiting conventional assets while expanding its footprint into a number of new shale resource plays.

Columbia Midstream Group (formerly NiSource Midstream) was established in August 2010 to partner with producers in the Appalachian Basin and bring their supplies to market. Columbia Gas traces its roots to the mid-1800s when it began operating pipeline infrastructure throughout Pennsylvania, West Virginia and Ohio.

“We at Columbia Midstream are very happy with the success of the Hickory Bend Processing Plant, because it’s an excellent example of our company building the necessary infrastructure to support the phenomenal growth of the industry as a result of the Marcellus and Utica shale play development,” said Mike Huwar, Columbia Midstream’s vice president of marketing.

“We are also proud to be a part of the Springfield Township community. We see strong growth opportunities in the future to further develop gathering and processing of natural gas, which will further enhance the local economy in Mahoning County and beyond,” Huwar said.

2015 Marcellus-Utica Midstream Conference forecasts growth

PITTSBURGH, PA – Hart Energy hosted its largest audience for a midstream conference on Jan. 27-29 when  the 2015 Marcellus-Utica Midstream conference and exhibition (MUM) came to town.

Attendees at the 2015 MUM Conference in Pittsburgh fill the David L. Lawrence Convention Center last month.

Attendees at the 2015 MUM Conference in Pittsburgh fill the David L. Lawrence Convention Center last month. (photo courtesy of Hart Energy)

More than 2,100 individuals — a nearly 20 percent increase from last year – visited the David L. Lawrence Convention Center in Pittsburgh 29 to hear from midstream sector leaders.

“It’s been exciting to see six years of success for this conference focused on the Appalachian region,”

said Barry Haest, Hart Energy’s vice president of events. “Hart Energy will continue to provide value to

industry professionals who need current and accurate data, intelligence, and contacts.”

Spectra Energy Vice President Brian McKerlie told attendees the industry will create supply opportunities and demand will grow on its own.

Other enlightening speakers included EnLink Midstream President and CEO Barry Davis and Kinder Morgan Energy Partners Vice President Karen Kabin.

Davis, CEO of EnLink Midstream Partners LP, was the opening keynote speaker focusing on Appalachia’s Continuing Grown. EdLink Midsteam has an expanding presence in the Utica and Marcellus plays through its Ohio River Valley operations. Davis provided insights on what he sees ahead for the region.

Barry Davis, CEO of EnLink Midstream Partners LP, was the opening keynote speaker focusing on Appalachia's Continuing Grown. Davis provided insights on what he sees ahead for the region.

Barry Davis, CEO of EnLink Midstream Partners LP, was the opening keynote speaker focusing on Appalachia’s Continuing Grown. Davis provided insights on what he sees ahead for the region. (photo courtesy of Hart Energy)

John Kneiss, Director of Governmental Affairs at Stratas Advisors provided a Regulatory & Policy Update. With the congressional elections just completed and a presidential election next year, the industry’s regulatory environment is in flux. Attendees learned how the midstream sector will likely be affected.

Kabin, Vice President of Business Development at Kinder Morgan Energy Partners, L.P., reviewed the market for the region’s growing gas and gas liquids production—and Kinder Morgan’s own organic growth plans to connect producer and consumer.

Prospective attendees can mark their calendars for January 26-28, 2016 when the MUM conference and exhibition returns to the David L. Lawrence Convention Center.

Hart Energy will also offer the DUG East conference and exhibition in the same venue on June 23-25, 2015.

Every DUG event delivers a highly effective mix of data, insight and forecasts about financing, exploration, drilling, production, and delivery; presented by esteemed industry leaders.

The Reshoring Initiative

Manufacturing in Pennsylvania continues to face tough challenges

 

On Jan. 15 and 16, Harry Moser, president of the Reshoring Initiative in Chicago, spoke for four hours at the Holiday Inn Express in State College about bringing back the manufacture of products to the United States. Moser’s visit was organized by Pittsburgh-based Catalyst Connection for the Northeast Pennsylvania Industrial Resource Center (IRC) in Wilkes-Barre.

He said he came to the state to train IRC members and economic developers to demonstrate how to work with area companies on how to identify where they are having problems with offshoring, such as quality and delivery.

Moser

Moser

Offshoring is a company’s relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes like accounting. Reshoring is the return of those companies to the United States.

“I also came to help them find Pennsylvania suppliers who could provide better service, and in the case of energy intensive industries, to help them realize the cost savings of using natural gas in their manufacturing operations,” Moser said. “The ultimate goal is to get companies who offshore products to recognize that even though the price is higher here, the total cost of production might not be when they figure in all the relevant factors including the cost of energy, transportation, and securing their intellectual property.”

To assist companies with deciding whether or not reshoring is worthwhile or to use as a sales tool to convince customers to buy domestically, the Reshoring Initiative offers a free Total Cost of Ownership (TCO) estimator on its Website. User data suggests 25 percent of what has been offshored should return if companies use TCO instead of price for sourcing decisions.

The Website also has a reshoring library containing more than 1,400 related articles. The library can be used to identify companies and industries that are reshoring and to see which of a company’s competitors are reshoring and why.

A new Ford Fusion on the assembly line in Detroit. These vehicles had previously been manufactured in Mexico.

A new Ford Fusion on the assembly line in Detroit. These vehicles had previously been manufactured in Mexico. (photo provided)

Since January 2010, between 300 and 400 large companies have reshored at least some of their manufacturing operations to the nation, Moser said. Out of the 750,000 jobs gained in manufacturing since 2010, about 140,000 jobs were from reshoring. Sixty percent of those reshored jobs were from manufacturers that had moved to China.

Some of those manufacturers were companies that produce raw materials, OEMs and branded companies such as GM, Ford, Caterpillar, and GE.

For example, GE returned its Chinese-made water heater manufacturing to Kentucky, and Ford moved its Fusion auto manufacturing from Mexico to Detroit – resulting in 1,200 jobs.

Chrysler not only returned vehicles to the United States, but also its current marketing slogan: Imported from Detroit.

“There’s also foreign direct investments in U.S. manufacturers by international conglomerates, and they do it for the same reason as the American companies, because of rising wages overseas and higher transportation costs now make producing consumer goods near the customer and near the supply chain more appealing,” Moser explained. “Today, it gets hard to tell the difference between foreign direct investments and reshoring, they’re just different labels on the company.”

Foreign direct investment (FDI) in U.S. businesses reached $2.7 trillion at the end of 2012, which is equivalent to about 16 percent of U.S. gross domestic product. Last year, Chinese overseas investment in the U.S. and other countries surpassed foreign direct investment into China.

Moser also is willing to bet that thousands of suppliers are also coming back to the U.S.

“When you bring back and automobile or refrigerator, the manufacturer has to buy fabricated metal parts, pumps, wire harnesses and other parts,” said Moser. “Typically, though not always, when the assembly comes back onshore, so does the component sourcing.”

Nationwide, manufacturing added an average of 16,000 jobs per month in 2014, compared with an average gain of 7,000 jobs per month in 2013. Pennsylvania, however, lost 6,600 manufacturing jobs from January to November. According to the U.S. Department of Labor, Pennsylvania manufacturing gained 2,000 jobs in December.

“December’s numbers are hopefully a sign of recovery, and while cheap energy is a big draw to some manufacturers, the most important thing Pennsylvania needs to sustain growth is a better business climate,” said Tom Palisin, executive director of the Manufacturers’ Association of South Central Pennsylvania in York.

“I think the new governor and the state legislators should take a serious look at the tax structure and the regulatory structure in Pennsylvania and figure out how they can make our state more competitive, not only for manufacturers looking to reshore or expand into the state, but also for retaining manufacturing jobs already here that are in danger of being lost.

“Pennsylvania has the second highest corporate net income tax in the nation at 9.9 percent. So when you hear about the commonwealth falling near the bottom of the list of states in job growth, it’s not surprising.”

One challenge that the manufacturing sector faces is the general belief that the jobs are low-paying and menial.

“Skilled manufacturing technologists, especially those that have passed an apprenticeship, are extremely well-trained, work in their area of training and earn an income at least comparable to university graduates,” said Moser.

Another challenge Pennsylvania faces is the workforce for manufacturing is significantly older than the general workforce, with many baby boomers retiring.

“Boomers had delayed retiring because of the recession, but now they’re in a position to start retiring, and they will be difficult to replace because the younger labor force in Pennsylvania lacks higher skilled technical workers such as computer numeric controlled machine operators.

“To get a true picture of job growth in manufacturing, you can’t only look at the new jobs, but the backfilling of experienced workers that’s going to have a really big impact on manufacturing over the next 10 to 15 years as baby boomers retire.”