Macron’s Carbon Tax Disaster: There Was A Better Way

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Emmanuel Macron took the elitist path on climate change and it was an utter disaster. Ironically, there was a much better way — the US way. He blew it.

Most Americans are probably just hearing about the ongoing protests in France after images of rioting around the Arc de Triomphe in Paris this past weekend finally forced the topic onto the front page. The nationwide protests, now in their third week, had previously garnered little coverage outside France, and what limited mention was made often obscured the source of anger driving the protests with vague references to “rising fuel prices.”

Since this weekend, international media has reluctantly gotten closer to identifying the root cause, citing “rising taxes.” But this is not just any old tax protest, it is targeted at a very specific kind of tax: namely, a carbon tax.

The protests in France, which despite the focus on Paris have been overwhelmingly peaceful and span the entire country, should be considered another data point in the building backlash to the international green agenda of forcing energy prices higher.

See the media references to rising fuel prices and rising taxes are correct in a sense, even if they don’t tell the whole story. The protest is specifically against rising fuel taxes, a previous increase imposed by President Emmanuel Macron last year, and the further increase scheduled for January 1^st, 2019. Hence the name given to the protesters, the gilets jaunes, “yellow vests,” which are required emergency equipment for every car in France and thus a symbol of being a car owner.

The January tax increases would have been the been the equivalent of 30 cents a gallon for diesel (around half of cars in France are diesel) and about 10 cents per gallon for regular gasoline.  This is on top of tax increases already enacted for 2018 and with additional tax increases scheduled into the future. These tax increases have been explicitly billed by Macron as a means to meet France’s commitments under the Paris climate treaty, making fuel more costly in an effort to reduce consumption and the carbon dioxide emissions associated with that consumption.

The problem is that outside the density and mass transit of Paris and other large cities, in large swaths of rural France there is no option but to drive a car. Sales taxes already make up 60% of the price of fuel in France, which has among the highest fuel prices in Europe, and most of the main trunk roads in the country exact steep tolls.

Layering even more costs on these car-dependent regions, which are also less financially well off than glittering urban centers like Paris, has finally pushed many French to the breaking point. And it’s not just the tens of thousands of protesters standing alone: polling has found more than 75% of the French population support the protests.

While the revolt seems to have taken Macron and other green elites by surprise, it shouldn’t have. Polling on carbon taxes has found pretty consistent results: people may vaguely support action to reduce carbon dioxide emissions (not surprising considering the media relentlessly hammers CO2 as evil and dangerous), but when asked how much they would be personally willing to pay in higher gas or electricity bills, the overwhelming response is little to nothing. In France, we are seeing these preferences play out in the streets as drivers object to paying the cost of green ideology.

The focus on the images of rioting in Paris is understandable, but it also paints a picture of violent urban street protests, when most of the past few weeks of tax revolt have been nothing of the sort. The protests have been dozens of people blocking a roundabout to slow traffic, creating an atmosphere reminiscent of a neighborhood block party.

Or, it’s been groups of people taking over toll plazas and, in a direct rebuke to the tax hikers, waving vehicles through without paying the toll (which saved this grateful correspondent a few tens of euros while driving through northern France on the first weekend of the protests). It has been the very definition of a spontaneous, widespread grassroots uprising.

It is appropriate that these protests burst onto the scene just before the latest climate confab began in Poland. The green elite has gathered to work out how to actually implement the Paris climate treaty that was so showily inaugurated in 2015. The protests should be a hint to the delegates in Poland: the people are not on their side. Energy supplies are crucial to the flourishing of modern humans, a true necessity.

While Macron and other green elites in the salons of Paris may barely notice higher gas or electricity prices, the poor and middle class feel the pinch acutely. And they are increasingly waking up to the source of their pain: the type of green engineering epitomized by the Paris climate treaty. And the costs of the implementation of that treaty have barely even begun to be felt.

Whether ballot initiatives in Washington state, provincial elections in Canada, or now protests in France, when the people weigh in on carbon taxes there is a common answer: Non! Are the delegates in Poland listening yet?

Editor’s Note: Macron could have done it a much better way, by emulating US policies on natural gas (and, by extension, fracking), policies that have dramatically impacted CO2 emissions in a way no European nation has been able to match in overall impact. Instead, he went for political correctness and the global scheme to impose a carbon tax that would have served as a bottomless slush fund for financing corporatist green energy scams. The needs and wants of commoners weren’t even a factor. They were shunted aside to push the slush fund so as to enrich the Simons family and other hedge fund folks who hope to abscond with trillions of dollars in such scams. There are billions invested in making it happen but even that wasn’t enough when the French realized the price of political correctness.

Ironically, natural gas would be far less impacted by a carbon tax than other energy sectors, but that isn’t the point. If Macron wants to get it correct and do something meaningful about reducing carbon, he’ll reexamine the premises of the carbon tax and let the free market work. The problem with the carbon tax is that it involves government picking of winners and losers and an incentive to do what hasn’t worked nearly as well as natural gas. He’ll also get on board with developing natural gas, nuclear and other resources to achieve a balanced energy portfolio that doesn’t require subsidies designed to enrich scammers. Enough corporatism already!

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Facts & Rumors # 315

Save these 2019 for Shale Directories Seminars

 

Utica Midstream March 21, 2019 Walsh University North Canton, OH www.uticasummit.com

Upstream PA 2019 April 17, 2019 Penn Stater Conference Center State College, PA

Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays

New DOE Study Supports Ethane Appalachian Storage Hub.   An ethane storage/distribution hub in the Appalachian Basin offers the U.S. petrochemical and plastics industries supply and geographic diversity, mitigates feedstock price spikes, and lessens the possibility of weather-related production disruption, a new Department of Energy report states. The 91-page report, mandated by, and delivered to, the U.S. Congress, entitled “Ethane Storage and Distribution Hub in the United States,” highlights the potential in Appalachia for a hub due to the huge availability and low-cost of natural gas liquids available via the Marcellus and Utica Shale plays. And the Trump administration is prepared to support such a project, Kallanish Energy reports.

'Incredible opportunity'

“There is an incredible opportunity to establish an ethane storage and distribution hub in the Appalachian region and build a robust petrochemical industry in Appalachia,” said U.S. Secretary of Energy Rick Perry, speaking Tuesday at the annual National Petroleum Council Meeting in Washington D.C. “As our report shows, there is sufficient global need and enough regional resources to help the U.S. gain a significant share of the global petrochemical market. “The Trump Administration would also support an Appalachia hub to strengthen our energy and manufacturing security by increasing our geographic production diversity.” The report to Congress examines the potential for a hub by comparing it to existing ones that already service the Gulf Coast and Permian Basin, which account for most of the U.S. growth in natural gas liquids outside Appalachia.

Supporting economic security

In addition, market analysis from the report emphasizes development of an Appalachian hub may offer a competitive advantage for the U.S. to gain global petrochemical market share while not being in conflict with ongoing Gulf Coast expansion. The report explains a new Appalachian hub would enhance the geographic diversity of the U.S. petrochemical industrial sector, supporting U.S. economic security. The regional group currently working on securing both public and private funding for an Appalachian Basin hub, said it’s not surprised with the DOE report’s conclusion.

Pleased, not surprised

Appalachia Development Group LLC (ADG) told Kallanish Energy it’s pleased -- though not surprised -- with the results of the DOE report. “This report further validates the strategic importance of the Appalachia Storage and Trading Hub and the positive impacts it will have on our country and our allies around the world,” said Steve Hedrick, chairman & CEO of ADG.  “Ensuring the opportunity for geographic diversification of the nation’s chemical manufacturing assets, while leveraging the regional resources in Appalachia in the safest, most efficient manner possible, provides a truly unique opportunity that requires public-private collaboration to see it forward.”

Industrial catalyst

The proposed, roughly $3.5 billion hub is considered to be a catalyst for industrial development within the Appalachian region. The American Chemistry Council estimates $36 billion in new petrochemical investments, more than 100,000 new long-term jobs that includes more than $6 billion in annual payroll and $2.9 billion in annual tax revenue for the Appalachian region, should the hub be built in West Virginia, Ohio or Pennsylvania. Currently, the U.S. has ethane hubs at Mont Belvieu, Texas, and Conway, Kansas. There also is a hub in Sarnia, Ontario Canada. “… both Mont Belvieu and Conway are in relatively close proximity to the growing NGL production projected from the Permian Basin in the Southwest,” according to the DOE report (reviewed by Kallanish Energy). “The East region of the U.S. currently is without a NGL storage hub similar to Mont Belvieu, Conway, or Sarnia. The extent to which East region NGLs will be converted and consumed locally will depend on regional infrastructure additions and, more specifically, the interplay between storage and transportation.”

Ethane production keeps growing

Ethane production in the Appalachian Basin is projected to continue to grow through 2025, to a total of 640,000 barrels per day (Bpd) -- more than 20 times greater than just five years ago. According to the U.S. Energy Information Administration, natural gas production in Ohio, Pennsylvania, and West Virginia has increased so rapidly their combined share of total U.S. natural gas production has jumped from 2% in 2008, to 27% in 2017. In addition, natural gas liquids processing and fractionating capacity in Appalachia has grown quickly to match this increase in natural gas production. However, the Appalachian region currently lacks other physical infrastructure for a “hub” that connects supply and demand sources, including storage for NGLs. Williams Introduces New Pipeline Project.  A major operator of energy infrastructure in Pennsylvania is planning a $500 million project to increase the amount of Marcellus Shale natural gas that can be transported from wells in the northern and western parts of the state. The increased capacity will supply enough natural gas to meet the daily needs of approximately 2.5 million homes, The Williams Cos. says. Commitments from producers Seneca Resources Co., Cabot Oil & Gas and UGI Utilities will enable it to expand its Transco pipeline daily capacity by 582,400 dekatherms (a dekatherm is equivalent to about 1,000 cubic feet), it says. The company cites a growing demand for natural gas along the Atlantic seaboard. The Leidy South Project is in the pre-filing stage with the Federal Energy Regulatory Commission during which public comment is sought. Williams has scheduled open houses from 6 to 8 p.m. Tuesday at the Hughesville Volunteer Fire Co. in Hughesville, and from 6 to 8 p.m. the following day at the Chapman Twp. Volunteer Fire Co. in North Bend. Dates and locations for open houses in Schuylkill and Luzerne counties have not been set, the company says. The timetable calls for Williams next summer to submit to FERC an application to begin construction in early 2021. The project limits environmental impacts by maximizing the use of existing infrastructure, Williams says. The Leidy South Project includes: Replacement of 6.09 miles of Transco's existing 24-inch pipe with a 36-inch line and install a 2.46-mile, 32-inch loop, both in northwestern Clinton County. Installation of a 42-inch, 3.55-mile loop in Lycoming County near the Columbia County line. Updates to a compressor station in Columbia County and one in western Schuylkill County, both on the Central Penn South line. Updates to a compressor station in Wyoming and one in Luzerne County on the Central Penn North line. A loop is new pipe connected to and placed adjacent to an existing pipeline in the same easement. Pennsylvania is the second largest gas-producing state behind Texas, averaging 15 billion cubic feet a day, Williams noted. While record volumes of natural gas are being produced, consumer access to it is limited by insufficient pipeline infrastructure, it says. Williams operates more than 3,600 miles of transmission and gathering pipelines in Pennsylvania. Latest News on LyondellBasell – Braskem. (Thanks, Tom Gellrich, TopLine Analytics)    Brazilian court blocks Boeing-Embraer deal = politics getting into business following the election in Brazil. The judge argued that since the Brazilian Federal Government is changing, the decision is aimed at preserving the possibility of reversing the deal, in the case the new government is against it. The new Brazilian government is pro-business, so this is only a delay. The Braskem - LyondellBasell deal may be in the same boat. Previously it looked like that deal would be completed the first half of 2019. Shale Revolution Reduces Trade Deficit by $250B.  What if the shale revolution had never happened? We’d be another $250 billion in the hole with our trade deficit. That’s the finding of a new report released by IHS Markit titled “Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check.” The report finds the total U.S. merchandise trade deficit in 2017 was $250 billion lower than it otherwise would have been if the petroleum (crude oil, refined products and natural gas liquids – petroleum liquids separated out from natural gas and also known as NGLs) trade deficit had remained at its 2007 level. Thank God for shale! The report also examines the impact of rising U.S. oil, natural gas and chemicals production on the domestic trade merchandise balance and how the U.S. position in energy and chemicals may evolve in coming years. Interesting stuff. The boom in U.S. oil and gas production over the past decade has exerted a moderating force on what is a large domestic merchandise trade deficit by helping reduce the country’s net petroleum imports, a new report by business information provider IHS Markit (Nasdaq: INFO) says. Continued U.S. production growth is now on track to make the country a net-exporter of petroleum for the first time since at least 1949. The total U.S. merchandise trade deficit in 2017 was nearly $250 billion lower than it otherwise would have been if the petroleum (crude oil, refined products and natural gas liquids – petroleum liquids separated out from natural gas and also known as NGLs) trade deficit had remained at its 2007 level, the report finds. IHS Markit projects that the U.S. petroleum trade balance will further improve by roughly $50 billion between 2017 and 2022. The findings are part of a new report entitled Trading Places: How the Shale Revolution Has Helped Keep the U.S. Trade Deficit in Check. The report examines the impact of rising U.S. oil, natural gas and chemicals production on the domestic trade merchandise balance and how the U.S. position in energy and chemicals may evolve in coming years. “The improved U.S. trade position in petroleum has been a counterbalancing force helping to keep the U.S. trade deficit in check over the past decade,” said Daniel Yergin, vice chairman, IHS Markit. “The resurgence of domestic oil and gas production has flipped the trade position of several products along the energy value chain on their heads, while that of other products, such as crude oil, have been significantly reduced.” U.S. production of liquids (crude oil and natural gas liquids) nearly doubled from about 7 million barrels a day (mbd) in 2007 to 13 mbd in 2017 and 14.8 mbd in the first nine months of 2018. Crude oil alone rose from 5 mbd in 2007 to 9.4 mbd in 2017 and averaging 10.6 mbd in the first 9 months of 2018 — and hitting 11.2 mbd in October 2018. This rise, combined with a slight decline in domestic demand, contributed to a sharp fall in U.S. petroleum net imports as a share of total consumption – from a high of 60 percent in 2005 to 19 percent in 2017 and 14 percent in nine months of 2018. IHS Markit estimates that the U.S. petroleum trade deficit in dollars fell from about $320 billion in 2007 to about $75 billion in 2017 as net imports declined. During this same time, when the petroleum trade deficit was shrinking dramatically, the trade deficit for non-petroleum merchandise grew by about $230 billion. The continued growth of U.S. crude oil and NGL production—along with relatively flat liquids demand—are expected to make the U.S. a net-petroleum exporter by early next decade, the report says. This would be the first time since at least 1949 that the U.S. was not a net petroleum importer. “The United States moving from net imports to being a net petroleum exporter would be an historic shift, something not achieved since at least the Truman administration,” said David Witte, senior vice president and division head for energy and chemicals at IHS Markit. “It speaks to the profound and continued impact that the U.S. shale boom has had in terms of investment, job creation, manufacturing, GDP and now trade.” The resurgence of U.S. oil and gas production has already altered the domestic net trade position of a number of energy products over the same 2007-2017 period, the report says. IHS Markit expects exports of these products to continue to rise. They include:

• Refined products: from about 1 mbd of net imports in 2007 to about 2 mbd net exports in 2017 – a positive change of about 3 mbd
• Natural Gas Liquids: from 0.2 mbd net imports in 2007 to 1.1 mbd of net exports in 2017 – a positive change of more than 1 mbd.
• Natural Gas: from 10.4 bcf/d of net imports in 2007 to 0.4 bcf/d of net exports in 2017 – a positive change of nearly 11 bcf/d
• Gas-and NGL-based chemicals: from about 6 MMt/y of net imports in 2007 to about 4 MMt/y of net exports—a positive change of more than 9 MMt/y
• Crude oil: from about 10 mbd of net imports in 2007 to about 7 mbd of imports in 2017 – a positive change of about 3 mbd

The report does caution that trade tensions between the U.S. and its trading partners could introduce new risks and therefore alter the trajectory of global energy trade and energy demand. In particular, the report notes recent frictions with China, which is a growth market for U.S. exports of LNG, crude oil, NGLs and gas- and NGL-based chemicals. “Overall turmoil in world trade patterns could not only dampen trade along the energy value chain but also affect global economic growth and thus impact demand for the many hydrocarbon and chemical products that depend on economic growth,” said Jeff Meyer, director, oil markets at IHS Markit.* Permit Info – Antero, Ascent, and SWN.   Antero Resources Corp. has been issued permits for three Shiloh-Wick Field-Marcellus Shale ventures in Tyler County, W.Va. The permitted wells will be drilled from a drill pad on a 317-acre lease in Centerville District, Middlebourne 7.5 Quad. The Heintzman Unit 1H well has a planned depth of 17,800 ft and will be drilled to the south. The Heintzman Unit 2H well has a planned depth of 17,500 ft and will be drilled to the southeast. The Heintzman Unit 3H well has a planned depth of 17,400 ft and will be drilled to the east-southeast. Nearby production in the Shiloh-Wick Field is at an Antero Utica producer, Rymer Unit 4HD. It was completed in 2016 flowing 20 MMcf/d of gas. Ascent Resources LLC has received permits for four Utica Shale-Colerain Field wells in Jefferson County, Ohio. The wells will be drilled from a drill pad in Section 34, Mount Pleasant Township. The Ruth E MTP 2H well has a planned depth of 22,000 ft, and the Ruth E MTP 4H well has a planned depth of 22,000 ft. The Ruth E MTP 6H well has a planned depth of 22,500 ft, and the Ruth E MTP 8H well has a planned depth of 23,000 ft. Ascent Resources LLC is underway at two Jewett Consolidated Field wells in Jefferson County, Ohio. The Utica Shell wells are on a 378-acre lease in Section 18-8n 3w. The Geno E SMF JF 5H well has a planned depth of 24,300 ft and will be drilled to the northwest. The offsetting Geno W SMF JF 1H well has a planned depth of 26,000 ft, and it will be drilled to the north. Nearby production is at an American Energy Partners completion in Section 27 in the Dillonvale 7.5 Quad at the Smithfield  A 1H-27 well. The Smithfield pad discovery was drilled to 18,525 ft (9,631 ft true vertical depth), and it was tested flowing 18.1 MMcf/d of gas. Southwestern Energy Co. has received permits to drill two Marcellus Shale tests from a drill pad in Ohio County, W.Va. The Roy Riggle OHI 6H well has a projected depth of 12,429 ft and a projected true vertical depth of 6,542 ft. It will be drilled to the northeast. The offsetting Roy Riggle OHI 206H well has a planned depth of 15,325 ft and a planned true vertical depth of 6,519 ft. It will be drilled to the southeast. The company also has received permits to drill Marcellus ventures in nearby Brooke County, W.Va., at the Worthley Brk 1H, Worthley 201H, Worthley Brk 210H and Worthley Brk 5H wells. Largest Oil and NatGas Potential Ever in TX and NM.  The US Geological Survey assessed that the Bone Spring Formation in Texas and Wolfcamp Shale in New Mexico contain the largest oil and natural gas potential ever found, the Department of the Interior said in a press release on Thursday. "he Wolfcamp Shale and overlying Bone Spring Formation in the Delaware Basin portion of Texas and New Mexico’s Permian Basin province contain an estimated mean of 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids," the release said. Interior Secretary Ryan Zinke celebrated the assessment by saying that the United States has a lot of energy and the country's dominance in the energy sector is now proven. The Wolfcamp shale in the Midland Basin portion of the Texas Permian Basin province has been examined by the US Geological Survey in 2016. The organization concluded then that the formation contained an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas and 1.6 billion barrels of natural gas liquids. ETP Launches Open Season.  Energy Transfer LP (ET), via its Sunoco Pipeline L.P. unit, has launched a binding open season to solicit shipper commitments of C3+ (natural gas liquids, excluding ethane) from the Marcellus/Utica Shale play in Pennsylvania to facilities in Claymont, Delaware and Marcus Hook, Pennsylvania, through the Mariner East pipeline system. The open season will allow Sunoco Pipeline to add additional product commitments to the pipeline, which is nearing completion, according to Energy Transfer. The Mariner East 2 line is designed to move NGLs across Pennsylvania to the Marcus Hook Industrial Complex near Philadelphia, with 275,000 barrels per day of capacity when completed by Jan. 1, 2019, Kallanish Energy learns. The Mariner East 2X project will Increase NGL takeaway from the Marcellus to the East Coast w/ storage at Marcus Hook Industrial Complex, when completed in the third quarter of 2019. Mariner East 1 originally went into service four years ago flowing propane. In the first quarter of 2016, ethane was added to the flow, via the series of pipelines from the Marcellus/Utica in Ohio, West Virginia and Pennsylvania. Energy Transfer LP is the new name for the now-merged Energy Transfer Equity and Energy Transfer Partners. Jupiter Connecting the Permian to the World.  Jupiter CEO Tom Ramsey believes the Texas crude transport, storage and pipeline operator can soon connect the Permian wellhead to the world. Jupiter MLP is now collecting shipper interest in a Permian crude pipeline that could connect producers to three export terminals along the Texas Gulf Coast. After earning funding in October for a 600-mile-plus pipeline with several origination points across the West Texas and New Mexico, Jupiter is now less than a year-and-a-half away from commencing operation. The pipeline has already received the necessary rights-of-way. Once complete, the pipeline will provide deep water port access at Houston, Corpus Christi and Brownsville, Texas. Charon System Advisors is providing the funding for the build-out of the pipeline. In Brownsville, Jupiter has already secured the ability to store. Repsol To Increase Drilling in the Marcellus.  Spain’s Repsol SA expects to raise production in the Marcellus natural gas shale field by about 50% by year-end 2020 due to efficiency gains, an executive said at an industry conference in New York on Dec. 6. “With just the addition of one rig and investment of about $400 million a year, we're going to be able to raise production by 50 percent and be cumulative cash flow positive by the end of 2020,” Paul Ferneyhough, executive director of North America for Repsol said at the S&P Global Platts Global Energy Outlook Forum. Repsol holds an interest in 168,400 net acres in the Marcellus Shale, one of the largest natural gas fields in the world, extending throughout the Appalachian Basin and stretching across Pennsylvania, according to its website. PA NatGas Production. Up! Up! Up!  Pennsylvania’s natural gas production, producing wells, and average per-well production all via horizontal drilling in 2018 continues in the direction the category trio has followed since 2011: Data distributed by the state’s Independent Fiscal Office reveals from 2011 through 2017, and full-year 2018 results based on nine months of data, show substantial increases in all three categories – triple-digit percentages from 2011-2018, Kallanish Energy calculates. Production volume is projected to hit 6 trillion cubic feet (Tcf) this year, up 646 billion cubic feet from 2017’s 5.35 Tcf production, and a whopping 4.95 Tcf – 472% -- from 2011’s horizontal well production of 1.05 Tcf. The number of producing wells for 2018 is projected at 8,600, up 710 wells, or 9%, from 2017’s 7,890 producing wells, and up 6,832 wells, 386.4%, from 2011’s 1,768 producing horizontal wells. Also, the all-important average production per well continues to climb, the Independent Fiscal Office reports. The Office is projected to reach 1.58 billion cubic feet (Bcf) this year, up 301 million cubic feet (Mmcf), or 23.6%, from 2017’s 1.28 Bcf. The 2018 projection would be 904 Mmcf, or 134.5%, higher than 2011’s 672 Mmcf average production per well. Comparing individual Pennsylvania counties, Susquehanna County, in the northeast portion of the state, led in both production and share of total state production, according to the state Independent Fiscal Office. Susquehanna in 2018 is projected to produce 1.07 Tcf, up 10.7% from 2017’s 966.1 Bcf of production. The county’s share of total production is 213.9%. Second place is Washington County, in Pennsylvania’s southwest quadrant, expected to produce 862.4 Bcf this year, up 27.2% from 2017’s 677.9 Bcf, with the county grabbing a 19.3% share of statewide production. SWN Totally Focused on Appalachian Basin.  Southwestern Energy said Tuesday the independent producer has completed the sale of its Fayetteville Shale assets in Arkansas to privately-held Flywheel Energy for $1.65 billion net to the seller. The Spring, Texas-based Southwestern now has all its operations concentrated in West Virginia and northeast Pennsylvania, Kallanish Energy calculates. “This strategic transaction represents a further significant step in the transformation of the company,” says Bill Way, president and CEO of Southwestern. “We’re now better positioned to leverage our leading technical and operating capabilities to drive greater value from our highly attractive and significant asset base in Appalachia, pay down debt and create even greater financial flexibility.” The assets sold include 716 million cubic feet per day (mmcf/d) of net production from 4,033 producing wells across over 900,000 net acres, and an integrated midstream gathering system with over 2,000 miles of gathering pipelines and more than 50 compressor stations, all located in central Arkansas. As a result of this deal, the company said it's further strengthening its balance sheet and is positioned to capture greater returns from its 500,000 acres in the Appalachian Basin. The proceeds will be used to retire senior notes of $900 million, retire the outstanding balance under the company’s revolving credit facility, repurchase stock up to the remainder of the company’s $200 million stock buyback program and invest in Appalachia assets over the next two years. Southwestern’s fourth-quarter production guidance will be impacted by a reduction of roughly 19 billion cubic feet resulting from the Fayetteville sale. Flywheel was backed in the deal by a $700 million equity commitment from alternative investor Kayne Private Energy Income Funds. PA and OH Permitting in October and November 2018.  The Pennsylvania Department of Environmental Protection issued 269 permits across the state for drilling and operating an unconventional well in October and November 2018. In western Pennsylvania, there were 58 permits issued in Washington County; 31 permits issued in Greene County; 21 permits in Westmoreland County; 15 permits issued in Allegheny and Butler counties; and two permits issued in Beaver County. In the first 11 months of this year, there have been a total of 1,687 permits issued across the commonwealth. Of those, there were 301 permits issued in Greene County. Other top counties for drilling/operating permits in western Pennsylvania were: Washington, 282; Westmoreland County, 132; Butler, 88; Allegheny, 73; Beaver, 60; Fayette, 41; and Armstrong, 32. Drilling also remains active in the northcentral region of Pennsylvania, where there are 5,421 active horizontal wells drilled since the beginning of 2008. Statewide, there are 10,817 active horizontal wells.

Ohio numbers

As of Nov. 17, there were 2,081 deep horizontal wells producing in the Utica or Point Pleasant shale plays in Ohio. Another 376 have been drilled, but are not producing at this time, according to the Ohio Department of Natural Resources. Of the 36 horizontal wells drilled in the Marcellus Shale in Ohio, 23 are producing wells. Eighteen of those 23 are in Monroe County, primarily in Ohio Township. Another three are in Belmont County, and there are single wells producing in Carroll and Jefferson counties in the Marcellus play. The ODNR issued 22 permits in the Utica/Point Pleasant shale plays in October, and 11 permits in November, as of Nov. 17. Guernsey County. There were seven permits issued in October and 0 in November in Guernsey County. Of the October permits, six are being drilled, four on the Fineran site in Wills Township and two on the Posey site in Oxford Township. The remaining permit was also issued for a well on the Posey site. All were issued to Eclipse Resources. Jefferson County. Ascent Resources Utica received eight new permits in Jefferson County in October, four for the Faldowski site and four on the Lori sites, all in Smithfield Township. Ascent is drilling on six of the sites. Another permit was issued on the Lori site in Smithfield Township in November. Monroe County. Equinor USA Onshore Properties (formerly Statoil) received two permits in October for horizontal wells in Green Township, and in November, Eclipse Resources received four permits in Switzerland Township. Three were for the Craig Miller wells, and the fourth on the Pittman site. Harrison County. Four permits were issued in October in Harrison County’s Archer Township to Chesapeake Exploration. One of the four, all issued for the Davis Trust wells, is being drilled. Chesapeake received another three permits in November 2018, all for the Wunnenberg wells in Cadiz Township. Also in November, Ascent Resources Utica received three permits for the Ellen well in Moorefield Township. Noble County. Triad Hunter LLC received a permit for drilling in Noble County’s Jefferson Township for a site dubbed “Woodchopper.”

Shale oil and gas at a glance

The companies with the most Ohio Utica shale permits, as of Nov. 17, are:

• Chesapeake Exploration, with 886 (719 producing)
• Ascent Resources Utica, 485 (367 producing)
• Gulfport Energy Corporation, 406 (299 producing)
• Antero Resources Corporation, 260 (215 producing)

Drilling interest is shifting south: Belmont County has the most total drilling permits issued since 2011, at 585, passing Carroll County, which was the state’s first boom area and has 525 drilling permits. There were 54 drilling permits issued in Belmont County in 2018, compared to only five in Carroll County. Monroe County, which has 418 total permits, received 45 permits in 2018. Harrison County remains active, with 33 of its total 433 permits issued in 2018. Guernsey County has 242 total permits, with 32 issued to date in 2018. Utica Shale natural gas production in Ohio was more than 21 times greater in 2017 than in 2012. Pennsylvania’s gross natural gas production, primarily from the Marcellus Shale, reached nearly 5.5 trillion cubic feet in 2017, and the state was the nation’s second-largest natural gas producer after Texas. Marcellus shale map Pennsylvania now has 10,817 active horizontal wells drilled across the state. Washington County has the most active wells, at 1,884, followed by Susquehanna, in the northcentral region, with 1,551 active wells. In the U.S., estimated production of natural gas from shale plays increased 9% in 2017. The Marcellus shale play is the largest natural gas shale play in the United States by volume of reserves. Joe Barone jbarone@shaledirectories.com 610.764.1232

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Chevron Projects $20 Billion Spending Budget For 2019

Chevron Corp. (NYSE: CVX), the second largest U.S.-based oil producer, is budgeting $20 billion for capital projects next year, the company said Dec. 6. The San Ramon, California-based company said it plans to spend $3.6 billion to produce oil and gas in the Permian Basin of west Texas and New Mexico and $1.6 billion for other shale investments. Chevron will spend $4.3 billion on its Tengiz field in Kazakhstan.

https://www.shaledirectories.com/blog/chevron-projects-20-billion-spending-budget-for-2019/

Northeast Gas Demand Is Huge and Growing Along with Supply

Cabot Oil & Gas Corporation
Well Said Cabot

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Northeast gas demand is unbelievably large and growing. Companies such as Cabot are helping meet that demand and several pipeline projects will ensure it.

Cabot is pleased to help families and businesses stay warm as cold weather settles in for the season.

We’re producing roughly 2 billion cubic feet of natural gas – every day – to help heat our homes, hospitals, schools, offices, factories, as well as power our electric grid (and thereby also help those families who use electricity for heating).

In the Appalachian/mid-Atlantic region, where Cabot’s operations are principally located, natural gas is vital to keeping families warm.

In Pennsylvania, half of households use natural gas for heating. In Ohio, 65 percent of households use gas for heating, in West Virginia it’s 40 percent, in Maryland it’s 44 percent, in New Jersey it’s a remarkable 75 percent, and in New York it’s nearly 60 percent.

Now, as neighborhoods from the Ohio River Valley to New England and beyond face temperatures in 40s, 30s and colder – along with blustery wind and snow –  know that Cabot will continue working (whatever the temperatures or conditions) to deliver reliable, affordable natural gas to local communities.

Cabot Oil & Gas

Key to that reliability are new pipeline projects like the Atlantic Sunrise Project, which came into service in October after almost five years after initially announced. New pipeline capacity like that of Atlantic Sunrise, the planned Leidy South expansion project, PennEast Pipeline and others are essential to keeping natural gas prices affordable as demand increases as temperatures fall.

Cabot’s natural gas production has helped overall U.S. natural gas production average 83.2 billion cubic feet per day in 2018 – should the average daily production hold, this year will mark a new American record.

The robust production “is expected to provide flexibility and optionality to compensate for below-average storage inventories at the beginning of the winter heating season,” explains the Natural Gas Supply Association (NGSA).

NGSA’s 2018-2019 Winter Outlook for Natural Gas forecasts that America’s “overall natural gas demand is projected to be more than 102 Bcf/day. Although that is a record amount of winter demand, it is only 3 percent more than the winter of 2017-2018, thus, customer demand is expected to place neutral pressure on natural gas prices.”

Similarly, the American Gas Association (AGA), reported that residential natural bills could be lower this winter compared to last year due to expectations of a warmer-than-normal winter.

AGA’s Richard Meyer explained,

“As natural gas utilities prepare for another winter heating season, record levels of production are offsetting lower storage inventories in the supply mix while prices remain low and stable. We continue to see robust supply that is well positioned to serve customer needs. These trends could speak to an evolution of how utilities and others make strategic use of natural gas storage.”

We know it’s cold and will remain so for the next few months. So as we all bundle up to head outdoors, we can assure families that while indoors we’ll do our part to help maintain America’s robust natural gas supply flowing to warm their homes and neighborhoods.

Reposted, with permission, from Well Said Cabot.

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Perry, DOE Tout Appalachian Energy Hub

Building a new ethane storage and petrochemical hub in Appalachia presents a “once in a lifetime opportunity for this country,” Energy Secretary Rick Perry told the National Petroleum Council on Tuesday.

The secretary’s remarks coincide with the Department of Energy’s release of a report to Congress highlighting the potential of a new hub atop the natural gas and natural gas liquids-rich Marcellus and Utica shale formations of Pennsylvania, Ohio and West Virginia. Among the DOE’s conclusions:

Appalachia’s abundant resources coupled with extensive downstream industrial activity may offer a competitive advantage that could enable it to displace marginal producers and help the U.S. gain global market share in the petrochemical industry.

The new report follows DOE’s June primer, and further bolsters the findings of a recent IHS Markit study conducted on behalf of the economic development initiative Shale Crescent USA.

More Than Meets Supply

As the International Energy Agency conveyed in its annual World Energy Outlook, the petrochemical sector will drive oil and natural gas development worldwide. While the Gulf Coast will continue to be a center for petrochemical manufacturing, remaining economically competitive in the global market calls for the expansion of petrochemical infrastructure.

Development of the Marcellus and Utica-Point Pleasant shales in Appalachia has produced prolific amounts of natural gas liquids (NGLs), specifically high volumes of ethane – the “building block” of petrochemical feedstock and plastics manufacturing.

The DOE report, based on the latest data from Energy Information Administration, projects a remarkable increase in the volume of ethane from the Eastern Region, which includes the Appalachian Basin. The increased ethane supply provides the best reason to locate the new hub in Appalachia.

The Appalachian Industrial Ecosystem

In addition to producing ample supply to meet growing demand, the Appalachian Basin’s location – its transportation access and proximity to the market – strengthens the region’s viability.

Furthering the attractiveness for investment, the recent IHS Markit study identified the region – through the combination of its location, proven reserves, and production levels – as the most profitable location for petrochemical development in the United States.

A Concord of Interest

The Gulf Coast serves as the U.S. petrochemical hub, but with growing worldwide demand, a second hub would provide the ability to increase competitiveness in the global marketplace, as Sec. Perry told the NPC audience earlier this week.

.@SecretaryPerry: not a competition for the Gulf Coast market, it’s in addition to it. “This is a once in a lifetime opportunity for this country.” @EIDTexas @EIDAppalachian #shale #natgas #NGLs

— Energy In Depth (@EnergyInDepth) December 4, 2018

The addition of a hub in Appalachia would not result in internal competition for investment between the two regions, but complement each other as the United States looks to expand its petrochemical manufacturing capacity. As the DOE report explains, a new hub in Appalachia would “enhance the geographic diversity of the vital U.S. petrochemical industrial sector, supporting U.S. economic security.”

This diversification also provides stability in the industry in the case of disruption from natural disasters such as Hurricane Harvey, which “paralyzed” the Gulf Coast.

Sec. Perry, a former governor of Texas, noted the severity of the impact these events can have on the nation’s economy during his speech on Tuesday:

“The present-day geographic concentration along the Gulf Coast of petrochemical infrastructure and supply may pose a strategic risk, where severe weather events limit the availability of key feedstocks.

“Don’t think for a second that I’m about pitting one section of the country against the other, we need it all and just like in the electricity sector, resiliency matters to the marketplace.”

Conclusion

Massive investments from the petrochemical industry including the multibillion-dollar Shell ethane cracker in Beaver County, Pennsylvania, and the proposed PTT Global Chemical complex in Belmont, Ohio, mark the first big steps toward creating the new Appalachian hub.

These projects are bringing thousands of jobs, billions of dollars in investment, and generating new revenue streams for local governments. With the DOE amplifying the region’s viability, a new wave of economic growth gained from the development of our oil and natural gas resources looks to be more inevitable than before.

.@SecretaryPerry: There’s an amazing opportunity for us in the Appalachian region – storage hub, petrochemical industry. This is an incredible economic opportunity for a region that sorely needs it. #NGLs #natgas #shale @EIDAppalachian

— Energy In Depth (@EnergyInDepth) December 4, 2018

The supply is here, the demand is here, and as the DOE report shows, Appalachia checks all the boxes to make the region a viable location to house the next American energy hub.

https://www.shaledirectories.com/blog/perry-doe-tout-appalachian-energy-hub/

Energy Sustainability Is Produced by the Free Market, Not Government

Robert Bradley, Jr.
Founder and CEO of the Institute for Energy Research.

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Energy sustainability is the product of innovation and consumer choices best left to the free market. Government is terrible picking winners and losers.

Depletion … pollution …. security … climate change. These flashpoints of energy sustainability have been invoked time and again to advocate forced (government) transformation away from fossil fuels. But each complaint has been highly exaggerated for the purpose of demoting the primary role of mineral energies (natural gas, coal, and petroleum) in modern living.

The congruence of private gain and social good in energy markets is reason to give thanks this holiday season. Consumers in good conscience can stay warm with natural gas and fuel oil, as well as travel on gasoline and diesel. Electricity, too, can be generated with the cheapest and most versatile carbon-based energy without regret.

Background

Energy sustainability is an offshoot of sustainable development, classically defined in a 1987 report by the World Commission on Environment and Development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

The so-called Brundtland Report led to the 1992 United Nations conference in Rio de Janeiro and Agenda 21, a 350-page action plan by the United Nations for global sustainable development. The US was one of 178 nations to sign the (nonbinding) Agenda 21. For implementation ideas, the Clinton/Gore Administration created the President’s Council on Sustainable Development (1993–99), which defined sustainability as “economic growth that will benefit present and future generations without detrimentally affecting the resources or biological systems of the planet.”

Said the “Vision Statement” of PCSD’s Sustainable America: A New Consensus for Prosperity, Opportunity, and A Healthy Environment for the Future (1996):

Our vision is of a life-sustaining Earth…. A sustainable United States will have a growing economy that provides equitable opportunities for satisfying livelihoods and a safe, healthy, high quality life for current and future generations. Our nation will protect its environment, its natural resource base, and the functions and viability of natural systems on which all life depends (p. iv).

Given this definition, are mineral energies “sustainable”? The answer is a resounding yesunder a free-market interpretation of sustainable development:

A sustainable energy market is one in which the quantity, quality, and utility of energy improve over time. Sustainable energy becomes more available, more affordable, more usable and reliable, and cleaner. Energy consumers do not borrow from the future; they subsidize the future by continually improving today’s energy economy, which the future inherits (Bradley, Capitalism at Work: Business, Government, and Energy, p. 187).

Countering Complaints

The energy sustainability triad has been depletion, pollution, and climate change. A fourth area, energy security, primarily relating to unstable oil imports from Middle Eastern countries, arose in the 1970s and peaked with the Gulf War in 1990–91.

Depletionism concerns resource exhaustion, better known as Peak Oil (and Peak Natural Gas), where demand outraces supply to result in increasing prices. Pollution has centered around the criteria air pollutants: carbon monoxide (CO), sulfur dioxide (SO₂), particulate matter (PM), nitrogen oxides (NO_x), lead (Pb), and volatile organic compounds (VOC). Climate change has shifted from brief worry about anthropogenic global cooling to an ongoing concern of anthropogenic global warming.

Peak-supply fears have been quelled by new-generation oil and gas extraction technology that, yet again, has turned high cost and inaccessible supply into economically mined resources. In response, fossil-fuel foes have turned to a keep-it-in-the-ground strategy conceding that many decades, if not centuries, of oil and gas inventory await. And with the US becoming the oil and gas center of the world, earlier concerns over energy security has faded.

Regarding the once vexing problem of urban air pollution, the US Environmental Protection Agency has documented a 73 percent decline in criteria emissions since 1970 with further improvement expected. Technology in light of achievable regulatory rules has made fossil fuels and clean air a success story that industry critics did not think possible early on.

Climate change? This is an issue entirely separate from the above, but the direct benefits of carbon-dioxide fertilization and moderate warming have made the debate over costs versus benefits of anthropogenic climate change ambiguous. The public policy takeaway is not to regulate CO₂ but to embrace free markets at home and abroad to capitalize on the positives and ameliorate the negatives of weather and climate change, natural or anthropogenic.

Free Market Environmentalism

The energy sustainability debate relates to the larger intellectual tradition of free market environmentalism. The private-property and voluntary-exchange model was codified by authors Terry Anderson and Donald Leal as follows:

Free market environmentalism emphasizes the importance of market processes in determining optimal amounts of resource use. Only when rights are well-defined, enforced, and transferable will self-interested individuals confront the trade-offs inherent in a world of scarcity (Free Market Environmentalism, 1991: p. 22).

Private entrepreneurship seeking gains from trade is key to overcoming negative externalities:

As entrepreneurs move to fill profit niches, prices will reflect the values we place on resources and the environment. Mistakes will be made, but in the process a niche will be opened and profit opportunities will attract resources managers with a better idea (ibid., pp. 22–23).

“In cases where definition and enforcement costs are insurmountable, political solutions may be called for,” Anderson and Leal add, while warning that “those kinds of solutions often become entrenched and stand in the way of innovative market processes that promote fiscal responsibility, efficient resource use, and individual freedom” (ibid., p. 23).

In a 1993 essay, “Sustainable Development—A Free-Market Perspective,” Fred Smith applied the Anderson/Leal framework as an alternative to sustainable development. Free-market environmentalism, Smith states (p. 297), “recognizes that the greatest hope for protecting environmental values lies in the empowerment of individuals to protect those environmental resources that they value (via a creative extension of property rights).” He explains (pp. 298–99):

Sustainable development is not an artifact of the physical world but of human arrangements. Environmental resources will be protected or endangered depending upon the type of institutional framework we create, or allow to evolve, to address these concerns.

After going through examples of self-interested solutions to economic and environmental progress, Smith concludes: “The empirical evidence is clear: resources integrated into a private property system do, in fact, achieve ‘sustainability’” (p. 301).

Smith also insists that “government failure” be assessed alongside alleged market failure, noting how “individuals who make resource-use decisions in a bureaucracy are rarely those who bear the costs or receive the benefits of such decisions” (p. 304). In this regard, he contrasts the politicization of drilling in the Alaska National Wildlife Reserve (ANWR) with drilling in the Audubon Society’s Rainey wildlife sanctuary in Louisiana (ibid.).

Conclusion

In a 1999 policy analysis for the Cato Institute, The Increasing Sustainability of Conventional Energy, I concluded:

he technology of fossil-fuel extraction, combustion, and consumption continues to rapidly improve. Fossil fuels continue to have a global market share of approximately 85 percent, and all economic and environmental indicators are positive. Numerous technological advances have made coal, natural gas, and petroleum more abundant, more versatile, more reliable, and less polluting than ever before, and the technologies are being transferred from developed to emerging markets. These positive trends can be expected to continue in the 21st century.

Almost twenty years later, production and consumption trends for mineral energies remain robust, despite determined, costly government policies to force wind power and solar energy into electrical generation and ethanol into transportation markets. The global market share for fossil fuels remains more than 80 percent, with the most recent year registering growth rates of 3 percent, 1 percent, and 1.6 percent for natural gas, coal, and oil, respectively.

It is not doom-and-gloom in the energy market but quite the opposite. New generations of technology have made our ever-increasing quantities oil, coal, and natural gas environmental products, not just energy products. The sustainability threat is not free markets but government ownership and direction of resources in the name of energy sustainability. That supreme irony must be the subject for another day.

 

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https://www.shaledirectories.com/blog/energy-sustainability-is-produced-by-the-free-market-not-government/

Sanchez Energy Hires Financial Adviser To Explore Strategic Alternatives

Sanchez Energy Corp. (NYSE: SN) said Dec. 4 it has engaged Moelis & Co. LLC as financial adviser to explore strategic alternatives to strengthen its balance sheet and maximize the value of the Eagle Ford-focused company. So far this year, Sanchez has faced three straight quarters of production declines and analysts with Capital One Securities recently said the company appears to be insolvent with about $3.1 billion of asset value and roughly $3.7 billion of net liabilities and corporate overhead. Tony Sanchez III, president and CEO of Sanchez Energy, said the company has been focused on taking critical steps throughout the year to stabilize its production profile and reduce the capital intensity of the business. “However, these operational challenges, combined with volatility in the commodity markets and the company’s leverage, led the company to review opportunities to improve its financial flexibility for continued success in the future,” Sanchez said in a statement.

https://www.shaledirectories.com/blog/sanchez-energy-hires-financial-adviser-to-explore-strategic-alternatives/