Monthly Archives: April 2017

Forced Pooling Bill is Dead (Most Likely)

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SB 576, this year’s revised version of forced pooling, is unlikely to pass.

The reason it isn’t likely to pass is that the House is running out of time to pass legislation and the House hasn’t spent any time on the forced pooling legislation.  This sounds like bad planning on the sponsor’s part, but actually the House spent a huge amount of time debating some legislation about medical marijuana–lots more than was expected.  (It looks like that is going to pass, if you’re interested.)

There’s a small possibility that someone could push for this bill on the last day or two of the session so we can’t say it’s completely dead yet.  It’s on life support, though.

We’re glad this forced pooling legislation won’t pass.  It was not really well written and it gave a lot of power to the companies.  Last year’s legislation was probably a tiny bit better, actually.  At very least it was a better written piece of legislation.

One of these years the companies are going to realize that getting forced pooling passed is really hard.

One of these years the companies are going to realize that they need to address one or two issues instead of trying to push legislation that addresses every single issue they want to address.

This year wasn’t that year.

Atlantic Coast Pipeline: A Small Scandal

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As it turns out, there may be some conflicts of interest for some of the people that have been working for FERC on the Atlantic Coast Pipeline.

The FERC contracts out some of the work it does reviewing the pipeline application.  Merjent was hired by the FERC to review the ACP’s Environmental Impact Statement.

The EIS was put together by a company called Natural Resources Group.

There are eight Merjent employees who previously worked for Natural Resources Group.

All eight of those Merjent employees approved the work Natural Resources Group did on the ACP.

Looks like a pretty clear conflict of interest there.

That conflict of interest was supposed to have been disclosed when Merjent got the contract from the FERC.  It wasn’t.

Interestingly, Natural Resources Group is listed on Merjent’s web site as one of Merjent’s clients.

That looks pretty bad.

Mountain Valley Pipeline Final Environmental Impact Statement

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The FERC is now scheduled to release its final environmental impact statement for the Mountain Valley Pipeline on June 23, 2017.

Once the FEIS is released, other agencies will have 90 days to make comments on it.

Once the 90 days has passed the FERC will approve the project.  While technically the FERC is supposed to “make a decision”, the reality is that the FERC has only turned down four projects in it’s 38 year life.

Approval will come on September 21, 2017.

The only thing that could stop approval would be if the FERC still doesn’t have a quorum of commissioners on September 21.

The State of Oil and Gas: April 3, 2017

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The Cheniere Energy gas liquefaction plant in Sabine Pass, Louisiana is selling it’s product overseas for about $7.50 MCF.  They have two of four “trains” online, with the other two expected to come online this year.  At least some of the gas being sent down there is from the Marcellus/Utica area.

March 21: Oil prices have been below $50/bbl for about two weeks.  OPEC is curbing production, but Libya is about to start shipping more oil and American producers are taking advantage of reasonably high prices.  The real question is, will American producers continue to produce and drive oil prices down?  Put another way, will banks continue to lend money to producers until they go bankrupt again?

Most of the major banks believe that oil prices will continue to go up throughout the rest of this year.  This is mainly due to their belief that the market is slowly working towards balance in production and consumption.

Goldman-Sachs thinks we’ll be back in an oversupply situation in 2018-2019, as shale drilling and new mega projects will bring lots of oil online in that time period.

We should end up with less gas in storage this year than we did last year.  That’s good for royalty checks.

This guy thinks that the major gains in efficiency in the American oil and gas industry are actually from the service companies slashing their prices, not from technological increases.

A study suggests that the Marcellus/Utica area could provide enough natural gas to supply a total of five cracker plants.  That’s a lot of gas.

Right now, most of the gas produced from the Marcellus/Utica is used in power generation and industry.

The guy who predicted the oil market crash (when most other people weren’t) is predicting oil will hit $60/bbl by the end of the year.  Everybody can be wrong, but it’s worth reading why he thinks that way.

Here’s a breakdown of oil production around the world, and some focus on oil production in the U.S. fracking fields.  The really short takeaway is that we have lots of oil in the U.S.  The same is true for natural gas.  The article actually points out that most of the rest of the world’s production is in decline, but it seems that the U.S. is going to be the producer that the world begins to rely on more and more.

The oil and gas industry does all kinds of things to improve output and cut costs.  The strangest one we’ve run across that actually seems to work is testing the DNA of microbes that come from the well.  Who came up with that one?

April 3, 2017: Oil prices broke $50/bbl at the end of last week, and natural gas prices have been above $3.00/MMBtu for about 10 days.  Price wise, it looks like the oil and gas industry is doing well.  I don’t see drilling slowing down any time soon here in West Virginia.  We’ll be here for anybody who needs us to help them navigate the murky waters of those oil and gas leases, pipeline easements, and surface use agreements.