Monthly Archives: August 2019

Atlantic Coast Pipeline Putting West Virginians in Danger?

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We’ve been supporters of building pipelines. There’s a ton of gas here in West Virginia, the gas is needed in other places, and pipelines are the safest way to transport natural gas. Sure, building power plants here and transporting electricity would be safer, but few people with the connections necessary to do that seem to be doing that. Pipeline companies have been the option. So we’ve supported that.

Of course, we’ve been negotiating great pipeline deals for the people of West Virginia. We’ve gotten much better prices and some really good terms that protect our clients from long-term use and abuse by the companies. We did so believing that the companies would do their best to install the pipelines in a safe way.

Turns out, that was not a safe assumption. Last week I got a call from a local source telling me that the Atlantic Coast Pipeline had been backfilling the trench with rocks. It’s a person that I have no reason to distrust, but it was news that was hard to believe because of the blatant disregard for safety that it displays. I’ve done some construction in my time and backfilling any pipeline trench with rocks is a no-no. Ask any plumber, landscaper, or developer if you don’t believe it.

Now today there’s news that the PHMSA (Pipeline and Hazardous Materials Safety Administration) has cited the ACP for placing the pipeline in a rock-laden ditch, for abutting the pipeline with rock-laden trench walls, and for building a trench that was too narrow for easy access for inspection and work.

The problem with rocks in backfill (or too close to the pipe as part of the trench wall) is that the rocks will scratch the outer protective lining of the pipe creating a location where corrosion will begin much sooner than anticipated. Corrosion is the main culprit in pipeline failures, except for construction guys digging into the pipeline.

This kind of construction is awful. It puts people in danger. When ACP or MVP start construction on your property we highly recommend that you get time-lapse photography of the entire process and watch it. If it looks like they’ve dropped rocks in the trench send the footage to PHMSA and FERC. Post it to YouTube. Make sure that it’s documented so that you can force them to properly install the pipeline.

The State of Oil and Gas: August 2019

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A new LNG plant is opening up in Louisiana. Marcellus Shale gas will flow to the plant, be turned into liquefied natural gas, and shipped abroad. Demand for gas will go up, and prices will (hopefully) start to go back up. One plant isn’t going to make a huge difference of course, but more are coming online in the future.

Speaking of gas prices, this year’s slide into oblivion has been pretty bad. Prices haven’t been above $2.75/MMBtu since about February in spite of lower than normal storage levels. The main reason is that gas production has been able to ramp up to keep up with and even exceed demand, making storage levels moot.

Libya is still struggling with civil war. “Someone” turned off a valve to the Sharara oil field which produces about 290,000 barrels per day, dropping Libya’s production below 1,000,000 barrels per day.

The Texas Eastern Transmission pipeline exploded in Kentucky, killing one and injuring five people. It’s a 30-inch pipe, and one of the major pipeline running from here to Texas. It’s disrupted natural gas supplies and prices have jumped a bit as a result.

Antero is planning to keep costs flat next year, but will drill longer laterals and increase land expenditures just a bit.

The Atlantic Coast Pipeline is looking down the barrel at yet another legal hurdle.

One thing that the FERC looks at when deciding whether to approve a major pipeline project is the need for the project. An independent analysis has called into question the need for the MVP. Whether this analysis was truly independent is, of course, in question. But the original analysis for need was done by the MVP so that was hardly an independent analysis itself.

On the other hand, Roanoke Gas says that the MVP is critical to them not running out of gas.

Since we’re talking about pipelines, West Virginia’s Attorney General has filed a brief with the U. S. Supreme Court opposing the Fourth Circuit Court’s decision to halt work on the Atlantic Coast Pipeline.

There’s a bill in Congress that will improve national pipeline safety. This is a good thing.

We have too much gas. That’s the reason natural gas prices are so low. Lots of gas being produced from the Marcellus Shale, and lots of natural gas being produced with the oil from the Permian Basin are the main culprits. For the next couple of years there will be major natural gas project completions, such as LNG plants and cracker plants, which will drive some demand. But between 2021 and 2023 there are no new major projects slated for completion. That could make 2021 to 2023 a period of time when natural gas prices get really low and put a lot of drillers out of work.

It’s very disappointing to West Virginia that the proposed cracker plant will definitely not be built, at least by Braskem. The land is being marketed, purportedly with a focus on other companies that might be interested in building a cracker plant.

U. S. oil production growth is declining slightly and, according to a Forbes article, it will continue to decline. It doesn’t really give a reason why, though, so who knows.

Rig counts overall are down, but in West Virginia they’re up year over year.