Pennsylvania House Environmental Resources and Energy Committee Hearing
In his testimony on August 17, 2021 at the Pennsylvania House Environmental Resources and Energy Committee public hearing on the Environmental and Economic Benefit of Pipelines, Babst Calland Attorney Keith Coyle, chairman of the Marcellus Shale Coalition’s Pipeline Safety Workgroup, explains, “As long as we are relying on fossil fuels to produce power, we need pipelines to deliver them safely. …It’s pretty clear we are going to be relying on natural gas and petroleum for some time. There is no other way to do this safely and to move product in bulk besides these pipelines.”
To view the video of the full public hearing of the House Environmental Resources & Energy Committee on the Environmental and Economic Benefits of Pipelines, click here.
After first acquiring an option agreement in 2012 for a 340-acre site, and then purchasing the site in 2014, Shell Chemical Appalachia has officially announced that it will build a multi-billion dollar ethane cracker plant on the site of the former Horsehead zinc smelter in Beaver County, Pennsylvania. The site will consist of the cracker, two units that will convert ethylene into polyethylene pellets, a natural gas-fired power plant, a loading dock, and a wastewater plant. It is estimated that constructing the plant will employ approximately 6,000 workers. Thereafter, the plant will permanently employ about 600 workers. The plant is expected to consume approximately 105,000 barrels of ethane per day and Shell has reportedly secured supplier commitments from at least 10 oil and gas operators in the region. Primary construction on the site is expected to start in approximately 18 months.
According to a report by the Charleston Gazette-Mail, TransCanada will be purchasing Columbia Pipeline Group for $13 billion. TransCanada had previously proposed the Keystone XL pipeline, and owns more than 42,000 miles of pipeline in North America. TransCanada will acquire about 15,000 miles of pipeline, as well as processing and underground storage facilities, through the purchase of Columbia.
As reported by Oil and Gas Investor, Rice Midstream Holdings, LLC, a subsidiary of Rice Energy Inc., and Gulfport Energy Corporation have teamed up to build a pipeline gathering and water line system in Ohio’s Utica Shale. Over the next six years, the companies plan to spend a combined $640 million on 165 miles of pipeline that will connect Gulfport’s Utica shale wells in Belmont and Monroe Counties to interstate pipelines. Speaking of the joint venture, Rice’s CEO, Daniel J. Rice IV, stated: “This joint venture will be one of the premier midstream systems in the prolific dry gas core of the Utica…” Gulfport will dedicate about 77,000 leasehold acres and an existing 11-mile pipeline to the joint venture, and Rice will be responsible for constructing and operating the assets. The parties have further agreed that Rice will own 75% of the joint venture and Gulfport will own the remaining 25%. Each partner will be responsible for its proportionate share of costs.
Horsehead Holding Corp. (Horsehead) announced Monday that it closed on the sale of its former zinc smelter to Shell Chemical (Shell), which is the proposed site for an ethane cracker plant in Beaver County. Although Shell has not made a final decision on whether to build the cracker plant, it has been considering the Horsehead property as a site for the plant, which would convert ethane, a component of natural gas, into polyethylene. Shell is moving forward with developing the site, having demolished the smelter plant and relocated power lines. Shell indicated that this is a necessary step in the plans to acquire permits and continue development of the site.
Energy Transfer Partners LP announced that it will invest $1.5 billion for a new pipeline system and processing facilities to serve the Marcellus Shale in and around Butler County, Pennsylvania. The new facilities are expected to be operational by mid-2017. Natural Gas Intelligence reported that the pipeline and facilities are part of a long-term natural gas gathering agreement between ETP and EdgeMarc Energy to serve EdgeMarc’s active wells in the region, but the facilities are also expected to accept third party gas in the future. The project plans include over 100 miles of high pressure pipeline and a cryogenic gas processing plant that will be located in western Pennsylvania near Butler County, providing an additional 440 MMcf/d of gathering capacity in the area. The plant will deliver gas to ETP’s Rover pipeline, which is expected to deliver gas to markets in the Midwest, Great Lakes and Gulf Coast regions beginning in 2017. ETP’s pipeline will also deliver natural gas liquids to the Marcus Hook Industrial Complex on the Delaware River, which is being repurposed for natural gas liquid storage, processing and distribution to foreign and domestic markets.
As reported by the Wheeling Intelligencer, the Ohio Department of Natural Resources (“ODNR”) recently released production data for the first quarter of 2015 for oil and gas wells drilled in Ohio’s Utica Shale formation. The report found that natural gas production during the first three months of the year, which totaled 183.5 billion cubic feet, nearly tripled from the first quarter of 2014, when Utica Shale wells produced only 67.3 billion cubic feet. The state’s most productive natural gas wells are Rice Energy’s “Blue Thunder” wells drilled in Belmont County, which produced a combined 1.41 billion cubic feet during the first quarter. The ODNR’s first quarter data also shows that oil production in the Utica Shale, which totaled more than 4.4 million barrels, is up from the 1.95 million barrels reported during the first quarter of 2014. The state’s most productive oil well is American Energy Partners’ “Shugert Daddy” well drilled in Guernsey County, which produced 40,683 barrels during the first quarter.
Despite the increase in both oil and gas production from the Utica Shale, Ohio has experienced a slowdown in new drilling operations and many existing wells have been shut-in due to a lack of pipeline infrastructure. Shawn Bennett, Senior Vice President of the Ohio Oil and Gas Association, stated that “[m]ore pipelines are integral to the success of the Utica” and suggested that Ohio is still a few years away from having all necessary pipelines in place.
Marcellus.com reports that an intrastate pipeline is under construction in northern West Virginia. The Stonewall Gas Gathering pipeline will connect Doddridge and Harrison counties to the Columbia Transmission interstate pipeline that runs through Braxton County, West Virginia. Wisconsin-based Precision Pipeline has been contracted to build the pipeline, which plans to hire approximately half of the necessary employees from local areas. The pipeline will help to fill the need for new infrastructure from gas producing areas in West Virginia to other markets. Charlie Burd, executive director of the Independent Oil and Natural Gas Association of West Virginia, stated that “[c]ustomers and producers are ready and waiting for pipelines that connect gas wells to markets.”
As reported by Marcellus Drilling News and the Daily Reporter, the WV Department of Commerce, which is tasked with overseeing the state’s leasing program, opened another round of bids on Friday to lease state-owned lands for oil and gas operations. Jay-Bee Production Company submitted a bid ranging from $5,000 to $16,300 per acre to drill underneath 303 acres in theJug Wildlife Management Area in Tyler County, and Antero Resources bid $8,100 per acrefor 283 acres in the Jug Wildlife Area. Noble Energy also submitted a bid to drill beneath Fish Creek and adjacent lands in Marshall County, and the state is currently negotiating with Noble, Statoil USA Onshore Properties Inc. and Gastar Exploration to lease different sections of the Ohio River.
StateImpact reported that the Federal Energy Regulatory Commission recently approved an addition to the interstate Transco pipeline that will transport Marcellus shale gas to New Jersey, where there is a high demand. The approval comes after several other pipeline expansions to New York and New England were recently approved. The Leidy Southeast line will total approximately 30 miles in Pennsylvania and New Jersey and is scheduled to be completed by late 2015.
StateImpact, a reporting collaboration supported by NPR, that the Federal Energy Regulatory Commission has approved a proposed interstate pipeline that would transport Marcellus Shale natural gas from Pennsylvania to New York and New England markets. The 30-inch pipeline would cover 124 miles, connecting gas production in Susquehanna County, Pennsylvania to existing transmission lines in New York. The pipeline will be operated by subsidiaries of Williams Partners, Cabot Oil and Gas, Piedmont Natural Gas, and WGL Holdings. The Pennsylvania Department of Environmental Protection, the U.S. Army Corps of Engineers and the New York Department of Environmental Conservation must still issue final permits.
According to a report published by Pennsylvania Business Daily, Reading-based UGI Utilities, Inc. recently became Pennsylvania’s first natural gas utility to connect one of its pipelines to a Utica Shale well, thereby increasing the supply of natural gas available to customers in Tioga and Potter counties. The expansion required UGI to construct a new meter and regulator station system, but it is estimated that the natural gas resources in the expanded system, which includes one Utica well and two Marcellus wells, can meet the energy needs of more than 50,000 households. According to a statement by Kelly Beaver, UGI’s Vice President of Supply, “[m]ore than 70 percent of the natural gas we deliver through our system is produced in the Marcellus Shale region. We are pleased to add volumes of lower-cost Utica Shale natural gas to our portfolio as another supply source.”
West Virginia University recently announced that it will be establishing the “Marcellus Shale Energy and Environment Laboratory,” at a site in the Morgantown Industrial Park near the WVU campus. The laboratory is being funded as part of a five-year, $11 million agreement with the U.S. Department of Energy and will be operated in conjunction with the DOE’s National Energy Technology Laboratory (that has long had a presence in Morgantown) and Charleston-based natural gas producer Northeast Natural Energy, LLC. Timothy Carr, WVU Professor of Geology, will be the Director of the new lab, which will also benefit from contributions by faculty with Ohio State University’s Subsurface Energy Resource Center. The primary goal of the new lab is to undertake a comprehensive, long-term study of the environmental and other aspects of the extraction of shale gas resources, focusing on the precise measurement of various parameters and developing best operating practices based on their research.
PowerSource of the Pittsburgh Post-Gazette provided commentary discussing future economic opportunities regarding natural gas liquids (NGLs). Olefins plants or cracker facilities transform NGLs into products that are used in many industrial and consumer end applications. The commentary discussed the infrastructure challenge facing many regional policymakers, education institutions, thought leaders and business groups. The commentary suggested the development of an open-access midstream system will guarantee delivery of the region’s NGLs, specifically ethane, to planned Olefins plants and cracker facilities in the Appalachian Valley region to support downstream manufacturing within the local region.
As reported on Bloomberg.com, Spectra Energy Corporation, a Houston-based pipeline operator, and Northeast Utilities, a Connecticut-based utility provider, have partnered in proposing a $3 billion pipeline expansion that will increase natural gas supply to the six New England states. The project, known as “Access Northeast,” will provide fuel for power plants and home heating in an attempt to combat soaring energy prices in the New England region. According to the report, power prices in New England reached a 6-year high last spring due to extreme cold temperatures and a shortfall in pipeline capacity, which restricted gas supply. The proposed Access Northeast project plans to boost the capacity of Spectra’s existing Algonquin and Maritimes pipelines, by as much as 1 billion cubic feet per day and create additional delivery points for local distribution. The project is expected to be in service by November 2018.
According to the report, Access Northeast is not the only pipeline project aimed at connecting the booming Marcellus Shale gas formation with other states: (i) Kinder Morgan Energy Partners LP’s proposed “Northeast Energy Direct” project will also supply natural gas to New England, (ii) Duke Energy Corp., Dominion Resources, Inc., Piedmont Natural Gas Co. and AGL Resources Inc. have partnered to construct a $5 billion pipeline from West Virginia to North Carolina, (iii) NextEra Energy Inc. and EQT have paired up to build a 330-mile pipeline from West Virginia to the southeastern states, and (iv) Spectra is also seeking to expand its Texas Eastern pipeline system in Ohio pursuant to an agreement with American Electric Power Co. and Chesapeake Energy Corp.