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Msg  3015 of 4349  at  11/15/2018 2:28:36 PM  by


Northeast Pa. shale gas permitting takes off after new pipeline opens

from SNL Daily Gas Report
Northeast Pa. shale gas permitting takes off after new pipeline opens
BYLINE: Bill Holland

SECTION: Exclusive

October permitting for new shale gas wells shot higher in northeast Pennsylvania as Williams Cos. Inc.'s newly started Atlantic Sunrise pipeline added 1.7 Bcf/d of new takeaway capacity to the region, doubling and tripling market prices at hubs across the state.

Washington County, south of Pittsburgh, continued to be the leading county for new shale wells. EQT Corp., the nation's top gas producer, continued as the leading company for new permits. But three northeast counties Susquehanna, Lycoming and Tioga accounted for nearly half the permits issued in the state in October, according to the Pennsylvania Department of Environmental Protection.

Statewide, permitting activity dropped 26% when compared to a year ago. With production still increasing in Appalachia this year, fewer permits indicates drillers are getting even more efficient at getting gas out of the ground with fewer wells and longer horizontal laterals.

The opening of Atlantic Sunrise, designed to move gas to the Transcontinental Gas Pipe Line Co. LLC system south to Dominion Energy Inc.'s Cove Point LNG LP terminal and metro Washington, D.C., juiced gas prices at local hubs across the state that historically suffer from rock-bottom pricing.

"To tell you how quick it happened at 10 a.m., the Atlantic Sunrise project was commissioned on October 6, and a little more than two hours later, we had already transferred out of [Pennsylvania] 850 MMcf per day to the market basin, where we were getting and receiving different price points," Cabot Oil & Gas Corp. CEO Dan Dinges told analysts on his company's Oct. 26 earnings conference call. "During the first week of October, prior to Atlantic Sunrise coming online, local cash prices averaged $1.40 [per Mcf] compared to an average of $2.90 [per Mcf] since the in-service of Atlantic Sunrise."

The opening of Atlantic Sunrise in Susquehanna County, Cabot's home turf, had knock-on effects for Lycoming and Tioga counties farther away from the new pipe as producers pulled gas from other lines to fill Atlantic Sunrise.

"Several of the largest shippers on Atlantic Sunrise indicated that they will initially fill their commitments with a combination of new production and redirected gas," market consulting firm BTU Analytics analyst Jake Fells said in an Oct. 9 note. "In the first few days, gas in Susquehanna County has been redirected primarily from [Tennessee Gas Pipeline Co.] to help fill Atlantic Sunrise's Central Penn North line."

Southwestern Energy Co. and Spain's Repsol Energy North America Corp. are drilling new wells in Tioga County where the geology features Marcellus Shale layers stacked atop the Utica Shale. Venture capital-backed Inflection Energy LLC pulled all 18 permits issued for Lycoming County in October. Inflection has been issued 59 permits this year, all in dry gas Lycoming County, according to state records.

Inflection is not the only private equity-backed driller actively working the state now. Blackstone Group LP-backed Huntley & Huntley Energy Exploration, LLC accounted for 16 permits pulled in October to drill outside Pittsburgh in Allegheny and Westmoreland counties, while EnCap Investments LP-backed PennEnergy Resources LLC pulled seven permits to drill in Butler County, north of Pittsburgh.

Also in the southwest corner of the state, EQT sharply limited its permitting activity in Greene County during October. Permits to drill in normally active Greene County dropped by 78% when compared to October 2017.

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