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Chesapeake Spins Off Oilfield-Services Company

Chesapeake Energy Corp. on Monday said its board has approved the spinoff of its oilfield-services operations into a separate, publicly traded company. The separation will be achieved through a distribution to Chesapeake shareholders after business closes June 30, as expected, the company said. Chesapeake said shareholders of record at the close of business on June 19 will receive one share of the new company, called Seventy Seven Energy Inc., for every 14 shares they own of Chesapeake common stock. Shareholders will receive the Seventy Seven Energy stock in a generally tax-free distribution, although cash received in lieu of fractional share interests will be considered taxable, Chesapeake said. Chesapeake said earlier this year that it may separate its oilfield-services operations, which provide drilling and pressure-pumping equipment to Chesapeake and other energy concerns. The business generated $2.2 billion in revenue last year. In May, the company said it would proceed with […]

Posted On : Published By : Tom Whipple
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Shale Gas Is America’s Geopolitical Trump Card

When Russia and China announced a $400 billion deal last month for Russia to supply China with 38 billion cubic meters of natural gas annually for three decades, some analysts heralded it as a tectonic geopolitical shift. Instead, Vladimir’s Putin’s haste to sign a deal that had been in the making for more than a decade confirmed his country’s political weakness. Despite being buoyed by high energy prices in the first decade of this century, Russia is in decline. Demographically it is shrinking; it has severe health problems (the average Russian male dies in his early 60s); and it is a "one-crop economy" heavily dependent on energy exports. Russia needs reforms to build a diversified, entrepreneurial economy, but its actions in Ukraine have brought on sanctions that weaken its access to Western ideas and technology. Becoming China’s gas station does nothing to reverse this trend. The real geopolitical shift […]

Posted On : Published By : Tom Whipple
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Shale Gas Is America's Geopolitical Trump Card

When Russia and China announced a $400 billion deal last month for Russia to supply China with 38 billion cubic meters of natural gas annually for three decades, some analysts heralded it as a tectonic geopolitical shift. Instead, Vladimir’s Putin’s haste to sign a deal that had been in the making for more than a decade confirmed his country’s political weakness. Despite being buoyed by high energy prices in the first decade of this century, Russia is in decline. Demographically it is shrinking; it has severe health problems (the average Russian male dies in his early 60s); and it is a "one-crop economy" heavily dependent on energy exports. Russia needs reforms to build a diversified, entrepreneurial economy, but its actions in Ukraine have brought on sanctions that weaken its access to Western ideas and technology. Becoming China’s gas station does nothing to reverse this trend. The real geopolitical shift […]

Posted On : Published By : Tom Whipple
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Marcellus Remains Driver of US Shale Gas Revolution

The Marcellus shale play remains the driving force behind the North America shale gas revolution , with current production of 12 Bcf/d surpassing production from any shale gas play worldwide, said Jeanie Oudin, Wood Mackenzie Lower 48 analyst who focuses on the Northeast, Rockies and West Coast, at a media briefing Wednesday in Houston. Wood Mackenzie anticipates production to surpass 20 Bcfe/d in 2018, attributing the enormous growth to increasingly productive wells and operators achieving better than expected results through optimal completion methods. The Utica shale play in eastern Ohio also is garnering a lot of attention and capital from the oil and gas industry. Current production from the play is only 1 Bcf/d, but Wood Mackenzie sees production rising above 5 Bcf/d in 2018 as operators apply lessons they’ve learned in the Marcellus to the Utica. These lessons include pairing with midstream partners to ensure that takeaway capacity […]

Posted On : Published By : Tom Whipple
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New York’s Highest Court to Rule on Towns’ Fracking Bans

The New York Court of Appeals, the highest court in the state, heard oral arguments this week in two cases regarding whether municipalities can use local zoning laws to prohibit hydraulic fracturing within the city boundaries, or whether the state’s law regulating oil and gas development within the state preempts a municipality’s local zoning laws. Presenting their cases before the seven judges on the bench, attorneys for the upstate New York towns of Dryden and Middlefield argued on the side of local zoning laws being able to prohibit oil and gas activities within a municipality’s boundaries, while a trustee for Oslo, Norway-based Norse Energy challenged the Dryden ban. Cooperstown Holstein, a dairy farm that leased land for drilling, challenged the ban by Middlefield. Lower courts had found no express or implied preemption. The Appellate Division, Third Department affirmed in May 2013 earlier Supreme Court decisions that dismissed both lawsuits, […]

Posted On : Published By : Tom Whipple
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New York's Highest Court to Rule on Towns' Fracking Bans

The New York Court of Appeals, the highest court in the state, heard oral arguments this week in two cases regarding whether municipalities can use local zoning laws to prohibit hydraulic fracturing within the city boundaries, or whether the state’s law regulating oil and gas development within the state preempts a municipality’s local zoning laws. Presenting their cases before the seven judges on the bench, attorneys for the upstate New York towns of Dryden and Middlefield argued on the side of local zoning laws being able to prohibit oil and gas activities within a municipality’s boundaries, while a trustee for Oslo, Norway-based Norse Energy challenged the Dryden ban. Cooperstown Holstein, a dairy farm that leased land for drilling, challenged the ban by Middlefield. Lower courts had found no express or implied preemption. The Appellate Division, Third Department affirmed in May 2013 earlier Supreme Court decisions that dismissed both lawsuits, […]

Posted On : Published By : Tom Whipple
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Tight Oil, Shale Gas to Drive Lower 48 Production

A handful of unconventional plays will drive U.S. Lower 48 oil and gas production growth, according to a recent analysis by Wood Mackenzie. Tight oil production is expected to reach 6 million barrels per day (MMbpd) by 2020 in the Lower 48, thanks to production in the Eagle Ford, Bakken and Bone Spring/Wolfcamp plays in the Permian Basin, John Dunn, who manages Wood Mackenzie’s Lower 48 upstream research, told reporters at a media briefing Wednesday in Houston. Overall U.S. liquids production in 2020 is forecast to reach nearly 9 MMbpd. Oil and condensate production from the Eagle Ford play in South Texas is expected to reach 2 MMbpd by 2020, while Bakken production is forecast to hit 1.7 MMbpd by 2020, according to Wood Mackenzie estimates. By 2020, oil and condensate production from the Bone Spring/Wolfcamp play in the Permian Basin – the new kid on the block – […]

Posted On : Published By : Tom Whipple
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Chesapeake Energy Faces Charges It Misled Landowners in Michigan

Michigan’s attorney general filed criminal charges against Chesapeake Energy Corp. , alleging that the natural-gas producer misled landowners to obtain leases in the state. Prosecutors contend that Chesapeake in 2010 assured Michigan landowners that holding mortgages weren’t obstacles to signing leases allowing the company to drill for gas, but later cited those mortgages as a reason for canceling the deals. "Chesapeake therefore obtained uncompensated land options from these landowners by false pretenses, and prevented competitors from using the land," the attorney general’s office said Thursday. The complaint says that Chesapeake signed leases with as many as 800 landowners, but honored fewer than 30 leases. "We believe this action has no merit and we will vigorously contest these baseless allegations," said Gordon Pennoyer, a spokesman for the company, which is based in Oklahoma City. The charges include one felony count of conducting a criminal enterprise and eight felony counts of […]

Posted On : Published By : Tom Whipple
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U.S. gas production setting records

U.S. natural gas production from the Lower 48 states in May beat a monthly high set in April by 0.6 percent, analysis shows. Bentek Energy, the forecasting division of energy website Platts, said May production reached 67.7 billion cubic feet per day on average. That beat the previous monthly record set in April. Production peaked May 26 at 68.2 billion cubic feet per day and May’s average was 4.6 percent higher year-on-year. "With power utilities clearly anxious about relying on coal as a fuel source now that the Environmental Protection Agency has released its latest carbon emissions reduction program, natural gas producers have stepped up and see a clear signal to deliver as much as the market can bear," Jack Weixel, Bentek Energy director of energy analysis, said in a statement Tuesday. The EPA proposed Monday to cut emissions from existing power plants by 30 percent […]

Posted On : Published By : Tom Whipple
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Shale gas gives North American petchem companies a competitive edge: S&P analyst

North America-based petrochemical companies are likely to enjoy a competitive advantage over their rivals based elsewhere for the next several years as a result of the US shale gas revolution, which provides both inexpensive feedstocks and fuel for the petchems industry, a senior Standard & Poor’s analyst said Tuesday. "The ability to extract low-cost ethane and put it through a steam cracker and create ethylene and all the derivatives, that’s been very favorable for companies that have operated in North American versus companies in other parts of the world," Henry Fukuchi, director of ratings and analytics at S&P, said on the sidelines of the Benposium conference in Houston. S&P and Platts are both units of McGraw-Hill Financial. Global demand for petrochemicals has historically grown about 4% annually and Fukuchi said he expects that growth rate to remain constant for the next several years, driven by economic development in China […]

Posted On : Published By : Tom Whipple