The State of Oil and Gas: January 15, 2020

Posted on by

Today, gas prices are at about $2.13/MMBtu, and they briefly dropped below $2.00/MMBtu during the last couple weeks.

Rig counts are at 781, which is down again. That’s going to reduce production eventually.

RBN Energy’s 2019 Prognostication Results and 2020 Prognostications.

Cameron LNG has started producing LNG from Train 2. More LNG going overseas!

Every year, Mexico hedges the price of natural gas, assuring the country that it can get gas at a specific price, making it easier for the country to budget for its energy needs. This year’s hedge (which will be effective for the rest of 2020) is at $49/bbl.

The EIA expects energy demand to grow 50% in the next 30 years. That’s an enormous amount of growth. Most of the growth will be in Asia.

Over the last six years, rig counts have dropped by 50% while oil production has increased by 60%.

One trader thinks natural gas prices are unlikely to move up significantly. I agree.

The 4th Circuit rejected a permit that the Atlantic Coast Pipeline needs.

Gas prices keep going down, but demand is going up. Up 20% in the last five years. That’s a trend that’s going to continue.

EQT is saying they’ll need more help from the West Virginia legislature in order to develop natural gas in West Virginia. They don’t. The solutions that EQT proposes are only in the interest of the companies and never good for oil and gas owners. The WV legislature really needs to think more about WV oil and gas owners.

The West Virginia legislature is working on an organization that would help secure investment money from China. Some of this money would hopefully get used to build the Appalachian Natural Gas Storage Hub.

If you’d like to know more about the international LNG market than you probably need to, then read RBN Energy’s series of posts about it.

Oil prices are becoming more stable, or perhaps it’s better to say less volatile, than they used to be. Stable is not a word to use in the same sentence with the term “oil prices”.

Natural gas production from the Marcellus/Utica region declined last month, and projected production is flat for the year. My gut says production will start to decline before the end of the year.

The State of Oil and Gas: Jan 2, 2020

Posted on by

Gas prices today are $2.13/MMBtu. Still down, but down farther than I expect them to stay for long. Rig counts went back up in mid-December, but back down at the end of the month. The long-term trend is down. Gas production is trending down, too. Read on for more details about the oil and gas industry. Much longer and gas prices have to go up because supply will go down.

If you’d like to take a pretty detailed look at current natural gas supply and demand, this article from RBN Energy is the one to read.

In an article about how West Virginia’s coffers have suffered from the slowdown in gas production and the lowering of gas prices, there’s some analysis about gas production.

Chesapeake is looking at hard times coming up. If I were a betting man, I’d put some money into CHK stock, though. I’ve never seen them lose in the long run. Note: I don’t invest in oil and gas companies, and I’m not an investment adviser; do your own homework (but take a look at CHK).

Mountain Valley Pipeline has cancelled a contract with one of its construction subcontractors. Interesting. It may not mean anything, or it may mean a lot. There’s just not enough information to be sure.

Back in September the U.S. exported more oil than it imported. For the first time in 46 years.

Natural gas did more to reduce greenhouse gases last year than renewables did.

Someone did an analysis of the Atlantic Coast Pipeline’s current situation.

Production growth in the oil sector will fall next year, according to prognosticators. The same will be true for natural gas. It can’t continue on this path for long. I give it about six more months like this before the price of gas and oil starts to climb. That’s a very seat of the pants guess, of course.

Explore the changing relationship between oil prices and natural gas prices.

West Virginia’s Attorney General is pushing for the Supreme Court to overturn the ruling that stopped construction on the Atlantic Coast Pipeline.

Antero Resources has put up some of its assets for sale. They plan to get about $1,000,000,000.00 for it. Yep, $1 billion. Just a little sale. No big deal. Nobody’s wondering what’s going on.

Chevron is also selling assets. All of them. It seems like a good time to buy assets in the Marcellus/Utica play. It’s going to take somebody who really knows what they’re doing, though. Times are tough in the natural gas patch.

Southwestern is cutting back on production growth next year. It’s still going to grow, but less than it did last year. This is what is going to happen for most producers, and eventually there won’t be enough gas flowing and the price will go up. That situation will not last long, though. It’s really easy to produce new gas from new wells, almost on demand.

The Mountain Valley Pipeline has settled a lawsuit for $2.15 million dollars.

Elba Island shipped its first Natural Gas Liquids cargo.

Marcus Hook isn’t able to take as much of the NGLs produced from the Marcellus/Utica play as producers would like. Seems they’re looking at expansion, though.

A well in Marshall County exploded. There were no injuries and Tug Hill was able to shut down the well remotely, which put out the fire. As far as gas production disasters go, this was a good one.

Production is beginning to lag a bit. The Appalachian region is expected to reduce production by 74 MMBtus per day in January, according to this EIA report. Everything else seems to be trending down as well, except in the Permian Basin. We’re getting close to the bottom. It’s hard to say how close, though.

Researchers at the University of Kentucky are studying the Rogersville Shale.

Arsenal has completed its second bankruptcy of 2019.

People are still sitting in trees on the Mountain Valley Pipeline construction right of way.

A compressor station in Ohio County caught fire the day before Christmas. Nobody was injured and the fire was put out in about 30 minutes. Again, a best case scenario for an oil and gas disaster.

The State of Oil and Gas: December 1, 2019

Posted on by

Today the price of gas is about $2.33/MMBtu. That’s down a good bit from two weeks ago. Odd that it should go down so much as gas storage is right at the five year average, but that’s the way it is.

RBNEnergy analyzes the demand for natural gas and how that’s affecting prices.

And the rig count continues to fall.

Here’s an argument that the trade war between the U. S. and China is the largest factor in the price of oil.

Preliminary reports say that the North Carolina governor, Roy Cooper, improperly influenced the permitting process for the Atlantic Coast Pipeline. Stay tuned, as it seems there’s more info coming.

The last “old” EQT leadership team member has resigned, saying he’ll be taking a spot at an undisclosed company.

One fellow over at Seeking Alpha thinks that spring of 2020 will see oil prices in the $35-40/bbl price range. It’s not a long read, and I’m not convinced that the amount of oil he says will be coming online in the next couple years will make a difference in the next few months, but see what you think.

The Keytsone XL pipeline has sprung a leak, affecting about 4.8 acres. Sure hope the ACP and MVP are a little more reliable than this. Oil leaks don’t typically explode. High pressure gas does.

Harold Hamm of Continental Resources explains a little bit of why we have an oversupply and a few other things he thinks are important.

People still want a cracker plant in West Virginia.

The EIA is predicting lower natural gas prices for most regions of the United States next year.

The price of gas is staying down, but the world is demanding more and more of it.

Everything is going electric, which means that the demand for natural gas is going up. While it would be great (I really mean that) for wind, solar, and tide to provide that electricity, the tech is just not mature enough to do so yet.

The State of Oil and Gas: November 15, 2019

Posted on by

The price of natural gas today is about $2.69/MMBtu.

Oil and gas news has again been a bit slow. Mainly it’s more of the same.

EQT is cutting its capital expenditures for 2020, and even the last quarter of 2019. Cutting them a lot. This means less drilling and less taking of leases.

West Virginia tax revenues are below what was initially projected, in part because of a lack of demand for gas and in part because the pipeline construction (ACP and MVP) got shut down.

Rig counts continue to fall. At some point this means underproduction, but for the time being we have plenty of gas. The important fact to figure out is when the reduction in rigs will result in too little gas. Somebody who can figure that out accurately can make a lot of money in the stock market.

This Forbes article focuses on oil, but the economic forces are true for gas producers as well. Everybody is slowing drilling. Everybody is saying they will produce the same. Eventually they will have to increase drilling as wells simply run out of gas. When? Who knows.

The Atlantic Coast Pipeline people think they’ll be building again in summer of 2020.

Disney Cruise Lines has ordered three LNG powered cruise ships. This will probably do more to reduce pollution than the Cash for Clunkers program did. Cruise ships are ridiculously dirty.

Cunningham Energy here in West Virginia is doing alright for itself. One of its well pads had produced (over its lifetime) 100,000 barrels of oil and 91 million cubic feet of wet gas. That doesn’t seem all that exciting until you realize that the wells they are drilling are about a tenth the cost of a Marcellus shale well. The ROI is pretty good.

A review of several weather sites says that 2019-2020 winter weather is expected to bring average temperatures or above average temperatures, but plenty of storms. Of course, there’s always a site or two that say it’s going to be colder than usual, and a site or two that say it’s going to be warmer than usual. Guess we’ll see, but it seems unlikely that we’ll have anything other than normal winter temperatures.

CNX is using e-fracking (using natural gas to power electric generators which provide the energy to push the fracking fluid into the formation), and went all e-fracking on a well pad in Green County, PA in May. It’s cheaper for the company, quieter by a lot, and produces fewer emissions.

Big news! Arsenal has filed for bankruptcy, again! They filed back in February of this year, zipped through the process in 10 days, and now are at it again. It seems this is more about restructuring debt than anything, as all the major investors are onboard.

The State of Oil and Gas: November 1, 2019

Posted on by

It’s been a bit of a slow couple weeks for oil and gas news. When the most exciting thing to report is 3rd quarter earnings reports, you know it’s slow. Granted, you do get a rough idea of where the experts think the industry is going, but it’s just not…much.

Natural gas prices today are $2.60/MMBtu. They had gone over $2.70/MMBtu a day or two ago. It’s a bit of a surprise as gas storage has gone over the five year average, but I’ve stopped trying to predict the movements of the natural gas price. That way madness lies.

Prices for natural gas coming out of the Marcellus/Utica region have dropped farther than the price at the Henry Hub. It seems that’s primarily because of the TETCO pipeline exploding and being shut down, constricting the flow of gas from the Marcellus/Utica region to the Henry Hub, as well as the Cove Point LNG plant shutting down for maintenance.

Exxon-Mobile is looking for another site for a cracker plant. Seems like going to the Parkersburg, WV location that was already going to be used as a cracker plant is a no-brainer, but there must be some other factors that we’re not aware of driving the decision.

EnergyFuse.com summarizes the various oil production outages around the world and notes that fears of a global recession as well as lower demand have countered the usual upward movement in price these would cause.

The Mountain Valley Pipeline has been ordered to stop construction pending additional regulatory research into some endangered species.

A trash hauling company, Republic Services, is adding to its CNG fleet.

Not being a financier, I’m not sure whether Range selling another 0.5% overriding royalty (total of 3.5% sold to date) is a good thing or a bad thing. The article states that the cash will be used for share buyback, so maybe it’s a good thing. But selling off future income at (presumably) a significant discount seems awfully short-sighted.

Burning natural gas has saved consumers a huge amount of money over the last ten years.

Yet another company is being accused of underpaying royalties. I’m beginning to think that there are two kinds of royalty owners, those who have been underpaid and those who are being underpaid.

Every once in a while we’ll take a look at one of the quarterly reports from a company that’s active in West Virginia. This one is from Southwestern Energy, a/k/a SWN. While they’re geared towards investors, there can be interesting nuggets for royalty and mineral owners at times. In general, SWN is producing more, and using a lot less money. Spoiler: that’s true for all the other producers, too.

Also in regards to SWN, they do a pretty good job of taking care of the water they use.

The amount of LNG exports has doubled, again.

Antero is one of the more important oil and gas companies in West Virginia. Their 3rd quarter report sheds light on why they closed the water treatment plant and how they expect next year to go.

The State of Oil and Gas: October 15, 2019

Posted on by

So, we’re publishing a late for this period. We’ve had some personal things to take care of that limited the time we could spend on this. Hope you’ll forgive.

Gas prices were at $2.29/MMBtu on October 1.

China’s gas demand is growing leaps and bounds. Analysts doubt it will be able to produce enough to keep up with growth. That gas has to come from somewhere.

India and China are trying to put together an agreement to work together when buying oil. India is also trying to get South Korea and Japan involved.

FERC has approved Elba Island’s first LNG train. There are nine more to come in the next year or so.

Holy Moley! The United Stage Geological Survey (USGS) has released a new estimate for recoverable natural gas from the Utica and Marcellus shale formations. Just for perspective, the estimate for about 15 years ago was about 2 trillion cubic feet of gas. Then it went up to 84 trillion, then 97 trillion. Now ….. drum roll ….. 214 trillion! That’s a lot of gas. I mean, the USGS is a conservative organization and is probably making calculations based off current natural gas prices, so this shows that producers are figuring out how to get more gas out of the rock. We’re not running out of natural gas any time soon.

Here’s an article that briefly goes into how U.S. LNG is competing with foreign LNG.

The drone attack on Saudi oil refining did not have a strong impact on oil prices, but the long-term implications towards stability are surprising.

There’s some talk of extending I-68 to run west of Morgantown. That’s some rugged country out there. I’d be curious to see where the route would go.

OPEC would like to have all of the oil producing countries in the world join with it.

A nice, concise article from RBN Energy describes how the fundamentals of natural gas are affecting the price of natural gas.

Every once in a while something bad happens in the oil patch. Honestly, we probably don’t hear about most of them. This one made headlines. There’s a gas well up in PA that caught fire. Local firefighters were able to put it out in about four hours.

Virginia has forced the Mountain Valley Pipeline to pay a $2.15 million dollar fine and submit to additional oversight during construction.

In related news, some permits the MVP needs have been pulled.

Research has turned up a new method for determining how much gas is in a formation and possibly which formations may produce gas. It’s cheaper and better, so companies will likely adopt it pretty quickly.

Gas prices ended at about $2.32/MMBtu on October 15, 2019. This post is published on October 20, so I haven’t scraped the exact data on the date.

The State of Oil and Gas: October 1, 2019

Posted on by

Natural gas prices are at $2.28/MMBtu today. They spent a couple good weeks up at about $2.50/MMBtu. It seems that we stored more gas than expected.

The third largest storage facility in North America (in Alberta, Canada) is at its lowest level in twenty years. That would typically drive prices up some, but it doesn’t seem to be doing so. Read the first of two articles about it over at RBN Energy.

Gas production is hitting new highs and setting new records. More interesting though are the last two paragraphs of the article which say that DUCs (Drilled but UnCompleted wells) have gone down a lot.

West Virginia’s DEP approved a coal-to-liquids plant that would combine natural gas and coal to create diesel, gasoline, and other fuels. It’s the first full sized coal-to-liquids plant in the United States. Importantly for West Virginia, it’s turning some of our natural gas into a more refined product, increasing its value before it’s sent out of state.

The US is producing more natural gas than it needs right now, and companies have been building facilities to ship it overseas. Unfortunately, it seems that “overseas” also has a lot of natural gas, and probably will for the near future. Thanks to horizontal fracking, the world of the near future is going to have plenty of natural gas. Good for consumers, not so good for your friendly neighborhood oil and gas attorney.

On that same line of thought, England uses a lot of American natural gas because they banned horizontal fracking a while back.

The attack on Saudi oil production affected their light crude the most. When the U.S. imposed a tariff on oil to China, that’s the same grade of oil that it affected. So now China is forced to buy U.S. oil with a tariff.

FERC has approved another LNG facility. It’s in Jacksonville, FL, and will send LNGs to the Caribbean. It’s kind of small compared to some of the others that have been built recently, but every little bit counts.

The oil and gas investment community has changed the way it thinks about price forecasting. The attacks on Saudi infrastructure have added an element of uncertainty to things. If Saudi infrastructure can be hit, anything else could be.

Trying to figure out how this oil and gas law business will do in the next couple years we’ve run across this handy page over at the Energy Information Agency. It says what we’ve been expecting, for the most part. It looks like natural gas prices are going to stay about the same for quite some time. We are unlikely to see prices above $3.00, or anything below $2.00 (at least for long). Production can outpace demand; the only thing slowing producers down will probably be a lack of capital. Hopefully we don’t have a new crop of investment bankers come in and decide they can make money in oil and gas because when oil and gas companies get money they drill and produce, driving supply up and prices down.

The National Review makes the argument that we can have either more fracking or more war.

West Virginia benefits from the taxes paid by natural gas producers. WVONGA put together a report showing how much property tax (not severance tax) was paid just by natural gas producers this year.

Some people would like to build an NGL storage facility on the Ohio River. The NETL has created a report supporting it.

India’s gas company, Petronet, has agreed in principle to invest $7.5 billion into Tellurian’s Driftwood LNG terminal in Louisiana. India plans to get 5 MM tons of LNG per year from the plant.

IHS Markit is predicting an average natural gas price below $2.00/MMBtu next year.

West Virginia is the seventh largest producer of natural gas in the US. This Rigzone article goes into some detail about what that means.

Here’s a news report including video footage of the new cracker plant going up in PA.

Japan is going to invest $10 billion into diversifying the source of its LNG. Presumably this means it will take more from the US.

Antero Resources puts a good chunk of change into upgrading and maintaining the small country roads it uses. Even so, there are places they’re not getting to. Good on ya, but lets get the rest taken care of, too.

Antero’s water treatment facility in Doddridge County has been closed. It seems low gas prices have made it a financial burden on the company.

And there’s yet another LNG plant being built in Louisiana. That makes three for anybody who’s not counting.

The State of Oil and Gas: September 17, 2019

Posted on by

Today, gas prices are at $2.68/MMBtu, which we absolutely would not have predicted two weeks ago. Oil prices jumped over the weekend when a military strike on Saudi oil production took a bunch of it offline, but prices have dropped back below $60/bbl already.

West Virginia is creating a task force to bring downstream oil and gas industries to West Virginia. Downstream means after the gas has come out of the ground. We have all the upstream jobs we need here, and they’re pretty hard to keep beyond a certain point because when oil and gas drilling slows down the jobs disappear. But downstream jobs would be more consistent; cracker plants, energy plants, and others, just can’t shut down and restart when the economy slows down. This should be a good thing for West Virginia. We’ll see how it goes. It wouldn’t be the first good news we’ve seen for WV that just kind of….fizzled.

Whew! Talk about contrarian thinking. Pretty much everybody thinks that the price of gas is going to be down (think below $2.50/MMBtu) for a long time still. But an article over at OilPrice.com by Dwayne Purvis makes the argument that while we can produce a heck of a lot of gas awfully quickly, demand is outgrowing production, production is slowing down, and storage hasn’t grown enough to keep up with demand. That’s a brave argument to make, but it’s worth taking a close look at. We wouldn’t mind too much if he was right, because the increase in activity in West Virginia would be good for our business.

Cunningham Energy occasionally makes the news with a new move to develop oil from formations that previously made West Virginia mineral owners very rich. Cunningham uses horizontal fracking in formations like the Big Injun, the Weir, and the Berea to recover oil that is not otherwise economic to develop. It’s a pretty good plan and we’re frankly a bit surprised that other companies haven’t glommed on to the idea yet. Cunningham has moved into Gilmer and Roane Counties, having acquired 12,000 acres worth of already producing property under the Rock Creek oilfield and the Tanner oilfield. Keep your eyes on these guys.

Southwestern Energy is just about the only company working in the northern panhandle of West Virginia right now, mainly because SWN bought up all of Chesapeake’s holdings up there, and CHK had bought leases on pretty much everything up there at one point. The northern panhandle is a little different as most of it is more densely populated than the rest of the state. Residents of the area are complaining about noise and other nuisances of the drilling and fracking process. SWN and the county are gathering info and making decisions. Gotta love how quickly government works. Unfortunately, the county probably doesn’t have much it can do to force SWN to do anything. Noise ordinances aren’t usually written with this kind of thing in mind, and drilling permits are done through the state. Maybe there’s a construction permit that can be amended or modified, but getting oil and gas companies to play nice and be good neighbors after you’ve signed an oil and gas lease is usually a losing battle.

China is the largest growth market for natural gas right now. Chinese growth is expected to slow some, and the US-China trade war has decreased the amount of gas the US exports there, but that will end sometime and the numbers will go up. Interesting fact from the article, China’s gas import demand is second only to…Japan. Think on that for a second.

Oil and gas producers are constantly working to be more efficient. They are producing more gas with fewer rigs. Trying to gauge the health of the industry by the number of operating rigs is not as accurate as it used to be.

Toby Rice, the new CEO of EQT, is working to get on my good side. Well, he doesn’t know me from Adam, but he’s making moves that make me and West Virginia mineral and royalty owners happy. The latest move is to dismiss a lawsuit that challenged one of the West Virginia legislature’s new laws. That law made it so that producers could not deduct post-production costs from certain old leases. It was good law for mineral and royalty owners. Thanks, Toby, for removing this legal challenge.

Some producers are using flared gas to run frack pumps. It’s called electric fracking or e-fracking because the natural gas turns an electric generator which turns the water pumps. Excellent use of an otherwise waste product.

Saudi Arabia has a new Energy Minister, and oil prices bumped up because of it.

One fellow thinks that the price of oil is going to go up in the near future because US production is set to go down a bit. It’s an interesting argument, extrapolating from data that shows that US production has leveled off in the last few months.

Mexico buys a hedge on its oil production each year to protect its budget from serious fluctuations in oil prices. This year it sounds like they’re hedging at $49/bbl, down from $55/bbl last year.

EQT is going to layoff 200 of its 850 workers in the next week. Ouch.

And on Friday we have news that EQT has, in deed, laid off 196 workers.

Probably everybody heard, but here it is anyways. Houthi rebels blew up part of Saudi Arabia’s oil production. It took about 5% of the world’s oil supply offline. The Saudis said they would have production almost entirely restored by Monday, and they pretty much did. Oil prices today (Tuesdays) have dropped almost as precipitously as they jumped.

Natural gas production has broken records again in August in spite of low natural gas prices. The more interesting take on this, though, is that we still haven’t gotten back to our five year average in gas storage. That means demand is growing as well. I think we’ll see gas storage levels drop like crazy again this winter, if the winter is at all bad.

Speaking of demand, Longview Power operates a 710 MW coal-fired power plant just north of Morgantown, WV on the Monongahela River. They have announced that they are going to build a 1,200 MW gas-fired power plant at the same location.

The State of Oil and Gas: September 1, 2019

Posted on by

So it’s September 3, but it was Labor Day and the office was closed tight all weekend. Everybody enjoyed themselves and didn’t think about posting this on the 1st. We’re getting back into the swing of posting things so look forward to another in a couple weeks. Enjoy the wrap up of oil and gas news from the last month!

Libya’s Sharara oil field is back online. Add 300,000 barrels per day back into the equation. Until some rebel faction decides to take it back off again.

Oil demand has gone down for three fiscal quarters. This hasn’t happened since 2014. Oil prices were pretty bad at that point.

An ethane storage facility will start construction in the first quarter of 2020. That will go a long ways towards keeping some of the value of the natural gas that we produce in the area, even if it’s not actually in the state.

This Reuters article discusses the rising demand for natural gas and the falling price of the same. All driven by an amazing increase in production capability. While this is good for consumers, it’s bad for West Virginia mineral owners and your friendly neighborhood oil and gas lawyer.

SWN is taking its rig count in the Appalachian Basin from six to two.

The Mountain Valley Pipeline folks seem to be misunderstanding the definition of the word emergency. Also, they have put someone’s house at risk. Come on, guys. Get it together.

The Atlantic Coast Pipeline was planning to get working again here in August or September. However, a federal judge vacated some permits that the pipeline needs in order to get to work. ACP plans to re-file the permits and hopes to get back to work sometime in the November to March tree-cutting window.

Some folks are sitting in trees on the MVP right of way, and they’ve been there for almost a year. We remember reading and posting briefly about them back then. Didn’t realize just how long they would stay there. It’s kind of impressive, really.

Russia is probably happy with oil at $40/bbl, Saudi Arabia probably wants it at $80. So long, OPEC+?

We’ve been wondering how Marcellus Shale drillers planned to stay in business if gas prices stayed as low as they currently are. EQT’s new CEO, Toby Rice, plans to use “combo development“, which is “large-scale, sequential, highly choreographed drilling and hydraulic fracturing.” The article is behind a paywall.

If you wanted to know more than you ever cared about moving propane to Mexico by train, here’s the article for you. And it’s only Part One.

EQT’s new CEO, Toby Rice (see above) did a town hall meeting in Bridgeport, WV on Monday, August 19,2019. He’s talking as if EQT will be a kinder, gentler company. While that’s all well and good coming from the CEO, it’s going to take a while for that attitude to trickle down through the bureaucracy. It’s the same principle that makes the federal government stay pretty much the same in spite of the changes in power between the Ds and the Rs. I’ll really believe EQT has changed when they start approving a gross proceeds clause in their leases without us having to get into a knock down, drag out fight over it every single time.

If you’d like to know some of the basics about where the gas that’s being produced here in West Virginia is going, this is the article for you.

If you’re wondering why natural gas prices are really low, it’s pretty simple. We produce more gas than we use.

CNX is one of two companies developing the Marcellus Shale in Monongalia County, WV. They have been hyper-focused on just filling out some units that they already hold most of the leases for. Looks like they might be slowing things down. Last week they laid of 50 people, and this week they’ve laid off another 20. Word is that they’re going to lay off about 1/3 of their employees; they’re at about 15% right now.

On a more positive note, shale oil companies have posted an actual profit for the first time that we know about.

Atlantic Coast Pipeline Putting West Virginians in Danger?

Posted on by

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.