PRSRT STD U.S. POSTAGE PAID BECKLEY, WV 25801 PERMIT NO.19
PO BOX 1001 • YOUNGWOOD, PA 15697 | WWW.ONGMARKETPLACE.COM
Page 5: MDN’s Top Stories in the Past 30 Days ENVIRONMENTAL MANAGEMENT: - Page 6-7: Rocket Boxes & MSHAM LEGAL & FINANCE: - Page 8-9: A Regulatory Reversal: Federal Trends Manifesting in Pennsylvania Page 12-13: Kallanish Energy
The Northeast ONG Marketplace
Delivering The Highest Quality Sand Our innovative PropStream sand delivery system was designed with quality and efficiency in mind, just like our mining and terminal operations. We know our integrated proppant supply chain can be your competitive advantage. PropStream is the next step in sand supply from Hi-Crush, a leading producer of premium â€œNorthern Whiteâ€? frac sand, with more than 300 million tons of proven reserves and production capacity of 10.4 million tons per year. Originating from our mines in the heart of Wisconsin and transported through our unmatched terminal network, the PropStream delivery system is your single source supplier from Hi-Crush mines to your blender.
www.hicrush.com For more information contact email@example.com
Let PropStream streamline your proppant supply.
ONG MARKETWATCH AGI INDUSTRIES INTRODUCES FIRST PIPELINE PIG LOADER Clarendon, Pennsylvania, February 2017 – AGI Industries is a safety-minded pipeline fabrication company that has developed the first pipeline pig loader dubbed the Safeway Pig Loader. Injuries are common when a push-rod or pig slips while forcing a pig into an open ended pipeline. The one-of-a-kind Safeway Pig Loader will eliminate this hazard. The truly innovative Safeway Pig Loader is the best and safest way to introduce a pig into any pipeline that requires cleaning, unclogging, or preparation for batch treatment processes, hydrostatic testing, and other various types of structural integrity testing. This ingenious device enables operators to easily achieve the preparatory step of loading a pig into an open ended pipeline in a safe, clean, and efficient manner. The creator of the patented Safeway Pig Loader is owner of AGI Industries, John Anderson. When asked where his inspiration for this safety-minded product came from, his response was: “I knew there had to be a better and safer way to load a pig into an open ended pipeline than the current practice being used in the field. My superintendent, myself, and my team at our fabrication shop started experimenting with pig loaders. It took a lot of trial and error, but finally we came up with a product we are proud of. We are confident that anyone using it will be as happy with it as we are.” AGI Industries’ fully mobile Safeway Pig Loader is available in eight convenient sizes ranging from 4” to 36” diameter and includes a standard gas engine and hydraulic supplement; other sizes are available upon request. In thirty minutes or less and with a few easy steps, any typical poly or brush pig can be condensed and injected into an open ended pipeline with the new Safeway Pig Loader. Pig or push-
rod slips are now a thing of the past when using this completely self-contained unit. The Manager of Warren, PA Operation and Fabrication Shop, Kirk Guiher, said: “There is no other product like it for getting pigs placed into an open end of a pipe without launchers. Safety is no longer a concern. The Safeway Pig Loader removes all the risks of forcing a pig into a pipeline.” AGI Industries is headquartered in Clarendon, PA. AGI Industries manufacturers the world’s first pipeline pig loader, performs pipeline fabrication and placement, and conducts hydro-static testing for the pipeline industry as well.
Contact: Katie Wynn - (814) 726-1058 – firstname.lastname@example.org
The Northeast ONG Marketplace
ASSOCIATION MEETINGS ADDC Region II Meeting | March 30 – April 1, 2017 Terre Haute, IN - www.addc.org
ADDC Region I Meeting | May 18-21, 2017 Niagara Falls, NY - www.addc.org
IOGANY Summer Meeting | July 12-13, 2017 Clymer, NY - www.iogany.org
KOGA Annual Meeting | July 18, 2017 Lexington, KY - www.kyoilgas.org
IOGAWV Summer Meeting | August 6-8, 2017 White Sulpher Springs, WV - www.iogawv.com
THEFREE PRIMARY RESOURCE FOR THE SUBSCRIPTIONS
NORTHEAST OILONLINE & NATURAL SIGN UP GAS INDUSTRY ONGMARKETPLACE.COM
MDN’s Top Stories in the Past 30 Days.................... 5
AGI......................................................................... 3 ALBERTA RIG MATS.............................................. 4 ALPINE ELECTRIC............................................... 15 CST INDUSTRIES.................................................. 7 DMC DESIGN....................................................... 10 E-FINITY.............................................................. 15 ERNST SEED.......................................................... 9 HI-CRUSH.............................................................. 2 KRUSE AUCTIONS.............................................. 18 LEE REGER BUILDS............................................ 15 LEE SUPPLY......................................................... 21 LYDEN OIL COMPANY......................................... 19 MCCLUSKEY & ASSOCIATES, INC..................... 16 MID-ATLANTIC STORAGE.................................. 15 NORTH AMERICAN FIELD SERVICES................ 15 PREMIER SAFETY & SERVICE INC...................... 7 PRODUCED WATER MANAGEMENT.................. 10 S&S TECHNICAL SOLUTIONS............................ 10 STEEL NATION...................................................... 1 TD CONNECTIONS................................................ 9 THERMO-TECH...................................................... 5 WEAVERTOWN ENVIRONMENTAL.................... 15
ENVIRONMENTAL MANAGEMENT: Rocket Boxes & MSHAM............................................................. 6-7 LEGAL & FINACE: A Regulatory Reversal: Federal Trends Manifesting in Pennsylvania..................... 8-9 Kallanish Energy.......................................................
CALENDARS ASSOCIATION MEETINGS.................................... 4 NETWORKING EVENTS...................................... 16 TRAINING & WORKSHOPS................................ 15 UPCOMING EVENTS........................................... 11
EVENTS DUG EAST............................................................ 24 EGCR.................................................................... 17 NORTH AMERICA OIL AND GAS 2017.............. 14 OHIO VALLEY OIL AND GAS EXPO..................... 1
CONTACT US FOR ADVERTISING, INFORMATION OR MAILING LIST CHANGES:
The Northeast ONG Marketplace PO Box 1001 • Youngwood, PA 15697 724-787-4451 E-mail: email@example.com
The Northeast ONG Marketplace will not be liable for any misprint in advertising copy which is not the fault of The Northeast ONG Marketplace. If a misprint should occur, the limits of our liability will be the amount charged for the advertisement. We do not assume responsibility for the content of advertising or articles herein. Any warranties or representations made in the advertisements are those of the advertisers and not The Northeast ONG Marketplace. Any warranties, representations or opinions made in the advertisements or articles are those of the contributors and not The Northeast ONG Marketplace.
Each weekday Marcellus Drilling News locates and shares news, along with a healthy sprinkling of commentary, for the Marcellus and Utica Shale. Over 50,000 people read MDN each month, making it an excellent barometer to inform ONG Marketplace readers which topics generated the most interest for those who work in the oil and gas and associated industries. Below is a summary of the top 5 stories that were most-read over the past 30 days on MDN. #1 Most Read: ET Rover Pipeline Gets Final Approval by FERC Perhaps the second most important (some might argue first in importance) pipeline to be approved by the Federal Energy Regulatory Commission (FERC) on Friday, Feb. 3, is Energy Transfer’s Rover Pipeline project. Rover is a $3.7 billion, 711-mile Marcellus/Utica natural gas pipeline that will run from Pennsylvania, West Virginia and eastern Ohio through Ohio into Michigan and eventually into Canada. Energy Transfer says with certificate in hand, they will have Phase 1 of the project done by July of this year, and Phase 2 by November of this year. Does that mean the bulldozers are already moving? Not just yet. The first thing to happen is tree clearing, which must be done by March 31 (you can be sure the chainsaws are already going). Then FERC staff will check on things. There is still the outstanding issue that ET knocked down a historic house without permission. FERC is still sore over that one and withholding permission to begin the bulldozers until they decide on just how expensive the punishment will be. But the good news is that FERC has signed off, and the project will now get done--this year. Which drillers reserved capacity on Rover? Antero Resources, Eclipse Resources, EQT, Gulfport Energy, Rice Energy, Range Resources and Southwestern Energy. Read the full story on the FERC approval of Rover at: https://goo.gl/V2hzls. #2 Most Read: Marathon Begins to Build New 49-Mile Utica Pipeline in Ohio In December 2013 MDN first reported a new $250 million pipeline on the way in the Utica Shale from Marathon Petroleum Corporation, the largest refiner in the Utica Shale region, Marathon’s Cornerstone Pipeline. Cornerstone stretches nearly 50 miles from MarkWest’s cryogenic processing plant in Cadiz, OH northwest connecting to M3’s fractionator plant in Scio and M3’s cryogenic processing plant in Leesville along the way as it terminates and connects to Marathon’s refinery in Canton, OH. The pipeline will carry, at various times, crude oil, condensate and natural gasoline. Cornerstone went online in September 2016. What we didn’t know/hadn’t noticed with all the talk and focus on Cornerstone, is that Marathon had also floated another 49-mile condensate pipeline project further west of Cornerstone, called HALI--the Harpster to Lima Pipeline. The purpose of the project is a pipeline “for efficient and safe delivery of condensate from the Utica Shale to refineries where it can be processed into gasoline and diesel in order to meet the needs of producers, mid-streamers, marketers, diluent blenders, and refiners as the Utica Shale continues to develop.” The HALI project is now under construction and expected to go online in July. Although Marathon doesn’t really provide any details for the project on their website, we were able to locate a good bit of information about the project, which we shared in this story: https://goo.gl/ nr6DS4. #3 Most Read: EQT Snaps Up Another 14K ‘Core’ Acres in WV for $130M EQT, one of the biggest and best drillers in the Marcellus/Utica, issued their fourth quarter and full year 2016 update in February. As is typical when issuing the updates, EQT’s top brass held a conference call with analysts to discuss results and take questions. In reading through a transcript of the call, one of the most interesting passages (for us) was in the prepared comments by incoming EQT CEO (then President) Steve Schlotterbeck. In a brief passage excerpted in this article, Steve provided a quick update on several items: the Mountain Valley Pipeline project, EQT’s Utica drilling program, and the fact that “this week” EQT had purchased an additional 14,000 “core” West Virginia acres in Marion and Monongalia counties for $130 million, which works out to be $9,286 per acre. No details (yet) on who EQT purchased the acreage from. We did note that last year EQT purchased 62,500 acres from Statoil in the “core” WV area, which is an average price of $6,512/acre. To read more about EQT’s WV purchase, read: https://goo.gl/Pufhho.
Page 5 #4 Most Read: New Driller is Born in PA Marcellus, Buys 8K Acres of Leases (More Coming) It’s not often these days we get to witness the birth of a new driller in the Marcellus/ Utica, so it’s with great pleasure we announce the birth of S.T.L. Resources. According to an announcement, S.T.L. recently closed on the acquisition of 8,000 acres in the “core of the Marcellus Fairway” in north central PA. Along with the acreage comes “significant in-place infrastructure, current Marcellus production and is prospective for the Marcellus and Utica Shale as well as the Upper Devonian.” The privately-held S.T.L. declined to say exactly where the acreage is located, who they purchased it from and for how much. Why? They continue to try and lease more acreage in the same area and would rather keep competitive information close to the vest. S.T.L. was founded and is run by three veterans in the O&G industry with deep experience in the Marcellus/Utica: William Dressel, Founder and Managing Partner; William Hayward, Chairman & Senior Geological Advisor; and Clinton Coldren, CEO. When you look at a map you find that north central PA includes counties like Potter, Tioga and Lycoming. Which got us to thinking--who might have sold some acreage there? We made a guess, which you can read here: https:// goo.gl/SwE09I. #5 Most Read: Atlantic Sunrise Pipeline Gets Final Approval by FERC Friday, Feb. 3, saw a flurry of activity at the Federal Energy Regulatory Commission (FERC)--the federal agency in charge of evaluating and authorizing interstate pipeline projects. Perhaps the most important news coming out of a list of approvals was FERC’s final blessing on Williams’ $3 billion Atlantic Sunrise Pipeline project--a 198-mile pipeline project running through 10 Pennsylvania counties to connect Marcellus Shale natural gas from PA with the Williams’ Transco pipeline in southern Lancaster County. In addition to the pipeline, two new compressor stations will get built, and when the whole thing is done, an extra 1.7 billion cubic feet per day of northeast PA Marcellus Shale gas (from Cabot Oil & Gas and Seneca Resources) will flow south. On Feb. 3, FERC issued a final certificate for the project, allowing Williams to build it. We can’t wait until Williams goes through and knocks down the magic tree house built by environmental wackos in an attempt to stop the project. That’ll make for some great headlines when it happens. However, Williams isn’t starting up the bulldozers just yet. Before they can begin, Williams still needs permits from the Pennsylvania Department of Environmental Protection (DEP) and the U.S. Army Corps of Engineers. However, permits from PA DEP & the Army Corps is perfunctory. It’s now over. The antis have lost and the good guys have finally scored a victory! Construction will begin on the main portion of the pipeline in mid-2017. For more on the Atlantic Sunrise project approval, read: https://goo.gl/CjqmaA.
The Northeast ONG Marketplace
ROCKET BOXES & MSHAM By: Eric Schroder, M.S., Environmental Scientist II/Bat Biologist, All-Star Ecology As oil and gas industry development continues across the country, Indiana (Myotis sodalis, IBAT) and northern long-eared bat (Myotis septentrionalis, NLEB) habitat requires consideration in the environmental permitting process. IBAT and NLEBs are listed as federally endangered and threatened species, respectively. Both speciesâ€™ populations have continued to fall due to the introduction of white-nose syndrome (WNS) in North America in 2006. WNS is a disease affecting hibernating bats that causes them to arouse early from hibernation and can cause tissue damage. NLEBs and IBATs hibernate in abandoned mines and caves during the winter (November 1st-April 1st). Early arousal from hibernation triggers the bats to burn through their fat storage they need to migrate to summer roosting habitat. IBAT and NLEBs are forest dwelling bats during the summer and will roost underneath the peeling bark or within cracks, crevices, or cavities of trees. WNS has caused more than 5.7 million bat deaths in North America and is a major reason the NLEB was listed as threatened in 2015. As a response to increasing required IBAT and NLEB conservation measures by the United States Fish and Wildlife Service (USFWS), AllStar Ecology, LLC (ASE) has designed and manufactured artificial bat roosting structures in the form of two-chambered rocket boxes using a habitat model to aid in placement.
project that exceeds 17 acres, or is within a USFWS buffer of known occurrence, is subject to a Habitat Assessment and Conservation Plan (HACP). A HACP is required to obtain tree clearing approval and trees must be cut during the winter tree removal period (November 15thMarch 31st). The habitat assessment ranks potential roost trees (PRTs) as primary or secondary. Primary roost trees are used more often and by greater numbers of bats. The HACP involves conservation measures, which involve the installation of artificial roosts to replace potential roost trees taken for construction. Often, conservation measures may be installed at a project on site, but if the project is of a great enough scope, off site conservation might be required in the form of permanent off site land conservation and enhancement Figure 2: Emergence Sampling Diagram measures. ASE utilizes a Myotine Suitable Habitat Assessment Model (MSHAM) for artificial roost placement and off site land conservation. MSHAM ranks areas of potential NLEB and/or IBAT habitat based on landscape features (forest fragmentation, solar radiation, slope, proximity to permanent water). The model divides up areas of land into five suitability classes: unsuitable, low, fair, good, and high. Rocket boxes are installed in areas of the highest suitability indicated by the model for the greatest chance of occupation. Rocket boxes are installed before the bats emerge from hibernation (April 1st). Off-site land conservation also uses MSHAM to evaluate large areas quickly for bat habitat conservation potential. Areas of high habitat suitability are targeted for bat conservation areas with permanent protection.
Figure 1: Rocket Box
The rocket boxes are manufactured by ASE in Fairmont, WV and are Bat Conservation International (BCI) certified (Figure 1). Many times, improper construction can deter bats from utilizing artificial roosts. As part of the BCI certification, rocket boxes were made sure to be properly caulked and sealed to prevent drafts or moisture from entering, the insides sufficiently roughened to allow bats to cling to the surface and climb into the structure, roosting chambers wide enough for bats to fit but not too big to allow nuisance insects to nest, and painted the proper color to allow for the artificial roost to obtain optimal warmth during the summertime. Rocket boxes simulate both internal cavities and the peeling bark of dead trees NLEBs and IBATs use to roost. In West Virginia, any tree clearing for a particular
Figure 3: Rocket Box Occupation in Relationship to MSHAM Rating
Last year, ASE installed 203 rocket boxes across West Virginia as part of clientsâ€™ HACPs. As an additional requirement in the HACP, rocket boxes were monitored for occupation twice during the pupping season (June 1st-August 15). Technicians used red-filtered spot lights (as opposed to white in order to reduce stress on the
bats) and/or thermal cameras to check the artificial roosts for bat occupation. Guano catchers were also installed on rocket boxes as another means of monitoring. If bats were found, mist nets were erected around the rocket box at dusk that same night to capture bats leaving to forage (Figure 2). Data were taken on each captured bat such as sex, weight, right forearm length, species, etc. A band was also placed on adult bats in order to monitor site fidelity and survival rates. Bats were released shortly after capture to minimize stress.
Tanks & Domes
During monitoring, 84 rocket boxes were found to be utilized by bats for a 41.38% utilization rate. In addition, seven NLEB maternity colonies were found occupying rocket boxes. Occupation rate increased with higher MSHAM suitability ratings (fair, good, high) with only two rocket boxes being occupied within not suitable-low quality MSHAM ratings (Figure 3). Prior to 2016, biologists assumed infrequent use of bat boxes by NLEBs. ASE’s results indicate rocket boxes used as conservation measures are beneficial to NLEBs. These results not only verify the model’s effectiveness, but prove that clients’ conservation measures were meaningful as rocket boxes are being used for reproduction and perpetuation of NLEBs. The results from the 1st summer of monitoring will help improve construction and placement of rocket boxes on the landscape to improve effectiveness of conservation measures for USFWS, and potentially help speed the process of receiving tree clearing approval by knowing the effectiveness of proposed rocket box conservation measures.
For more info contact Eric Schroder at 304-816-3490, eric.schroder@ allstarecology.c om
THE EQUIPMENT YOU NEED RIGHT WHEN YOU NEED IT Ask About Our Rental Program!
We provide you with legendary equipment and services from the leading manufacturers in the safety industry. To be sure that you are wearing the best when the worst can happen. • Single & Multi-Gas Instruments
• 5 & 10 Minute Airline Egress
• Breathing Air Cylinders, Carts,
• Ventilation Equipment
World’s largest provider of glass bolted storage tanks • • • • • •
Long life Fast construction Easy to relocate Never needs painting Local Authorized Dealers Factory trained and certified erection crews
• Frac & flow back water applications • Safely stores flowback • Chemical resistant glass coating
For additional product, pricing and ordering information contact us at: 1-800-828-1080 • www.premiersafety.com • firstname.lastname@example.org
1551 Robinson Road Washington C.H., OH 43160 740-335-2019 www.midatlanticstorage.com
6010 Drott Drive East Syracuse, NY 13057 315-433-2782 www.besttank.com
The Northeast ONG Marketplace
LEGAL & FINANCE
A REGULATORY REVERSAL: FEDERAL TRENDS MANIFESTING IN PENNSYLVANIA By: Teresa Irvin McCurdy, President of TD Connections, Inc. Andrew J. Ritter Jr., Senior Associate at Capital Associates, Inc. In a recent political trend, there has been a change in climate regarding government regulations on a variety of fronts. This trend may not be more deeply fueled by any one event more so than the election of President Trump. The negative economic impact of over-regulation was a cornerstone of his policy platform during the 2016 election cycle. While this element of his platform transcends policy issues, it is especially noteworthy in the energy field. The new president has made it clear that he believes reducing these regulations and reversing policies created by previous administrations will empower job creators, streamline permitting, and create a revolution in the shale and oil industry.
Representative Kristin Hill’s bill focuses on re-examining regulations that have been in place for years and have never been re-addressed. There is currently no legislative authority responsible for conducting regular reviews of these regulations. The result is outdated, excessive, and onerous regulations that clutter our system. Representative Hill’s bill would establish the Independent Office of the Repealer, which would “undertake such an ongoing review, receive and process recommendations, evaluate the merits of recommendations in accordance with decision rules and quantitative and qualitative criteria, and make recommendations to the General Assembly and the Governor and Executive agencies for repeal, modification or revision.” Although these bills are not specific to natural gas or oil, the introduction of these bills present opportunities for the natural gas industry to grow and thrive. Most employers in this industry would agree it is needed. In a study done by the Mercatus Center at George Mason University the Top 5 Industries effected by regulations are compared by number of industry restrictions.
Photo taken by Teresa Irvin McCurdy Republicans in Congress have been utilizing the Congressional Review Act which allows Congress to disapprove of new regulations within 60 days of rules being introduced. The House also passed a measure, which was then sent to the Senate, that would reverse new regulations, introduced by the Obama Administration, on flares used to burn methane gas. The oil industry backed these measures and regarded them as a step in the right direction for oil and natural gas production on federal land. On the state level, the trend is no different. We see a similar approach to reducing unnecessary regulations that impede economic growth. Bills introduced by Representatives Kristin Hill (R – York) and Greg Rothman (R – Cumberland) demonstrate the approach to addressing and combating these substantial regulations. Representative Rothman’s bill addresses growing regulatory costs and their relation to the weak economic growth rate in the Commonwealth. Rep. Rothman’s legislation would amend the Regulatory Review Act by requiring any economically significant regulations to be approved by the General Assembly before taking effect. This means any regulation with an impact of $1 million or more on the economy must be approved by a majority vote in both the House and the Senate. Rejection from either the House or the Senate will result in the stoppage of the regulation.
Al-Ubaydli, O. and McLaughlin, P.A. (2015) “RegData: A numerical database on industry-specific regulations for all United States industries and federal regulations, 1997-2012.” Regulation & Governance, doi: 10.1111/rego.12107.
Natural gas industries fall under the category of “Professional, scientific, and technical services.” These industries suffer far greater restrictions than any other. In terms of regulations, the Federal Acquisition Regulation makes up about 7,081 regulations, the Federal Energy Regulatory Commission contributes about 3,154 regulations, and the Environmental Protection Agency imposes 2,000. More specifically, the Oil and Gas extraction industry is governed by 11,950 regulations and the number is growing each year. In addition to the regulations already in place, some state agencies can circumvent the process of implementing regulations and impose restrictions through other means. For example, the Pennsylvania Department of Environmental Protection (DEP) utilizes the deployment of General Permits (GP) and Guidance Documents to implement both federal and state regulations and laws. General Permits provide specific rules that companies must follow to be in compliance and operate under that GP. GPs can be issued for different types of issues such as air, water, waste and erosion & settlement control. On the other hand, Guidance Documents are crafted for both the regulated community and the regulators to follow to ensure that regulations are being implemented and interpreted as intended.
Spring 2017 Although both may have public comment periods, DEP does not have the same hurdles to go through to get these approved and can, in fact, approve them without changing a single word based upon public comments. Currently, DEP is revising its General Permit (GP-5) to regulate methane at compressor stations. Since it is a General Permit, it does not have to go through the Regulatory Review Act, nor does it have to be approved by the Independent Regulatory Review Act. More and more legislators are taking notice of these efforts that are not going through the normal regulatory development process. During the House Appropriations Budget Hearing with DEP Secretary Patrick McDonnell, Rep. Brad Roae (R-Crawford) asked why DEP was making changes to the GP-5 and was it going to be more restrictive than the federal requirements? The Secretary responded that the GP-5 was being changed in part due to EPA requirements and the state’s own experience over the past four years. He also commented that it will be more restrictive than current operator practices and that the use of best available technology can obtain a greater reduction in emissions. The regulatory future is as uncertain more as it has ever been. Both state and federal agencies have overstepped its authority for years. Now lawmakers are trying to take measures to undo some of those actions. With lawsuits from industry and environmental groups resulting in either temporary stays on regulations, such as portions of Chapter 78a of the Oil and Gas Act, or doing away with the Mercury Regulations, it is difficult for companies to know how to make long-term plans when those plans depend on a specific regulation being in place or not.
Page 9 For more information contact: Teresa at Teresa@TDConnection.com or 717-329-6402, or Andrew at Ritter@CapitalAssoc.com or 717-919-6628
An opportunity to restore diversity • Conservation seed mixes • Native seeds • Pollinator forage • Bioengineering materials
ernstseed.com email@example.com 800-873-3321
The Northeast ONG Marketplace
MARCH 29-30, 2017
Pittsburgh, Pennsylvania E&P-Led Speaker Lineup Including Cost-Effective Treatment Technologies And Alternative Disposal Methods To
Maximize Cost Savings For Produced Water Disposal And Treatment For Recycling & Reuse
Director, Water Management
Superintendent Water Management Group
While Mitigating The Risk Of TENORM & Seismicity New For 2017: E&P Strategies To Comply With New Chapter 78A Regulations
Ascent Resources Steve Marcil
Black Swan Energy
Brand New Focus Areas And Practical Case Studies To:
Burke Grove Water Foreman
• Make The Decision Between ‘Low-Cost Disposal’ and ‘Treatment for Reuse’ • Respond To The Act78A
• Economic TENORM Management
• Raise The Bar On Produced Water Treatment
• Economic Water Treatments For Disposal
• Navigate The Process > Injection & Disposal • Eliminate Water At A Similar Cost Of Recycling
• Water Sharing
West Virginia Radiological Health Program Organized by
www.shale-water-marcellus-utica.com THE WORLD’S QUIETEST, SAFEST AND COOLEST GAS COMPRESSOR STATIONS
Design/Build • Engineering Manufacture • Erect Sound Mitigation & Air Handling ISNetworld & SafeLand Certified
1120 Washington Road/Rt 19, Washington , PA 15301 Phone: 724.225.2202 | www.steelnationbuildings.com
UPCOMING EVENTS MARCH
14-16 International Pipeline, Oil and Safety Conference Houston, TX | oilandgassafetyconference.com
1-4 Offshore Technology Conference Houston, TX | 2017.otcnet.org
2-3 Marcellus & Manufacturing Conference
Morgantown, WV | www.wvma.com
State College, PA | www.upstreampa.com
29-30 The Annual Cost-Effective Produced Water Management Marcellus & Utica 2017
17-18 US Gas Power Conference Charlotte, NC | www.lmnpower.com
Pittsburgh, PA | www.shale-water-marcellus-utica.com
IADC Drilling Onshore Conference Houston, TX | www.iadc.org
North America Oil & Gas Conference Pittsburgh, PA | www.kallanishenergy.com
3-4 OGIS New York
Eastern Gas Compression Roundtable Pittsburgh, PA | www.egcr.org
New York, NY | www.ipaa.org
11-12 AADE National Technical Conference Houston, TX | www.aade.org
18-20 SPE Health, Safety, Security, Environment & Social Responsibility New Orleans, LA | www.spe.org
20 Michigan Petroleum Conference Traverse City, MI | www.michiganoilandgas.org
26-28 Women’s Energy Network National Conference Houston, TX | www.womensenergynetwork.org
Denotes National Event
JUNE 5-7 LDC Gas Forums – Northeast Boston, MA | www.ldcgasforums.com/ne/
15 Appalachian Storage Hub Conference Canonsburg, PA | www.appastorage.com
19-20 Northeast U.S. Petrochemical Construction Pittsburgh, PA | www.petchem-update.com/northeast/
Visit our website for links to these events
The Northeast ONG Marketplace Numerous partners working on hub The Appalachian Storage Hub, first proposed seven years ago, is still in the conceptual stage. Researchers from West Virginia University and Ohio State University and staffers from the states of West Virginia and Ohio have been analyzing possible sites for Appalachian underground storage. That report listing the top potential sites is expected to be released by April 1.
APPALACHIAN STORAGE HUB: BIG PLAN, BIG PRICE TAG By: Bob Downing The proposed Appalachian Storage Hub is a big idea with a big price tag. Support for the $10 billion infrastructure expansion project is slowly growing in western Pennsylvania, Ohio, West Virginia and Kentucky. What is envisioned is a system of underground caverns, salt caves and areas where natural gas has been extracted where 100 million barrels of natural gas liquids (NGLs) and liquid chemicals would be stored, plus 3,000 miles of pipelines to move the chemicals to industries along a 454-mile corridor in the four states. A chemical six-pack The system would handle a chemical six-pack — ethane, methane, ethylene, propane, propylene and chlorine — in a safe and environmentally sound way, proponents say. Such a system could take advantage of the raw materials for petrochemical and plastics companies found in the Marcellus, Utica and Rogersville shales of the Appalachian Basin. The raw materials available in the Marcellus Shale alone have been estimated to be worth more than $2 trillion, of which 15% is NGLs, including ethane, experts say. The project would benefit planned ethane cracker plants in the Appalachian Basin because they need nearby ethane storage. Plus, existing petrochemical and polymer companies in the four states would also benefit. Benefits of hub The system would provide a stable supply of ethane to cracker plants and would also provide a conduit for the offtake of the crackers’ produced ethylene. The hub would also provide a trading point for gas producers to sell their NGLs to the crackers and to other petrochemical and polymer production facilities. The hub would likely attract new companies to the region with cheap raw materials and reduced transportation costs and create new jobs, supporters say. Those six chemicals would be moved 386 miles along the Ohio River from Monaca, Pennsylvania, northwest of Pittsburgh to Catlettsburg, Kentucky, by rail and a new system of pipelines. There would also be a 68-mile offshoot up the Kanawha River to Charleston, West Virginia, and nearby chemical plants. Monaca is where Royal Dutch Shell wants to build a multi-billion-dollar ethane cracker plant; Catlettsburg is where Marathon Petroleum has a refinery. Six liquids, six pipelines Each of the six liquids would have its own pipeline with the six lines laid side by side. It will likely take four years, at the earliest, to develop such a system, supporters say. What is being planned is a system similar to underground storage available on the Gulf Coast near Mont Belvieu in East Texas. A total of 35 storage caverns there can store and deliver 110 million barrels of NGLs. The liquids can then be piped to spots along the Gulf Coast.
The four states are working on the project, along with a public-private partnership that includes the U.S. Department of Energy, the U.S. Department of Commerce and private companies. The Pittsburgh-based Claude Worthington Benedum Foundation provided a $100,000 matching grant to get the project moving. The individuals spearheading the project include Dr. Brian Anderson, director of WVU’s Energy Institute; Steve Hedrick, president and CEO of the West Virginiabased Mid-Atlantic Technology, Research and Innovation Center (MATRIC), and Kevin DiGregorio, director of the West Virginia-based Chemical Alliance Zone Anderson, in a speech last spring, said that without the Appalachian Storage Hub, the four states risk having shale resources drained away to the Gulf Coast. There is plenty of ethane available, supporters say. Ethane is now being shipped to the Gulf Coast. It is also moving via pipeline to Philadelphia and shipped overseas, or piped to Sarnia, Ontatio. Ethane is also remaining in U.S. natural gas flows and being burned. The proposed hub is very real. Added DiGregorio in an interview with Kallanish Energy: “It’s not quite a pie-in-the-sky project, but it’s not going to happen tomorrow, DiGregorio told Kallanish Energy. “It’s somewhere in between. But it’s important for the region’s long-term, long-range economic development.” The Appalachian Storage Hub is, supporters say, the logical next step following the 2016 announcement by Shell that it intends to build its Pennsylvania cracker. Thai-based PTT Global Chemical is considering a site in Belmont County, Ohio, for its $5.7 billion ethane cracker. A final investment decision is expected soon. A third cracker has been proposed by two Brazilian companies near Parkersburg, West Virginia. The storage hub would ideally be able to store ethane for cracker use when supplies might be disrupted, supporters say. One cracker might use 80,000 barrels a day of ethane, or about 560,000 barrels per week. Such ethane storage is likely to result in additional crackers being developed in the Appalachian Basin, perhaps a half dozen in the next 20 years, supporters say. Getting the needed funds to build the Appalachian Storage Hub will likely pit the Appalachian Basin region against the Gulf Coast, some say. Such a storage hub “won’t be easy or cheap,” said Hedrick, whose office is in South Charleston. “It’s something that can be done. It’s exceptionally real, phenomenally real.” Smaller projects proposed There are similar but much smaller proposals for liquids storage in the Appalachian Basin. For example, privately held Mountaineer NGL Storage, a Colorado-based company, has plans for an initial 2 million barrels of liquids storage in the Saline salt formations near Clarington, Ohio. It would load/unload about 40,000 BPD. Construction on the first four, half-million-barrel caverns is scheduled to begin in April or May, with operations beginning about a year later, said David Hooker, managing director, in an interview.
Page 13 Overall, BTU Analytics projects 11.9 Bcf/d of demand growth from 2016 to 2022, “in-line with the U.S. trend of 1-2 Bcf/year since 2008,” Bradford said. Regionally, proposed natural gas-fired power plants in Pennsylvania, Ohio, and West Virginia add potential regional demand of roughly 3.0 Bcf/d, according to BTU Analytics.
APPALACHIAN NORTH AMERICAN O&G INDUSTRY PUNCTUATED BY VOLATILITY MOVING FORWARD By: Rick Stouffer HOUSTON — The North American oil and gas industry can be summed up in one word for the next two to four years: Volatility. Whether talking about product prices or production, the next few years will see numerous ups and downs, as producers: • Continue to try matching supply with demand • Take into account new and expanded pipelines • Fold in the international outlook for exports • Combat the industry’s “herd” mentality to chase demand full-bore regardless of consequences • Face possible manpower shortages in certain plays. The above points and much more were covered last week at an all-day conference in this energy city presented by consulting/analytics firm BTU Analytics. “What Lies Ahead 2017” detailed the analysts’ projections moving through 2017 and beyond. Kallanish Energy was in attendance. Supply-demand balance ‘tenuous’ “Over the next 12 to 18 months, the global balance between supply and demand is tenuous,” according to Tony Scott, BTU’s managing director of Analytics and Consulting. “U.S. activity goes up with crude at $50-$60 a barrel, which is likely to increase price volatility in 2017-2018.” However, Scott told the audience of roughly 65, the global crude market will be supply-short after next year – unless – the U.S. or the Middle Eastern countries step up their production. “Stagnating oil demand per capita, excluding Asia, and global revisions to economic growth provide a worrying trend,” according to Scott. Marcellus-Utica still a beast On the natural gas side, one of BTU’s tenets is the Marcellus and Utica Shale plays in Pennsylvania, Ohio and West Virginia, remain the “Beast in the East” when it comes to just shoving other plays out of the way with its overpowering production. And demand can come from nearly anywhere. “Despite over 10 billion cubic feet per day (Bcf/d) Appalachian greenfield and 3.0 Bcf/d brownfield projects, the amount of Appalachian gas arriving at Henry Hub (in Louisiana) is much lower than the market expects,” according to Andrew Bradford, CEO of BTU Analytics. Appalachian Basin natural gas volumes are offset by considerable demand growth in adjacent regions, limiting the impact of basin gas on Gulf Coast demand.
Big gas markets: Mexico, LNG exports Bradford addressed two big markets for what is still considered by many industry watchers a natural gas glut: exports to Mexico via pipeline, and exports to the rest of the world via liquefied natural gas shipments. “2018-2020 will be characterized by a demand-constrained market despite over 10 Bcf/d of growth, primarily from LNG and exports to Mexico,” Bradford said. “Pemex (Mexico’s state-owned energy company) production is declining in a weak price environment, driving the need for imported natural gas.” Bradford said U.S. gas exports to Mexico will grow by 50%, from the current 4 Bcf/d, to 6 Bcf/d by January 2022. LNG exports from the U.S. will grow over time, but volatility in exports will be driven by seasonal spreads and evolving global demand dynamics. “There will be more than 8 Bcf/d of LNG exports by September 2022, from six export terminals, while capacity will be 9+ Bcf/d,” Bradford said.
The Northeast ONG Marketplace
KALLANISH ENERGY PRESENTS:
NORTH AMERICA OIL & GAS 2017 TOP QUALITY SPEAKERS 2 DAY CONFERENCE NETWORKING OPPORTUNITIES
GROUP RATES AVAILABLE EARLY BIRD $1100 PER DELEGATE www.kallanishenergy.com
SIGN UP TODAY FOR YOUR FREE SUBSCRIPTION www.ongmarketplace.com | 855-269-1188
Dependable Power for the Oil & Gas Industry Flexible • Scalable & Portable • Low Emissions • Low Maintenance Power when and where you need it. Clean and simple.
TRAINING & WORKSHOPS
E-Finity Distributed Generation Power To Be Independent Exclusive Capstone Distributor, E-Finity Distributed Generation Contact Jerry Todd • p 800.730.0011 x122 • www.e-ﬁnity.com
Stationary Power Products
16 Wellsite Waste Management: From 11:11 AM Generation to Disposal Pittsburgh, PA www.marcelluscoalition.org 16-17 Ohio Gas Association Technical Seminar Columbus, OH www.ohiogasassoc.org 28 Site Sense Safety Flatwoods, WV www.iogawv.com 29 Site Sense Safety Flatwoods, WV www.iogawv.com
6-7 OOGEEP Firefighter Workshop Applecreek, OH www.oogeep.org
JUNE 13-15 Petroleum History Institute Annual Symposium Findlay, OH www.oogeep.org
OCTOBER 7-8 OOGEEP Firefighter Workshop Applecreek, OH www.oogeep.org
APRIL 20 PIOGA’s Water & Waste Management Training Canonsburg, PA www.pioga.org 20 SOOGA Spring Membership Meeting Marietta, OH www.sooga.org
NOVEMBER 4-5 OOGEEP Firefighter Workshop Applecreek, OH www.oogeep.org
27 KOGA Eastern Kentucky Technical Program and Dinner Prestongburg, KY www.kyoilgas.org
WANT YOUR TRAINING EVENT ON OUR CALENDAR? CALL US AT 724-787-4451 OR EMAIL INFO@ONGMARKETPLACE.COM
The Northeast ONG Marketplace
ONG MARKETWATCH EGCR HEADS TO PITTSBURGH TO CELEBRATE ANOTHER YEAR OF INDUSTRY EXCELLENCE. The Eastern Gas Compression Roundtable(EGCR), held annually at the David Lawrence Convention Center in downtown Pittsburgh, and created by the nonprofit group by the same name, sprang from its early roots at the Evansdale campus of West Virginia University in 1973 to become the industry leading education powerhouse that it is today. Over the years, countless operators, engineers, gas pipeline managers, industry leaders and insiders have participated in the group’s training courses. The EGCR offers 17 individual educational and interest tracks, each one having up to eight individual classes over a 2.5 day period. Classes are taught by industry pro’s with years of industry experience and are rigorously noncommercial. Class attendance certificates are issued which can be used when renewing professional licenses. One of the most popular tracks is the Entry Level Compressor Station Operator training which is a basic-training course for anyone new to the industry. The track covers yard piping, auxiliary systems, prime movers, compressor components and operating characteristics of reciprocating and centrifugal compressors.
This year, take a step to increase your knowledge and increase your worth by attending the 2017 EGCR!
NETWORKING EVENTS March 21 APA Monthly Speaker and Dinner Canonsburg, PA | www.appalachianpipeliners.org April 5 YPE Crew Change Washington, PA | www.ypepittsburgh.org
A helpful feature of the EGCR is that all the classes run on the same time schedule which allows attendees the opportunity to move between the educational tracks so that they can maximize their experience and expand their knowledge based upon their own needs. And, as the Roundtable name implies, class participation is encouraged. In most of the classes, the ‘instructor’ is just one of several people in the room with in-depth knowledge of the subject. In these cases, not only are participants treated to a lively discussion, it ensures that all questions can be answered.
April 18 APA Monthly Speaker and Dinner Canonsburg, PA | www.appalachianpipeliners.org
This year’s tracks include: • Entry Level Compressor Station Operator Training • Auxiliary Equipment • Compressor Maintenance • Electrical and Ignition Equipment • Environmental Health and Safety • Gas Engine Maintenance • Gas Processing • Gas Turbines & Centrifugal Compressor • General Interest 1; General Interest 2; General Interest 3 • Lubrication and Filtration • Pipeline Valve & Actuation Maintenance • Technical & Engineering • Original Equipment Manufacturers (OEM) Solar Turbines – All instructors from Solar Turbines • Original Equipment Manufacturers (OEM) GE HSR Compressors – All instructors from GE • Original Equipment Manufacturers (OEM) CAT – All instructors from Caterpillar
May 9 ABGPA Speaker Luncheon Canonsburg, PA | www.abgpa.org
Along with the educational aspect of the event, the EGCR boasts a large vendor tradeshow which allows visitors to see what is new within the industry, network with other industry professionals and renew friendships. With more than 140 tradeshow exhibitors focused on natural gas compression products and services, this provides all attendees a unique opportunity to learn and grow with other industry service groups and suppliers. The entire event is promoted by professionals directly involved in oil and gas for the benefit of those in the industry. The conference is open to everyone and EGCR membership is not required to attend. This year’s EGCR is May 23-25 at the David Lawrence Convention Center; Pittsburgh, PA. Registration is available via the website at www.EGCR.org. Cost to attend is: $175/person and includes over 130 class sessions, vendor hall, welcome reception and lunch and reception on Tuesday and Wednesday. Student scholarships are available.
May 4 APA Spring Clay Shoot Dilliner, PA | www.appalachianpipeliners.org
May 16 APA Monthly Speaker and Dinner Canonsburg, PA | www.appalachianpipeliners.org May 26 SOOGA Spring Golf Outing Belpre, OH | www.sooga.org FOR MORE EVENTS VISIT WWW.ONGMARKETPLACE.COM/EVENTS
The Northeast ONG Marketplace
A 2.5% admin fee will be charged on all purchases Auctioneer: DAN KRUSE, PA Lic # AU000518L
5% Total Internet Bidding Fee
WEDNESDAY • APRIL 13TH, 2017 • 9:00A.M. (EDT)
@ The DOUBLE TREE HOTEL
(2) CAT C18
WASHINGTON, PENNSYLVANIA TOP DRIVES
TESCO 250-Ton HPU p/b CAT 3412 VENTURE TECH 250-Ton HPU p/b CAT C18 TESCO HS 1100-Ton Hyd Top Drive (2) TESCO HS 500-Ton Top Drives CAT SR4B 725KW Gen p/b CAT C27 Top Drive Gen Unit Top Drive Elevated Elec/ Hyd Suitcase Unit
ENGINES (8) CAT 3512C Engs w/OIL WORKS C-300-125 Torque Converter & Pump Drives CAT 3512A Eng CAT 3508 Eng (3) CAT C18 Engs (3) CAT C15 Engs (2) DETROIT Series 60 Engs (7) CAT & DETROIT Various Size Radiators ACE J5S Heat Exchanger F/ Cat
2005 MACK CXN613 T/A Laydown Truck p/b MACK E-7 EATON 10Spd Trans, (2) Winches, Operators Cab (2) 500-Bbl Frac Trailers (2) CAT SR4B 545KW Gen EA p/b CAT C18 Engs w/GE Elec (2) 38’L T/A Oilfield Floats Controls, Mtd in Gen House VERI 3-Axle 40’L Trailer (2) CAT SR4B 545KW Gen EA p/b CAT C18 Engs w/GE Elec 41’L T/A Step Deck Trailer Controls, Mtd In Gen House (2) CAT SR4 455KW Gen EA p/b CAT C15 Engs w/GE Elec Controls, 23’L T/A Equipment Trailer w/5’L Dovetail (2) ALLWAYZ 18’L T/A Utility Trailers w/Bumper Hitch Mtd in Gen House CAT SR4B 545KW Gen p/b CAT C18 DRILL PIPE / COLLARS CAT SR4 545KW Gen p/b CAT 3456 CAT SR4B 455KW Gen p/b CAT C15 10,184’ 5” Range 3 S-135 Dril Pipe CAT SR4 275KW Gen p/b CAT 3406 (14) 6 1/4" Slick DC’s w/4 1/2” XH CAT SR4 320KW Gen p/b CAT 3406 DRILLING COMPONENTS CAT SR4 292KW Gen p/b CAT 3406 STAMFORD 325KW Gen p/b CAT 3406C NATIONAL 610M S/D Drwwks, Catheads, Hydro Brake (2) Eng (11) Various KVA Camp Transformers In-line Compound p/b (2) CAT C18 Engs EA w/NOV C195-100 Torque C’s CASING LAYDOWN UNITS / TRAILERS F-1000 Triplex Pump Skidded 2004 FREIGHTLINER T/A Laydown Truck p/b DETROIT S-60 (2) 5,000# Pulsation Dampeners EATON 10-Spd Trans, (2) Winches, Operators Cab (4) F-1000 Discharge Manifolds
N.O.V. 610M Drawworks
(2) PZ-11 & (1) 9-P-100 Fluid Modules ADVANCED PRESSURES 5-Station Closing Units KOOMEY 5- Station Closing Unit VALVCON 5-Station Closing Unit 4- Station Closing Unit 5,000# Choke Manifold w/4-1/16” & 2-1/16” Valves 2005 Casing Laydown Truck AMERIMEX EMD-D79 Traction Motor (3) MI SWACO MONGOOSE Shale Shakers (2) NOV 425 & 400 Ton Swivels (5) OWI & (1) SPINMASTER Hyd Pipe Spinners ATCO 48’L Rig Manager House Furnished Skidded (2) 30’L Top Doghouses 35’L Utility House w/TESCO Hyd Tank & Fan Assembly CAT 3512 w/Torque Converter (2) G.DENVER Rotary Air Compressors EA w/Volume Tank • (3) Hyd Utility Winches • (7) FORMOST Cushion Subs • (3) NOV C-195-100 Torque Converters (Rebuilt) • OIL WORKS C-300-100 Torque Converter • DURST 4-Pump Drive Gear Box • (7) NAT’L 610 Brake Bands (Rebuilt) & (2) Brake Rims (UNUSED) • (5) 75HP Elec Motors • F-1300 Pump Drive • (4) McKISSICK 30” Crown Sheaves TESCO HS 500 Ton Top Drive (UNUSED) • (4) 3-1/2”IF Safety Valves w/Wrench (UNUSED)
FOR MORE INFO, Call 432-563-2005, View Online at www.kruseenergy.com
1 of 2 r.2017.03.03
TOP DRIVES • GENERATORS • ENGINES • CASING LAYDOWN UNITS • DRILL PIPE & COLLARS • DRILLING COMPONENTS
The Northeast ONG Marketplace
ONG MARKETWATCH ARBITRATING AN OIL AND GAS DISPUTE BEFORE THE AMERICAN ARBITRATION ASSOCIATION BY DANIEL MCLANE, ESQ, ECKERT SEAMANS I. INTRODUCTION Having conducted a number of oil and gas arbitrations before the American Arbitration Association (“AAA”), this article is intended to provide some thoughts on the process for those who may become involved in such proceedings. While this article references the AAA, these recommendations are offered for consideration regardless of the forum. As with all litigation, there are unlimited issues that could be addressed in an article such as this and it would be impossible to meaningfully cover more than a select few. Sophisticated oil and gas companies typically have agreements requiring that all disputes arising out of those agreements should be addressed in arbitration. The preference for arbitration has often been driven by the presumed efficiencies of the arbitration process. Further, oil and gas companies tend to agree that the unique and specialized nature of the industry makes the resolution of a dispute better situated in a process conducted by an arbitrator having actual knowledge and expertise in oil and gas. Thus, the controlling arbitration provisions in many oil and gas agreements have specified that an arbitration be conducted before the AAA. II.ARBITRATING THE OIL AND GAS CASE A. The Boilerplate Arbitration Provision and Applicable Rules Oil and gas agreements are commonly no different from other extensively negotiated and exhaustively drafted commercial agreements in that they often include a boilerplate arbitration provision. While not intended as criticism, business lawyers charged on both sides with closing a substantial commercial oil and gas deal may often overlook, or be unfamiliar with, the practical realities of litigation when it comes to the drafting of an arbitration provision. Business lawyers for good reason are well-versed and focused on the discrete commercial terms and conditions unique to the oil and gas industry and the pending deal. To get that deal done, they may have focused substantial attention on the specific business terms yet resort to the easy “cut and paste” insertion of a boilerplate arbitration provision. Thus, after a dispute has arisen, the parties could be stuck with a boilerplate arbitration provision that was not meaningfully negotiated or considered. It is not uncommon then for farmout or operating agreements to include boilerplate arbitration provisions such as the following: The Parties agree that any controversy or dispute arising out of or involving this Agreement will be addressed before the American Arbitration Association in accordance with the rules then followed by the AAA and to be held in Pittsburgh, Pennsylvania. The losing party shall reimburse the winning party for all of its legal fees and for all other costs associated with the arbitration. With such a generalized provision, the first issue is what rules actually apply? Of the AAA’s available rules, the only ones that are really applicable are the Commercial Arbitration Rules (the “Commercial Rules”). In fact, Commercial Rule R-1(a) states that in those domestic commercial disputes where the applicable rules are not specified in an arbitration provision, the AAA’s Commercial Rules shall apply. The AAA will apply its “Large, Complex Commercial Dispute” procedures for any claim in excess of $500,000. Conversely, the AAA’s “Expedited Procedures” will apply when the claims are less than $75,000. These rules are available on the AAA’s website (www.adr.org) for comparison. The parties can always agree on what rules should apply to a particular case and inform the AAA accordingly. In addition, it is important to note that the parties can also modify the applicable rules by written agreement before an arbitrator is appointed. Once an arbitrator has been appointed, the Commercial Rules cannot be modified without his or her consent. See Commercial Rule R-1(a). B. Be Selective With the Appointment of a Qualified Arbitrator The AAA has a “National Roster” of distinguished and qualified individuals who
have expressed an interest in serving as an arbitrator for all types of disputes1. It is beyond dispute that the oil and gas sector is unique with terminology, practices, financial modeling and expectations that may not be thoroughly appreciated and readily understood by those who have not had first-hand experience in the sector. For obvious reasons then, a qualified arbitrator who understands the economics of the industry as well as the language and intent of such agreements as a farmout or an operating agreement, or the evolving law on post-production deductions, is crucial. Concerns have arisen that some seeking to serve as arbitrators have overstated their actual oil and gas experience in order to be considered. This is not to say that many are not qualified and capable arbitrators. Rather, caution is given that oil and gas clients and their attorneys should not be surprised that an initial roster of proposed arbitrators may be disappointing. Regrettably, there is a perception that some may have chosen to insert the key words “oil and gas” in their biographical work experience descriptions in order that the AAA will identify and include them in the initial proposed roster for an oil and gas arbitration. Of course, parties should also be prepared to receive an initial roster from the AAA that will include some very qualified oil and gas candidates. If an initial roster is provided by the AAA with perceived deficiencies in the qualifications and/or experience of the candidates, it will become necessary for the parties and their attorneys to work with one another to address the problem. Experience has shown that the AAA is receptive when the parties jointly request a new roster and/or provide additional criteria for the inclusion of additional candidates. For those who may be inexperienced with the AAA, there is no requirement that you must choose from a dissatisfactory roster of AAA candidates. If the parties desire to have an eminently qualified and well-versed individual who is not on the AAA roster serve as the arbitrator, they can insist that the AAA abide by that decision. Upon such an election, the AAA will continue to administer the case and the chosen arbitrator will have to provide the AAA’s required conflict disclosures and take the required oath. Reaching an early agreement on a qualified and respected oil and gas attorney to handle the dispute should be a relatively easy matter. C. Discovery Considerations Commercial Rule R-22(a) provides that the arbitrator “shall manage any necessary exchange of information among the parties with a view to achieving an efficient and economical resolution of the dispute.” In the context of an oil and gas case, an exchange of documents under Commercial Rule-22(b) is typically the efficient and cost-effective way to proceed. Because there are typically no depositions, some parties seek additional discovery in the form of “limited” interrogatories and often try to persuade the arbitrator that they will “narrow” the issues for the hearing. This is rarely the case. Sophisticated oil and gas companies often have been parties to a subject agreement for many years and presumably know all of the pertinent facts arising out of their business relationship at issue in the dispute. Unless there is a truly compelling need or unique circumstances, parties should not plan on additional forms of traditional discovery in arbitration. D. Recovering the Full Measure of Damages One area that warrants careful consideration is the necessary steps to properly claim and recover the full measure of damages. As an example, consider an arbitration where the claimant is a working interest holder in a natural gas well and claims that the respondent operator has improperly deducted gathering fees and marketing fees from the sale of the gas. In such situations, the operator typically issues a distribution statement to the working interest holder several months following the sale. Thus, a statement received in June will only reflect net distributions from sales through the preceding April. If the working interest owner claims in the arbitration that the operator has taken improper deductions, the working interest owner will not have an up-to-date damage calculation because of the time lag in the issuance of the distribution statements. This facet of the oil and gas industry highlights the discussion above concerning the importance of appointing a truly qualified oil and gas arbitrator who understands this about the business. Because the AAA typically requires the parties to exchange their exhibits, including damage summaries, approximately 30 days before the hearing, the working interest owner will not have up-to-date distribution statements to bring its damages claim
Spring 2017 current through the date of the hearing2. Accordingly, after offering evidence as to why the nature or amount of the deductions was improper, the claimant working interest owner should be prepared to explain to the arbitrator why the damage claim is not current or “final” and why the claimant must be allowed to supplement the damage calculation upon receipt of the subsequent distribution statements from the operator.
LEE SUPPLY’S SOLUTIONS
It is therefore recommended that in such situations where the calculation of total damages will be subject to a time lag, claimants and their attorneys must inform the arbitrator during the hearing (and in a written submission filed with the AAA for extra measure) that they desire to leave the record of the proceedings open under Commercial Rule R-39 if necessary to supplement the calculation of damages. If the parties are to submit post-hearing submissions of proposed findings of fact, etc., the claimant can use the submission to further add to its damages with the appropriate supporting documentation3. This may not entirely protect the claimant’s full claim for damages after the record has closed. This is because the arbitrator typically will have thirty days to issue an award after the record has been closed. See, Commercial Rule R-45. During those thirty days, the calculation of the claimant’s damages could continue to grow from the continued deductions taken from the ongoing production and sale of the gas from the well. Yet, after the record has been closed, the claimant will not have a formal process to supplement the calculation of those additional damages. If the arbitrator ultimately holds that the deductions were improper, the claimant and its attorney should be given fair opportunity to supplement the claim for damages with the additional deduction amounts that were disclosed in distribution statements that were unavailable during the hearing or in time for the post-hearing submissions. It is for this very reason that a claimant and its attorney should make it clear before, during and after the hearing that they seek an interim, and not a final, award under Commercial Rule R-47(b). It is further recommended that claimants and their attorneys in an oil and gas case involving claims of improper deductions should offer to submit a detailed proposed order for the arbitrator to understand the continuing potential accumulation of damages from the ongoing production. Thus, under Commercial Rule R-47(a), a claimant and its counsel should submit a proposed order initially directing specific performance from the operator and/or precluding the challenged deductions after the date of the award. The proposed order should also provide for continuing jurisdiction by the arbitrator to receive additional evidence of the claimant’s deduction damages under Commercial Rule R-47(b). Upon submission of a calculation of the most up-to-date damages, the final award can then be issued under Commercial Rule R-47(c). Indeed, for those agreements that also provide for an award of attorneys’ fees such as in our example above, any party seeking to make such a claim may want to follow a procedure such as this because they will: (a) not know who was the “winning” party until after an interim award has been issued; and (b) the total attorneys’ fees incurred will not be known or quantified until after the hearings have concluded. A structured interim award process provides a procedural mechanism for the submission of attorneys’ fees claims to the arbitrator to be included in the final award. 1. If the arbitration provision does not specify the number of arbitrators, the AAA will only appoint one arbitrator under Commercial Rule R-16. 2. Parties and their attorneys should be familiar with Commercial Rule R-6, “Changes of Claim”, which provides that a party can change the amount of any claim or counterclaim in writing “at any time prior to the close of the hearing or by the date established by the arbitrator.” 3. Alternatively, a party may submit an application to reopen the hearing under Commercial Rule R-40 before the award has been issued. There is some risk in this because the request is a matter for the arbitrator’s discretion. In fact, in the absence of consent of all parties, no such application will be granted if it would “prevent the making of the award within the specific time agreed to by the parties in the arbitration agreement.”
For more information, please contact Carrie Butler of Eckert Seamans at 412-897-6177
How many HDPE experts does it take to change a light bulb? Only ONE – If you have the Right Expert! So - what makes the “Right Expert?” ONE that has more assets and resources in one location than anyone else. ONE that provides HDPE pipe, fittings, and specialty fabrication. ONE that is a certified McElroy Service Center providing Sales/Service/Rental capabilities. ONE that has factory trained, fully insured and confined-space certified fusion technicians.
Contact Us… See how we measure up!
ONE that can match their customers’ needs to the best quality products and services. Yes - that’s a long list! And that’s why there’s only ONE “Right Expert” and only ONE Lee Supply!
1-800-353-3747 • leesupply.com
The Northeast ONG Marketplace
ONG MARKETWATCH SHALE INSIGHT – REGISTRATION OPENS ON MARCH 15TH! Celebrating its seventh year, the SHALE INSIGHTTM 2017 Conference and Exhibit is returning to the epicenter of the Marcellus and Utica Shale plays Sept. 27-28 at the David L. Lawrence Convention Center in Pittsburgh. This year’s conference once again solidifies the partnership between the Marcellus Shale Coalition (MSC), the Ohio Oil and Gas Association (OOGA) and the West Virginia Oil and Natural Gas Association (WVONGA). “The successful partnership last year with key regional trade groups in three of the top energy - producing states in the country is proof positive that SHALE INSIGHTTM 2017 will once again be the nation’s leading forum for public-private dialogue on shale development,” said MSC president David Spigelmyer. SHALE INSIGHTTM 2017 will provide participants a front-row seat for the most important discussion on shale development, featuring some of the most prominent industry and government leaders. Attendees will network with the most influential industry executives and innovative thought leaders throughout the two days of technical and public affairs insight sessions,
major keynote addresses, and dynamic exhibit hall featuring all the major shale players. “SHALE INSIGHTTM is a tremendous opportunity to showcase our region, and we’re excited to be collaborating once again with the MSC and WVONGA. Building on last year’s success, we will further enhance the conference’s programming by highlighting the challenges and opportunities in the Appalachian Basin, presenting greater value to attendees,” said OOGA executive vice president Shawn Bennett. The conference will also feature daily educational sessions that explore various technical and public affairs-related topics. “This combined effort absolutely poses a unique networking opportunity for attendees. A number of energy producers as well as suppliers and vendors across Appalachia are active in more than one state,” added WVONGA executive director Anne Blankenship. Become a sponsor, host an exhibit, or register for the conference beginning March 15th by visiting www.ShaleInsight.com and capitalize on this unique opportunity to gain unprecedented industry access. We look forward to seeing you in Pittsburgh. Take advantage of the early rates!
724-787-4451 PO Box 1001 Youngwood, PA 15697 www.ongmarketplace.com firstname.lastname@example.org
ADVERTISING RATES & SPECS
Business Card 3.25” W x 1.85”H
1/12 Page Ad 3.25” W x 3.00” H
1/8 Page Ad Horizontal - 5.0” W x 3.00” H Vertical - 3.25” W x 6.0” H
1/4 Page Ad Horizontal - 6.75” W x 5.125” H Vertical - 5.0” W x 6.25” H
1/2 Page Ad Horizontal - 10.25” W x 6.25” H Vertical - 5.0” W x 12.8” H
Full Page Ad 10.25” W x 12.8” H
Back Cover Ad 10.25” W x 12.8” H
Front Cover Ad 10.25” W x 9.0” H
2 Page Center Spread 21.44” W x 12.8” H
Page 2 or 3
ALL ADS ARE IN FULL COLOR Digital files may be high resolution PDF, TIFF, or Adobe Photoshop. Submit photos not less than 200 dpi. Logos, text or other images should be sent 400 dpi or greater as JPEG, TIFF, or EPS file. Our color process is CMYK, color text or text within a color background needs to be bold for proper registering with this type of printing process. If you don’t have a prepared ad but have a draft designed; we can work with you to create your advertisement at 20% with two revisions. Email info@ongmarketplace. com
DEADLINES: Spring - March 3 Fall - September 8
Summer - June 2 Winter - December 8
The Northeast ONG Marketplace
June 20-22, 2017
PITTSBURGH, PA David L. Lawrence Convention Center
SAVE THE DATE Innovation and perseverance are as synonymous with this business as oil and gas. For over a century producers have found ways to navigate challenging business cycles. Appalachia’s producers have drastically cut breakevens and improved EURs by driving down operating costs and refocusing their strategies. This June, find out what’s working, what’s not and what’s next for top producers and midstream operators in the East.
Why you should attend: n Hear
from 20+ senior-level executives at the most active producers in the Northeast – find out what they are doing to improve efficiency, cut costs and drive profitability
the latest updates on midstream infrastructure projects coming online
out where top industry analysts expect oil and gas prices to end up in 2017 and beyond
hands-on technology demonstrations from top exhibitors
with hundreds oil and gas professionals – make valuable connections during the event’s 9+ hours of dedicated networking opportunities
PLAYS COVERED: Marcellus, Utica and Emerging Appalachian Plays
DUGEast.com Presented by:
From the producers of:
The Northeast ONG Marketplace - Spring 2017