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Permalink Reply by Jack Straw on June 5, 2014 at 8:03am

Source:http://www.platts.com/latest-news/natural-gas/washington/consol-to-...

Consol to spend $1 billion for Appalachian shales: official

Washington (Platts)--4Jun2014/409 pm EDT/2009 GMT

Consol Energy has a 9,000-acre sweet spot containing an estimated 1 Tcf of Marcellus Shale natural gas just outside its Pittsburgh headquarters.

The only hitch is that the Pittsburgh International Airport is on top of the gas.

So Consol, a 150-year-old coal company trying to become a shale gas exploration and production company, in January hired the guy who has done airports before -- former Chesapeake Energy executive Tim Dugan -- as its chief operating officer.

Dugan led Oklahoma City-based Chesapeake's drilling effort beneath Dallas-Fort Worth International Airport.

The new COO outlined his plans to transform Consol on Wednesday before an audience of hundreds of energy professionals at the sixth annual Hart Energy Developing Unconventional Gas East conference in Pittsburgh. Last fall, Consol sold half its coal mines and announced plans to become a shale gas independent, milking the revenue from the remaining coal mines to fund gas exploration and production. Dugan said Consol plans to spend nearly $1 billion, 74% of its planned capital expenditures for 2014, drilling for natural gas in both the Marcellus and Utica shales. "The Marcellus is 20% of US gas production despite a 30% drop in rig count," Dugan said. "The best is yet to come." Consol will grow is gas production 30% per year for the next two years, Dugan said. In the first quarter, Consol reported 537,777 Mcf/d of gas production, a 23% year-on-year increase, with 230,000 Mcf/d coming from the Marcellus Shale, nearly double the Marcellus production from the first quarter of 2013. Consol is still buying acreage in Appalachian shales, Dugan said, with an eye toward acres that have the potential for being stacked: Upper Devonian above Marcellus above Utica. Dugan said 20% of Consol's 2014 planned spending -- about $200 million -- will be for more land. The Pittsburgh airport drilling project starts in August, Dugan said. Consol will drill 47 wells from six pads around the runways, with the potential for adding 18 more wells to each pad, he said. Currently, Consol is focusing on drilling longer, 8,000-foot laterals to reduce its costs while exploring possible opportunities to exploit multiple shales from the same pads. Unlike many of its peers, Consol "is long on firm transportation," Dugan said, and can get all of its production to market in a region with little available pipeline capacity. --Bill Holland, bill.holland@platts.com --Edited by Annie Siebert, ann.siebert@platts.com

Permalink Reply by 015334grltd9m on June 6, 2014 at 1:02am

I saw this acquisition as the main reason Consol put their northern Utica development on hold.  They drilled the farthest Utica well in Trumbull Cty. at that time and turned around and let BP takeover. A bit of a mystery too.

Permalink Reply by Tom L A. on June 17, 2014 at 3:48pm

I worked with Tim Dugan earlier in my career (he actually was the first person to hire me).  His vast experience (especially when dealing with airport issues) will be a tremendous resource to CNX!

Permalink Reply by Jack Straw on June 17, 2014 at 4:13pm

Ten years ago, who would have guessed that Moon Township would become the new Dallas?

The Colonel (Colonel Edwin L. Drake, not Col. Sanders) must be smiling in his grave.

More proof to the adage that; "The best place to look for Oil & Gas is where you had already found Oil & gas.). In this case, about 150 years earlier.

JS

Permalink Reply by jason irvine on June 8, 2014 at 3:29am

If anyone has any reservations about the new energy policy and coal this should be the canary in the mine. They obviously made this transition some time ago with the knowledge that nat gas was the next big energy source and coal would be a causality. This company was a coal company. They didn't change just because.

Permalink Reply by Jack Straw on June 8, 2014 at 11:00am

Consol Energy (formerly Consolidated Coal) had a bit of an advantage in making the transition to producing O&G from shales; that advantage a result of about three decades of involvement in drilling for and producing Coal Bed Methane (CBM).

 

Drilling for and producing CBM has many similarities to drilling for Shale Gas; in both:

you drill a vertical well and kick it out horizontally (following a coal seam in the case of CBM, following a hydrocarbon rich shale for Shale Gas),

CBM production depends upon natural fractures in the coal (called cleats) – Shale Gas depends upon natural fractures in the shale (called joints) which are greatly assisted by induced fracturing (fracing),

CBM and Shale Gas production each deal with substantial quantities of water (de-watering the coals in the case of CBM and dealing with return frac fluid and formation waters for Shale Gas).

 

A difference between CBM and Shale Gas lies in the fact that the Shale Gas wells tend to be substantially deeper and the horizontal legs are increasingly much longer.

 

So, Consol Energy had substantial experience in working the areas of the Marcellus and Utica through their coal operations; and Consol Energy had experience gained through their CBM operations that was (in a broad sense) transferrable to exploitation of Shale Gas.

 

Consol Energy not only saw the 'handwriting on the wall', but also had a competitive advantage due to their being 'home town boys and girls', their understanding of the local geology, their land positions (associated with earlier activities) and their CBM experience.

They were in the 'right place', at the 'right time' and made the right decisions.

All IMHIO,

                        JS

Permalink Reply by Jack Straw on June 17, 2014 at 11:24am

An interesting article entitled:    Iraq Breaks Down, Oil Surges

 

http://www.peakprosperity.com/blog/85802/iraq-breaks-down-oil-surges

 

I know that this is neither the Marcellus nor the Utica ….. but, what is happening in Iraq could blow up in a manner that radically alters the price of oil …. and, there is still a relationship (weak though it seems to be) between the price of oil and that of Natural Gas; the relationship is more direct and obvious in Europe and Asia.

 

The article is long, with a lot of graphics; not suitable for cut and paste to here.

 

Part two of the article is by subscription; but I consider that there is a lot to gain from Part one alone.

 

All IMHO,

                     JS

Permalink Reply by Jack Straw on June 17, 2014 at 3:02pm

Boone Pickens says falling natgas rig count will hurt U.S. output

Source: http://www.reuters.com/article/2014/06/16/energy-cng-pickens-idUSL2...

By Eileen O'Grady

HOUSTON, June 16 Mon Jun 16, 2014 6:39pm EDT

(Reuters) - Energy investor T. Boone Pickens questioned on Monday whether U.S. natural gas production can continue its robust growth with just 300 drilling rigs working to find gas.

Last week, the number of rigs drilling for gas fell by 10 to 310, while rigs drilling for oil rose by 6 to 1,542, according to data from oil services firm Baker Hughes.

While gas-directed rigs have fallen from 353 a year ago, the U.S. Energy Information Administration keeps raising its estimate for gas production this year and next.

In its June Short-Term Energy Outlook, the EIA said it expects daily gas production to reach 73 billion cubic feet per day in 2014 and 74 bcf/d in 2015, the fourth and fifth straight annual records due primarily to growth from the Marcellus shale play, EIA said.

However, Pickens said the pace of gas production is on the decline.

"You can't add (to production) with 300 rigs," he added.

Pickens expects utilities to rebuild gas in storage to between 3.4 trillion and 3.5 trillion cubic feet by the beginning of winter, well-below the five-year industry average of 3.8 tcf after the coldest winter in decades.

Pickens, founder of BP Capital, was in Houston on Monday to talk about natural gas as a transportation fuel, and to recognize Waste Management Inc for its growing use of natural gas to fuel its fleet of trash-hauling vehicles.

Pickens also founded Clean Energy Fuels Corp builds and operates compressed natural gas (CNG) and liquefied natural gas (LNG) fueling stations and other equipment.

Waste Management, a leading trash collection, disposal and recycling company, has more than 3,200 trucks that run on CNG, or about 18 percent of its fleet, said David Steiner, chief executive.

Waste Management began using gas to fuel some trash trucks in California in the mid-1990s, working with a previous Pickens company, but the effort stalled when truck engines had operational problems.

The push to rely on the alternative fuel gained momentum in 2007 when U.S. gas production from unconventional shale plays blossomed and gas prices fell, Steiner said.

Waste Management is now spending about 90 percent of its fleet budget to replace diesel trucks with CNG trucks. While more costly to purchase, Steiner said each CNG truck reduces diesel use by an average of 8,000 gallons a year and eliminates 22 metric tons of greenhouse gas emissions. (Reporting by Eileen O'Grady in Houston. Editing by Andre Grenon)

Permalink Reply by Jack Straw on June 19, 2014 at 2:55am

U.S. autumn nuclear refuels seen up from 2013, but below norm

Published: Jun 18, 2014

By Scott DiSavino

Source: http://www.firstenercastfinancial.com/news/story/58356--us-autumn-n...

U.S. autumn nuclear refuels seen up from 2013, but below norm

Published: Jun 18, 2014

By Scott DiSavino

June 18 (Reuters) - U.S. power generators are expected to shut three more nuclear reactors in the autumn than last year, but two fewer reactors than normal for planned refueling and maintenance, according to a Reuters survey on Wednesday.

To make up for the missing generation that the nuclear industry usually provides, gas and power traders expect utilities to burn more gas to run power plants than last year, making it slightly tougher to refill severely depleted gas supplies.

Utilities pulled a record amount of gas from storage this past winter to keep homes and businesses warm during the cold season, and now they must inject record amounts of the fuel back into storage to get stocks to healthy levels before next winter and avoid possible price spikes later in the year.

Nuclear operators are expected to shut 24 reactors this autumn, from September through November, capable of generating about 23,200 megawatts. That compares with just 21 reactors, or 20,600 MW, shut during the same period last year and a five-year average from 2009-13 of 26 reactors, or 24,900 MW.

Since nuclear operators spread the outages out across the fall season, the reactors will not all be shut at the same time.

The survey expects nuclear outages this autumn to peak on Oct. 19-20 when about 19,900 MW will be out of service. NUKE/

Since 1999, when the U.S. nuclear regulator started posting outages on its website, autumn outages peaked at 32,045 MW in October 2012 when a few reactors that have since been retired were still expected to return to service.

This spring, generators shut 38 reactors, capable of generating about 38,800 MW. That topped the 31 reactors, or 31,100 MW, shut during the spring of 2013 and was also more than the prior five-year average of 33 reactors, or 32,900 MW.

But because all the reactors did not shut at the same time this spring, outages peaked at just 24,365 MW on April 16, which was less than the 2013 spring peak of 28,581 MW and well below the all-time spring peak of 32,799 MW set in May 2011.
 
Generators usually shut nuclear and other power plants for maintenance to prepare for the peak summer and winter months during the spring and autumn when demand for power for heating and cooling is lowest.

It takes roughly 200 million cubic feet of gas per day to generate about 1,000 MW. One megawatt can power about 800 to 1,000 homes.

The 100 operating nuclear reactors in the United States are capable of generating about 98,300 MW, which is about 10 percent of the country's total generating capacity. But because nuclear units run around the clock, those reactors provide 20 percent of U.S. power generation.

Permalink Reply by Jack Straw on June 19, 2014 at 8:28am

The plots at the below link are courtesy of BMO Capital Markets and pedriven:

http://www.investorvillage.com/uploads/13230/files/US_Natural_Gas_S...

The plots represent the latest Natural Gas storage data released this morning by the U.S. Department of Energy - Energy Information Agency.

BMO Capital Markets have taken these data and plotted them in a more understandable illustrative manner.

JS

Permalink Reply by Jack Straw on June 19, 2014 at 8:53am

Hot off the Presses ... an eight part article titled:

Key takeaways from CONSOL Energy’s analyst day meeting

Information on the Marcellus and Utica.

Find it at this link:

http://marketrealist.com/2014/06/key-takeaways-consol-energys-analy...

JS

Permalink Reply by Jack Straw on June 19, 2014 at 4:01pm

Coal may no longer be 'King Coal' ... but cheap Natural Gas will only slowly displace cheaper coal.

Cheap coal will place a ceiling on Natural Gas pricing.

Source: http://www.marketwatch.com/story/bentek-report-coal-poised-to-retai...

press release

June 19, 2014, 4:02 p.m. EDT

Bentek Report: Coal Poised to Retain Majority of U.S. Power Market Share

Winter Saw Consumption Climb 17%, Stockpiles Plunge to Pre-2006 Levels

NEW YORK, June 19, 2014 /PRNewswire/ -- U.S. coal is poised to retain its majority share of the U.S. power market, based on winter 2014 consumption and inventories data just released by Bentek Energy® *. U.S. coal consumption in winter 2013-2014 increased 17% from winter 2012-2013 to 74.1 million short tons per month. Similarly, coal-fired generation accounted for an estimated 44% of the total U.S. power stack, compared to 41% during the previous two winters.

Meanwhile, natural gas held steady at 24% of power generation compared to last winter and declined 2% compared to the winter prior, states Back in the Black: Coal Makes Comeback . The Bentek** report examines how record winter cold pushed U.S. electricity load to levels traditionally seen during the peak of summer and increased demand for all power-generating sources, particularly coal.

"Based on our analysis, coal is expected to remain a viable fuel source in the U.S. power sector, despite increased environmental regulation and competition from cheap and plentiful shale natural gas," said Michael Bennett, a Bentek analyst and the report's lead author. "This contrasts sharply with the past decade, during which coal's market share dropped by 12%."

A major driver of heightened winter coal consumption was natural gas prices. According to the report, prices hit $7 per million British thermal units (/MMBtu) several days this winter and averaged $4.60/MMBtu at Henry Hub, the standard delivery point for the New York Mercantile Exchange (NYMEX) natural gas futures contract in the U.S. This compares with $3.46/MMBtu during the previous winter and $2.75/MMBtu in winter 2011-2012.

As a result, coal stockpiles at U.S. power facilities fell to the lowest levels since 2006. Stockpiles peaked in mid-June 2012, but plunged to 113 million short tons in March, compared to a five-year average of 177.9 million short tons. Reserves since have rebounded to 141.5 million (see chart).

Based on historical trends, stockpiles are unlikely to stretch beyond 136 million short tons by the end of June, or about 18 million short tons less than the five-year minimum. Coal stockpiles typically peak in mid- to late-June just prior to the height of the summer cooling season, and then experience a slight decline, followed by another build in the fall.

To monitor coal's position in the U.S. power market and its relationship with natural gas, read the report , and see Bentek's fundamental coal market data just added to its U.S. Power Burn  report and to Platts Coal Trader  market report.

*Bentek Energy is an analytics and forecasting unit of Platts , a leading global provider of energy, metals, petrochemicals and agriculture information.

**Colorado-based Bentek was acquired by Platts in 2011 and provides analytical tools and forecasts for natural gas, crude oil, natural gas liquids (NGLs) and power markets. For more information on natural gas analytics and Bentek Energy visit www.bentekenergy.com .

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 180 countries benefit from Platts' coverage of the biofuels , carbon emissions, coal , electricity , oil , natural gas , metals , nuclear power , petrochemical , shipping and sugar markets. A division of McGraw Hill Financial /quotes/zigman/233490/delayed/quotes/nls/mhfi MHFI -0.28% , Platts is based in London with approximately 900 employees in more than 15 offices worldwide. Additional information is available at www.platts.com .

About McGraw Hill Financial:  McGraw Hill Financial /quotes/zigman/233490/delayed/quotes/nls/mhfi MHFI -0.28% , a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 17,000 employees in 29 countries. Additional information is available at  www.mhfi.com .

SOURCE Platts

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