It’s been a relatively quiet week since our last report. Natural gas spot prices in Appalachia took a nose dive amidst only modest increases in the Henry Hub and the rig count. In Appalachia, a federal judge denied a bid to dismiss a class action brought by royalty owners alleging improper payments. The Pennsylvania Department of Environmental Protection and the FERC did their part moving various pipeline projects along, with DEP issuing an air permit for the Atlantic Sunrise project and FERC denying bids from environmentalists to halt construction of that pipeline and the Northern Access pipeline. Finally, the Delaware River Basin Commission plans to ban hydraulic fracturing operations within the basin. Here’s the week in review:
The Rig Count
- The national rig count is up at (Source: BakerHughes).
- The rig count in the Marcellus is up at 46. (Source: BakerHughes).
- The rig count in the Utica is flat at 30. (Source: BakerHughes).
- The Henry Hub natural gas spot price is up at $2.93/MMBtu as of 9/8/2017. (Source: EIA).
- In the Marcellus and Utica region, spot prices are down as of 9/8/2017. At Dominion South in northwest Pennsylvania, spot prices are down at $1.41/MMBtu. On Transco’s Leidy Line in northern Pennsylvania, spot prices are down at $1.34/MMBtu. (Source: EIA).
- Oil prices are up at $54.78/bbl as of 9/8/2017. (Source: WSJ).
Developments in Appalachia
- PA Royalty Class Action Claims Survive in Federal Court. A federal judge in the Middle District of Pennsylvania denied a motion to dismiss claims that a lessee and its partners improperly paid royalties that are lower than the NYMEX spot price and/or the local market price and improperly deducted post-production costs from royalty payments. Slamon v. Carrizo (Marcellus) LLC, — F. Supp. 3d —, No. 16-2187, 2017 WL 3877856 (M.D. Pa., September 05, 2017).
- FERC Denies Bids to Halt Pipeline Projects. FERC denied separate bids to block the Atlantic Sunrise Pipeline Project and the Northern Access 2016 Project, finding no irreparable harm if the projects move forward and concluding in both instances the projects are environmentally acceptable under NEPA if constructed and operated in accordance with the FERC’s order and conditions imposed by prior orders.
- PADEP Issues Air Quality Plan Approval for Atlantic Sunrise. DEP issued an Air Quality Plan Approval for air emissions related to construction activities in Lancaster County for the Atlantic Sunrise Pipeline Project proposed by Transcontinental Gas Pipe Line Company, LLC (Transco). The approval authorizes “Emission Reduction Credits” (“ERCs”) to comply with the offset requirements of Pennsylvania’s Air Pollution Control Act and regulations. A copy of the press release may be accessed here.
Developments Beyond Appalachia
- Delaware River Basin Commission Plans Possible Outright Ban of Frac Operations. The Delaware River Basin Commission reportedly has plans to make permanent its current “moratorium” on authorizations for oil and natural gas projects within the basin. For years, the DRBC has placed a moratorium on approving projects involving hydraulic fracturing while the agency purported to draft and promulgate regulations. The draft regulations would include prohibitions on natural gas development and restrictions on disposal of frac fluids within the basin. A copy of the agency news release may be accessed here.