Essentially all abandoned wells are conventional vertical not horizontal ones

From an Article by Mike Tony, Charleston Gazette, Charleston, WV, October 8, 2022

Landowners in Harrison, Nicholas, Preston and Wetzel counties has filed the lawsuit in the U.S. District Court for the Northern District of West Virginia in July against Diversified Energy and Pittsburgh-based EQT Corp. A 2018 agreement between the company and the WV DEP requires Diversified to summarize the actions taken to plug oil and gas wells or place them into production during the past year.

Diversified Energy, the largest owner of gas wells in the country, says it doesn’t have to plug wells that West Virginia landowners allege in federal court pose health and environmental hazards, arguing that state regulators relieved them of that responsibility. Diversified Energy Company says an agreement it made with the state Department of Environmental Protection to plug or place into production a set number of gas and oil wells annually shields it from the duty to plug and abandon the wells.

The company says the federal lawsuit from eight landowners in four West Virginia counties would “usurp” the authority of the Office of Oil and Gas, the DEP’s well-plugging and reclamation regulatory unit that state officials have acknowledged is understaffed. Diversified argues it has no duty to plug wells unless it identifies them as candidates for plugging in annual reports it is required to file with the Office of Oil and Gas through 2034.

The lawsuit alleges the two companies struck transfer deals in recent years for many more wells than Diversified can afford to plug and decommission. Industry experts have made similar observations, saying the company’s business model is based on acquiring a high number of low-producing wells that yield short-term dividends but present long-term liabilities mounting as the company puts off well decommissioning obligations.

The DEP estimates older wells that have been poorly maintained will likely total more than $100,000 in plugging costs. New wells that have been properly maintained cost a few tens of thousands of dollars, per the agency. Plugging typically entails using cement to seal wells that are no longer productive to keep toxic chemicals from polluting the air and aquifers.

The landowners’ lawsuit asks the court to make EQT liable for plugging and decommissioning the wells that Diversified took responsibility for in 2018 and 2020, contending that those transfers were fraudulent. The lawsuit petitions the court to award plaintiffs and class members damages from Diversified to compensate them for the cost of plugging, remediation of the abandoned wells.

Most of Diversified’s roughly 70,000 wells are in Appalachia, acquired since 2018 from EQT and Canonsburg, Pennsylvania-based CNX Resources. Diversified acquired more than 12,000 gas wells from EQT in deals in 2018 and 2020 for roughly $700 million. In a response it filed last week to the landowners’ lawsuit, Diversified highlighted a passage of its 2018 agreement with the Office of Oil and Gas stating that the company “requires sufficient time to identify” which wells have a “bona fide future use” that merits them being placed back into production. “For the duration of that process, Diversified has no duty to plug its wells unless it identifies them as a plugging candidate in its reports, and then only on a set schedule,” Diversified’s response contends.

The DEP did not respond to a request for comment on Diversified’s filing. Per the agreement, Diversified must either place into production or plug at least 50 oil and gas wells for which no production was reported in 2017 every year from 2020 through 2034, of which at least 20 must be plugged each year. Diversified has similar consent agreements in Kentucky, Ohio and Pennsylvania. Combined, the company’s agreements in those states plus West Virginia commit the company to plugging at least 80 wells annually out of its tens of thousands of wells there.

The landowners’ lawsuit called those consent agreements a “smoke-screen” that doesn’t impact “private civil liberties that Diversified [and EQT] have to private citizens over private property rights.” The DEP has contracted with a Diversified subsidiary to plug wells. The agency has paid Diversified subsidiary Next LVL Energy LLC over $150,000 since October 2021 for well-plugging, according to West Virginia State Auditor’s Office data.

The DEP awarded Next LVL Energy two contracts to plug and reclaim orphaned gas and oil wells under the federally funded Infrastructure Investment and Jobs Act passed by Congress last year. Next LVL Energy was the low bidder on the two DEP contracts, bidding a combined $10.2 million. The DEP is requiring contractors to identify, inspect and prioritize what documented or undocumented wells to plug, in addition to plugging them and reclaiming the well sites. Under the terms of state-posted contracts, contractors will have the exclusive right to plugging orphaned, abandoned wells within the contract region.

Diversified acquired Next LVL Energy, a Pittsburgh area-based well-plugging company, in February.

Diversified also argued in its response to the lawsuit that their claims are time-barred under a two-year state statute of limitations for trespass, nuisance and negligence claims, citing past statute of limitations-focused judicial decisions. The company contends the two years the landowners had to file claims began when the wells on their properties stopped producing gas in a two-year window from 2017 through 2019.

The landowners allege that Diversified’s acquisition of thousands of wells from EQT was completed with intent to defraud creditors, including the plaintiffs, in a business model designed to push off decommissioning liabilities for decades. They say Diversified has left them with unplugged, abandoned wells that pose health risks, degrade the environment and hurt their property values.

Much of the lawsuit is based on a report published in April by the Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-renewable energy nonprofit think tank. That report predicted it was highly unlikely that Diversified will have enough money to plug and abandon all its wells. The lawsuit cites the report to allege that if Diversified had used industry norms to calculate its plugging and decommissioning obligations, then its liabilities would exceed $2 billion instead of the company’s self-reported figure of roughly $520 million, making Diversified insolvent. The report cited Diversified company data and federal projections for natural gas prices. The Ohio River Valley Institute report found that Diversified has used unusual assumptions like implausibly long economic lives of wells though 2095 and an excessively long ramp-up timeline to start plugging and abandoning most of its wells to calculate the value of its asset retirement obligations, liabilities for well plugging and abandoning costs.

In 2020, Greg Rogers, a senior advisor to Carbon Tracker, a London-based think tank researching climate change impacts on financial markets, called Diversified’s business model “a legal Ponzi scheme” in a conference call with the Capitol Forum, a corporate news analysis service. “[I]t only works as long as there’s growth and the perception of profitability,” Rogers said. States mandate that wells no longer producing gas or oil are plugged and abandoned, and that well owners secure a bond or other financial assurance that helps cover the expense of closing wells that aren’t productive anymore.

But Diversified’s critics say its business model could leave West Virginia taxpayers footing the bill for remediating many of the company’s wells. “[I]t is clear Diversified Energy’s economic model is built to fail and could leave residents of West Virginia with billions of dollars in clean up costs,” Ohio River Valley Institute senior researcher Ted Boettner said in an email.

The Office of Oil and Gas, whose authority Diversified emphasized in its lawsuit, has been beset by low inspector staff numbers. The state’s well inspection staff dwindling from 17 to nine in the past two years on the Legislature’s watch has concerned not just environmentalists but royalty owner advocates. The office has faced a $1.3 million shortfall, with officials attributing the budget crunch to permit fees having dried up amid oil and gas industry struggles. Bills that would have restored office staffing levels to what they were before they were slashed in 2020 through annual $100 oversight fees on unplugged wells failed in the Legislature amid opposition from the Gas and Oil Association of West Virginia. The industry group said the fees would be too onerous for operators.

A recent study found that low-production well sites like those dominating Diversified’s portfolio are a disproportionately large source of methane emissions. The April report published in the peer-reviewed scientific journal Nature Communications found roughly half of all well site methane emissions nationwide come from low-production well sites like Diversified’s, which emit six to 12 times as much methane as the average rate for all U.S. well sites. Methane has a 100-year global warming potential 28 to 36 times that of carbon dioxide, according to the U.S. Environmental Protection Agency, making Diversified’s deepening well footprint across Appalachia a climate concern.

Merging opens up Marcellus acreage in the northeast sector to EQT

From an Article by Reuters News Service, May 6, 2021

EQT Corp., the largest U.S. natural gas producer, said on Thursday it will buy Blackstone-backed Appalachian basin rival Alta Resources for $2.93 billion in cash and stock, making an entry in the Northeast Marcellus shale play.

Dealmaking in the oil and gas space has been heating up as crude prices have jumped on a vaccine-led recovery in travel demand. Natural gas, in particular, hit record highs earlier in February when a winter storm swept parts of the United States.

The deal, which adds around one billion cubic feet equivalent gas production to EQT’s portfolio, is expected to be accretive to free cash flow and net asset value per share, the company said.

EQT said it will pay $1 billion to Alta in cash and the rest in stock. It expects to fund the cash portion partly by drawing on its credit facilities and new debt.

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PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Administrative violation issued on 5/04/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 78A122(B)_ – WELL REPORTING – WELL RECORD AND COMPLETION REPORT – The well operator failed to include all required information on the completion report to the Department on a form provided by the Department.
Incident Date/Time: 2021-05-04 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Environmental Health & Safety violation issued on 5/04/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 79.16(B) – WELL DRILLING AND USE – DEVIATION – Well drilled intentionally to deviate from the vertical in order to intersect the producing horizon outside the area permitted by the spacing order. Failure to file a complete angular deviation and directional survey of the well upon completion of an intentionally deviated well.
Incident Date/Time: 2021-05-04 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Administrative violation issued on 5/04/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. OGA3222(B.1) – WELL REPORTING – COMPLETION REPORT – Operator failed to submit a completion report containing all necessary information.
Incident Date/Time: 2021-05-04 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Administrative violation issued on 5/04/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 78a12 – COMPLIANCE WITH PERMITS – Person failed to comply with terms and conditions of permit or registration while drilling, altering or operating an oil or gas well.
Incident Date/Time: 2021-05-04 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Environmental Health & Safety violation issued on 4/28/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 79.16(B) – WELL DRILLING AND USE – DEVIATION – Well drilled intentionally to deviate from the vertical in order to intersect the producing horizon outside the area permitted by the spacing order. Failure to file a complete angular deviation and directional survey of the well upon completion of an intentionally deviated well.
Incident Date/Time: 2021-04-28 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Administrative violation issued on 4/28/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 78A122(B)_ – WELL REPORTING – WELL RECORD AND COMPLETION REPORT – The well operator failed to include all required information on the completion report to the Department on a form provided by the Department.
Incident Date/Time: 2021-04-28 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Administrative violation issued on 4/28/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. OGA3222(B.1) – WELL REPORTING – COMPLETION REPORT – Operator failed to submit a completion report containing all necessary information.
Incident Date/Time: 2021-04-28 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Administrative violation issued on 4/28/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 78a12 – COMPLIANCE WITH PERMITS – Person failed to comply with terms and conditions of permit or registration while drilling, altering or operating an oil or gas well.
Incident Date/Time: 2021-04-28 00:00:00

PA Permit Violation Issued to EQT CHAP LLC in Franklin Twp, Fayette County
Description: Environmental Health & Safety violation issued on 4/28/2021 to EQT CHAP LLC in Franklin Twp, Fayette county. 79.16(B) – WELL DRILLING AND USE – DEVIATION – Well drilled intentionally to deviate from the vertical in order to intersect the producing horizon outside the area permitted by the spacing order. Failure to file a complete angular deviation and directional survey of the well upon completion of an intentionally deviated well.
Incident Date/Time: 2021-04-28 00:00:00

The rugged mountains and many streams are readily damaged by large pipeline projects

From an Article by Laurence Hammack, Roanoke Times, October 27, 2020

ROANOKE — Two endangered species of fish — the Roanoke logperch and the candy darter — could be pushed closer to extinction if a natural gas pipeline is allowed to invade their waters, according to a legal challenge filed Tuesday.

A coalition of environmental groups asked a federal appeals court to review a biological opinion from the U.S. Fish and Wildlife Service, which found last month that construction of the Mountain Valley Pipeline is not likely to jeopardize protected fish, bats and mussels.

It was the latest in a string of lawsuits that have long delayed work on the 303-mile pipeline.

Also on Tuesday, the Sierra Club and 10 other environmental and conservation groups asked the Fish and Wildlife Service to stay its approval, one of several needed for the project to move forward.

In a letter seeking the stay, the groups contend that the biological opinion failed to adequately consider how fish would be affected by increased sedimentation caused by the steel pipe crossing hundreds of streams, or how the Indiana and northern long-eared bats would survive the clearing of forests they inhabit.

“These imperiled species are highly vulnerable to precisely the impacts that the Project would inflict,” Elly Benson, a senior attorney with the Sierra Club, wrote in the letter.

Work on the controversial pipeline was put on hold a year ago, after the same environmental groups filed a legal challenge to Fish and Wildlife’s first biological opinion, issued in 2017. After a nearly yearlong review, the agency last month issued its second approval — which was again challenged Tuesday.

Benson’s letter asked the agency to act on its request for a stay “as soon as possible,” as construction crews begin to mobilize along the pipeline’s route from northern West Virginia, through Southwest Virginia, to connect with an existing pipeline near the North Carolina line.

A spokeswoman for the Fish and Wildlife Service would only say that the request and court papers were under review. The Sept. 4 biological opinion was the first of three sets of permits — set aside by litigation filed with the 4th U.S. Circuit Court of Appeals — to be regained by Mountain Valley.

Three weeks later, the U.S. Army Corps of Engineers decided to reissue permits allowing the buried pipeline to cross nearly 1,000 streams and wetlands, either by trenching through or boring under the water bodies. A legal challenge led by the Sierra Club quickly followed.

The 4th Circuit then temporarily stayed the stream-crossing permits while it considers the case.

In an email Tuesday, a Mountain Valley spokeswoman said the “comprehensive” biological opinion includes previously submitted and new data. The 200-plus page document exceeds regulatory requirements and addresses earlier issues raised by the court, Natalie Cox said.

“We are not surprised that the Sierra Club and other organizations filed this action, as more often than not their stated opposition is to the project itself rather than to specific details of the permits being challenged,” her email stated.

Mountain Valley has said it plans to have the pipeline finished by early next year. But if the biological opinion is stayed, it would encompass much more of the construction area than is covered by the other suspended permits. The stream crossings account for less than 10 miles of the 303-mile pipeline. And while the U.S. Forest Service has yet to rule on whether Mountain Valley can pass through the Jefferson National Forest, that segment is just 3.5 miles.

The Sierra Club’s letter says that In addition to bats and fish, two kinds of freshwater mussels — the clubshell and snuffbox — would be threatened.

Since the first opinion came out in 2017, the candy darter has been added to the list of endangered species. The environmental groups take issue with the conclusion that the colorful fish would not be hurt by boring under the Gauley River in West Virginia and Stony Creek in Giles County, among other things.

As for bats, the Fish and Wildlife Service improperly downplayed the effects of cutting down roost trees to clear a 125-foot-wide right of way for the pipeline, the letter states.

Joining the Sierra Club in Tuesday’s litigation were Appalachian Voices, Wild Virginia, the West Virginia Rivers Coalition, Preserve Giles County, Preserve Bent Mountain, the West Virginia Highlands Conservancy, the Indian Creek Watershed Association, Defenders of Wildlife, the Chesapeake Climate Action Network and the Center for Biological Diversity.

42 inch Mountain Valley Pipeline is larger than previous pipelines, probably too large for the steep terrain and many stream crossings

From an Article by Laurence Hammack, Roanoke Times, April 24, 2020

The Mountain Valley Pipeline is still targeting a completion date of late this year, a spokeswoman said Friday, despite reports of the suspension of a nationwide program needed to grant a key permit it lacks.

Last week, a federal judge in Montana vacated a permit for the Keystone XL pipeline to cross streams and wetlands in a decision that also applied to other projects, including the controversial natural gas pipeline being built through Southwest Virginia.

The Associated Press reported Thursday that the U.S. Army Corps of Engineers — which approves the permits on a general basis for pipelines, utility lines and other construction work that must cross a water body — has suspended the process in light of the court ruling.

Mountain Valley spokeswoman Natalie Cox said the company was aware of comments from the Corps about its so-called Nationwide Permit 12, which the AP attributed in part to emails it had obtained.

“We are awaiting further developments on the Montana federal court case … to understand any potential impacts on the MVP project,” Cox wrote in an email, adding that the company still was aiming to complete work on the 303-mile pipeline by the end of the year.

Mountain Valley was originally slated to be done by late 2018, and delays caused by legal challenges from environmental groups have in large part caused its estimated price to soar from $3.7 billion to as much as $5.5 billion.

“Continued delays will further erode the case for completing the MVP,” said Thomas Hadwin, a retired gas and electric utility executive from Waynesboro who is opposed to the project.

While Mountain Valley officials have said the pipeline is 90% done, “this is probably one of the biggest outstanding issues for them,” he said.

Hadwin said it was difficult to say whether the joint venture of five energy companies would abandon the project at this late stage, as opponents hope.

“The more money they put in, the harder it is to say, I’m going to give up,” he said. “I think that most board members would say, we’re so far in, let’s keep going.”

Larry Liebesman, a senior adviser for the water resources consulting firm Dawson & Associates in Washington, D.C., said he was not surprised to learn of the Corp’s suspension of its permitting process for stream and wetland crossings.

“My read of it is they felt it was important to abide by the court order, which in effect was a nationwide injunction against use of the Nationwide Permit,” he said.

It was not clear Friday how long the suspension might last. A spokesman for the Army Corps referred questions to a counterpart at the U.S. Justice Department, who had not responded by 6 p.m. Friday.

Environmentalists have long decried the Nationwide Permit process, which takes a blanket approach for projects the Corps determines will not cause significant harm to natural resources. An individual analysis of each stream crossing is needed to fully evaluate a pipeline’s effects, they say.

“Permit applications for projects like MVP would — and should — fail if project-wide impacts were more thoroughly examined,” said Russell Chisholm, co-chair of the anti-pipeline group Protect Our Water, Heritage, Rights.

Over the past two years, Mountain Valley has been cited repeatedly by regulators in Virginia and West Virginia for noncompliance with required measures to control erosion and sedimentation. Muddy runoff from construction sites along steep mountain slopes has carried sediment into nearby streams.

Mountain Valley has blamed much of the problem on heavy rainfall in 2018, and says it is working to have three sets of suspended permits — including the one to cross more than 1,000 streams and wetlands — restored in time to resume work by the late spring or summer.

An original water-crossing permit granted to Mountain Valley more than two years ago was set aside by the 4th U.S. Circuit Court of Appeals. The company had applied for a new approval and was waiting on a decision when the recent court decision came down.

Because the Nationwide Permit is also used by power lines and other utility work, critics say the ruling by U.S. District Court Judge Brian Morris goes too far.

The Justice Department is likely to ask the judge to narrow the scope of his ruling, and to then appeal if he does not, according to Height Capital Markets, an investment banking firm that has followed Mountain Valley. “The universe of the kind of projects that would be affected is incredibly broad,” Liebesman said.

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See also: Dominion Energy: Significant new natural gas generation not viable, NBC News 29, April 8, 2020

RICHMOND, Va. (AP) — Dominion Energy Virginia recently told state regulators “significant build-out” of natural gas-fired power plants is no longer viable because of renewable energy legislation lawmakers passed earlier this year.

The disclosure came in a filing with the State Corporation Commission several weeks before Dominion has to file its integrated resource plan, or IRP, a long-range planning document that describes how the utility will generate power to comply with regulations and meet customer needs.

The company’s critics called it the latest development to raise questions about why the Atlantic Coast Pipeline, the approximately $8 billion multistate natural gas pipeline the utility’s parent company is spearheading, is needed.

When Dominion proposed the pipeline in 2014, it was planning to build several thousand megawatts of additional natural gas generation in Virginia, said Will Cleveland, an attorney with the Southern Environmental Law Center.

EQT merged with Rice Energy but the debt problems remain

From an Article by Nick Cunningham, Oil-Price.com, January 14, 2020

The largest natural gas driller in the United States just announced a massive write-down for its assets, offering more evidence that the shale sector faces fundamental problems with profitability.

In a regulatory filing on Monday, Pittsburgh-based EQT took a $1.8 billion impairment for the fourth quarter, as the natural gas market continues to sour. EQT said that the write down comes as a result of the “changes to our development strategy and renewed focus on a refined core operating footprint,” which is a jargon-y way of saying that some of its assets are now worth much less.

EQT also slashed spending for 2020 to between $1.25 and $1.35 billion, down by another $50 million compared to the guidance the company provided in the third quarter of last year.

Although not a household name, EQT is the largest gas producer in the country, and is a giant in the Marcellus shale. EQT purchased Rice Energy in 2017, growing into a huge gas producer and pipeline company, but it has posted disappointing results in the last few years. The poor performance led to an internal battle for control of the company. Toby Rice, who co-founded Rice Energy and maintained small ownership stakes in EQT after the tie up, wrestled control from management, convincing the company’s board that he could right the ship. He became CEO last year.

So far, the company’s problems continue. Natural gas prices slid sharply in 2019, and are at rock-bottom levels, particularly for the time of year. According to the FT, while Henry Hub natural gas prices for February delivery trade at $2.24/MMBtu, they are only trading at around $1.83/MMBtu at the Dominion South hub in Pennsylvania.

EQT itself admits that it can’t succeed in this environment. “Gas prices are down. It has a big impact, the difference between $2.75 gas and $2.50 gas,” Toby Rice said in December “A lot of this development doesn’t work as well at $2.50 gas.”

EQT hopes to cut $1.5 billion in debt by selling assets and boosting cash flow. However, the cash flow part will be hard to pull off with prices stuck in the doldrums.

Moody’s cut EQT’s credit rating on Monday to Ba1 with a negative outlook, moving it into junk territory after the gas giant said it would issue new bonds to refinance debt. “EQT’s significantly weakening cash flow metrics in light of the persistent weak natural gas price environment and the company’s intent to refinance its 2020 maturities in lieu of debt reduction through repayment drives the ratings downgrade,” Moody’s senior analyst Sreedhar Kona said.

The agency also noted the “volatility associated with the cash flow of pure-play natural gas producers necessitate a higher retained cash flow to debt ratio threshold than EQT can deliver over the medium term even with significant debt reduction.”

“Additionally, EQT’s cash flow metrics compare poorly to other Baa3 rated oil producing companies, despite EQT’s size and scale,” Moody’s concluded. EQT’s share price is down by more than half since last spring, and it is also down by more than 75 percent since 2017.

These problems are obviously much larger than EQT. Range Resources recently slashed its dividend in order to pay off debt, while also taking out another $550 million in new debt in order to pay off maturing debt this year. Meanwhile, Chesapeake Energy, the second largest gas producer, is now trading at pennies on the dollar and faces the prospect of being delisted from the New York Stock Exchange.

EQT’s predicament reflects the broader financial questions that have long plagued the shale industry. Fracking can produce lots of oil and gas, but steep decline rates make profits elusive. If the largest gas producer in the country is struggling, and has a credit rating in junk territory, then something is wrong with the business model.

The problems endemic to the shale gas industry are starting to affect production. The decade-long boom in gas production from Appalachia may have finally come to a halt.

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See also: BlackRock makes climate change central to its investment strategy – The Washington Post, January 14, 2020

Over the past year, Pope Francis met with chief executives and board chairs of leading oil and gas companies and financial firms, including CEO Fink of BlackRock, and urged them to take steps to curb climate change. Activists have launched a campaign called “Stop the Money Pipeline.” And investors have flocked increasingly to mutual funds or money managers who screen out shareholdings in fossil fuel companies.

“This is a major, major crack in the dam,” said Bill McKibben, a writer and climate activist who was arrested last week at a protest at a Chase bank in the District. “The financial powers in New York have tried to ignore climate risk, but that’s now impossible; the pressure from activists, and from the climate chaos in the real world, is simply too great.”

Welding operation on 40 inch MVP in WV

From an Article by Jessica Farrish, Beckley Register Herald, December 3, 2019

A Texas corporation that has put down roots in Raleigh County is no longer working on a controversial natural gas pipeline in West Virginia, after the pipeline’s major stakeholder unexpectedly cancelled the Texas company’s contract last month.

The Mountain Valley Pipeline is a joint project of EQM Midstream Partners LP, Con Edison Transmissions Inc., NextEra US Gas Assets LLC, WGL Midstream and RGC Midstream.

The Federal Energy Regulatory Commission (FERC) in October halted construction of the 303-mile interstate pipeline pending the outcome of a series of court challenges launched by environmental groups.

In the last week of November, EQM Midstream Partners LP cancelled a work contract for Trinity Energy Services of Argyle, Texas, Trinity spokesman Bob McKibbon verified Monday. “We’ve all been kind of in the dark with it, as far as not much detail,” McKibbon said Monday. “There’s nobody else talking to us about it.”

Mountain Valley began work on the pipeline in February 2018, with partners anticipating the project would be completed by the end of 2019, at a cost of $3.7 billion. In October, Mountain Valley announced plans to have the pipeline operational by mid-2020, at a cost of $5.3 to $5.5 billion.

The company owns a hangar at Raleigh County Memorial Airport and leases a second one, airport manager Tom Cochran. The company also purchases plane fuel locally.

Cochran said Monday that he is hopeful Trinity will stay in Raleigh County. “We appreciate the business that they have offered to us and not only the airport but our community,” said Cochran. “This is going to be felt across the county.

The pipeline is set to cut across 600 streams and more than 400 wetlands along its proposed path from northwestern West Virginia to southern Virginia.

The West Virginia Department of Environmental Protection (WVDEP) had cited Trinity for water safety violation rules in May 2018, according to a report by The Gazette-Mail.

According to the WVDEP complaint, Trinity was cited for unsatisfactory perimeter control and failure to install devices in a timely manner at four sites (Slate Run Road, Route 219 Crossing, “Mr Law’s field” and War Ridge Road) in Wetzel County. Receiving streams were the Ohio River, Fishing Creek, North Fork and Mobley Run, according to the WVDEP complaint.

Investors had planned for Mountain Valley to be finished by the fourth quarter of 2019, but work was temporarily ceased in October by Federal Energy Regulatory Commission (FERC), due to federal agencies suspending three key sets of permits that is necessary for the project.

The U.S. Army Corps of Engineers is currently considering whether to re-issue permits that would allow the pipeline to cross more than 1,000 streams in West Virginia and Virginia. Overseen by FERC, the interstate pipeline cuts through 11 state counties, including Fayette, Greenbrier, Nicholas, Summers and Monroe counties, and six Virginia counties. Citizens along its route, including environmental groups, have opposed construction.

In October, FERC ordered all construction to stop immediately while legal challenges are being decided by judges. The pipeline’s developers in October said that it is 90 percent complete but has work ahead in sensitive areas.

Diana Charletta, president and chief operating officer of EQM Midstream Partners, the operator of MVP, acknowledged schedule delays and cost overruns. “We have encountered unforeseen development challenges; however, we continue to make progress towards ultimate completion,” Charletta stated in October.

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MVP pipeline opponents say erosion controls are inadequate

By Joe Dashiell, WSHV, Harrisonburg, VA, November 20, 2019

ROANOKE, Va. (WDBJ) — Opponents of the Mountain Valley Pipeline say sediment and erosion controls approved by the Virginia Department of Environmental Quality are not protecting water and endangered species.

During a Roanoke news conference they cited conditions near Yellow Finch Lane in Montgomery County. They said citizen monitors documented problems there in the days after the VA-DEQ approved the controls.

“This kind of a project cannot be built without causing both acute and chronic long-term harm to our water resources,” said pipeline opponent Tammy Belinsky.

Northeast Petrochemical Conference, Pittsburgh, June 2019

From an Article by Nick Cunningham, OilPrice.com, June 24, 2019

Fracking has been an “unmitigated disaster” for shale companies themselves, according to a prominent former shale executive.

“The shale gas revolution has frankly been an unmitigated disaster for any buy-and-hold investor in the shale gas industry with very few limited exceptions,” Steve Schlotterbeck, former chief executive of EQT, a shale gas giant, said at a petrochemicals conference in Pittsburgh. “In fact, I’m not aware of another case of a disruptive technological change that has done so much harm to the industry that created the change.”

He did not pull any punches. “While hundreds of billions of dollars of benefits have accrued to hundreds of millions of people, the amount of shareholder value destruction registers in the hundreds of billions of dollars,” he said. “The industry is self-destructive.”

The message is not a new one. The shale industry has been burning through capital for years, posting mountains of red ink. One estimate from the Wall Street Journal found that over the past decade, the top 40 independent U.S. shale companies burned through $200 billion more than they earned. A 2017 estimate from the WSJ found $280 billion in negative cash flow between 2010 and 2017. It’s incredible when you think about it – despite the record levels of oil and gas production, the industry is in the hole by roughly a quarter of a trillion dollars.

The red ink has continued right up to the present, and the most recent downturn in oil prices could lead to more losses in the second quarter.

So, questionable economics is not exactly breaking news when it comes to shale. But the fact that a prominent former shale executive – who presided over one of the largest shale gas companies in the country – called out the industry face-to-face, raised some eyebrows, to say the least. “In a little more than a decade, most of these companies just destroyed a very large percentage of their companies’ value that they had at the beginning of the shale revolution,” Schlotterbeck said. “It’s frankly hard to imagine the scope of the value destruction that has occurred. And it continues.”

“Nearly every American has benefited from shale gas, with one big exception,” he said, “the shale gas investors.”’

The industry is at a bit of a crossroads with Wall Street losing faith and interest, finally recognizing the failed dreams of fracking. The Wall Street Journal reports that Pioneer Natural Resources, often cited as one of the strongest shale drillers in Texas, is largely giving up on growth and instead aiming to be a modest-sized driller that can hand money back to shareholders. “We lost the growth investors,” Pioneer’s CEO Scott Sheffield said in a WSJ interview. “Now we’ve got to attract a whole other set of investors.”

Sheffield has decided to slash Pioneer’s workforce and slow down on the pace of drilling. Pioneer has been bedeviled by disappointing production from some of its wells and higher-than-expected costs.

But, as Schlotterbeck told the industry conference in Pittsburgh, the problem with fracking runs deep. While shale E&Ps have succeeded in boosting oil and gas production to levels that were unthinkable only a few years ago, prices have crashed precisely because of the surge of supply. And, because wells decline at a precipitous rate, capital-intensive drilling ultimately leaves companies on a spending treadmill.

Meanwhile, as the financial scrutiny increases on the industry, so does the public health impact. A new report that studied over 1,700 articles from peer-reviewed journals found harmful impacts on health and the environment. Specifically, 69 percent of the studies found potential or actual evidence of water contamination associated with fracking; 87 percent found air quality problems; and 84 percent found harm or potential harm on human health.

The health impacts have been a point of controversy for years, pitting the industry against local communities. The industry largely won the tug-of-war over fracking, beating back federal and state efforts to regulate it. However, the story is not over. Related: Philadelphia Refinery Explosion To Boost Gasoline Prices

In many cases, there is an abundance of anecdotal evidence pointing to serious health impacts, but peer-reviewed research takes time and has lagged behind the incredible rate of drilling. Now, the public health research is starting to catch up. Of the more than 1,700 peer-reviewed studies looking at these issues, more than half have been published since 2016.

One need not be an opponent of fracking to recognize that this presents a threat to the industry. For instance, a spike of a rare form of cancer has cropped up in southwestern Pennsylvania recently. The causes are unclear, but some public health advocates and environmental groups are pointing the finger at shale gas drilling, and have called on the governor to stop issuing new drilling permits. The Marcellus Shale Coalition, an industry group, said the request was “ridiculous.” The region is right at the heart of high levels of shale drilling, so any regulatory action coming in response the public health outcry could impact drilling operations. Time will tell.

In the meantime, poor financials are the largest drag on the shale sector. “And at $2 even the mighty Marcellus does not make economic sense,” Steve Schlotterbeck, the former EQT executive said at the conference. “There will be a reckoning and the only questions is whether it happens in a controlled manner or whether it comes as an unexpected shock to the system.”

There clearly should be “no eminent domain for private gain”

From an Article by Laurence Hammack, Ronoake Times, February 5, 2019

An appeals court has upheld the “take first, pay later” approach to building the Mountain Valley Pipeline, in which the company condemned private property in the project’s path before paying opposing landowners for their losses.

The ruling Tuesday by the 4th U.S. Circuit Court of Appeals was a blow to pipeline foes, who have long decried the use of eminent domain to take parts of family farms and rural homeplaces to make way for a 303-mile natural gas pipeline.

In their appeal, the landowners did not contest the laws that allowed Mountain Valley to obtain forced easements through nearly 300 parcels in Southwest Virginia.

But they challenged a ruling by U.S. District Court Judge Elizabeth Dillon, who granted Mountain Valley immediate possession of the disputed land before deciding how much each property owner should be compensated.

Dillon’s decision was instrumental in allowing the company to move forward with tree-cutting in February 2018. At the time, Mountain Valley officials testified that they needed to start timbering as soon as possible to keep the project on schedule and to meet a March 31 deadline for the felling of trees before they became the warm-weather habitats of protected species of bats.

The company would have suffered serious financial harm if it was forced to wait to begin tree-cutting until mid-November, after the bats had gone back into hibernation, Dillon ruled in allowing Mountain Valley to take first and pay later.

Two other federal judges, who preside over districts in West Virginia through which the pipeline will pass, made similar calls. All three of the decisions were consolidated into one case, with a three-judge panel ruling unanimously in Mountain Valley’s favor.

Derek Teaney, an attorney for Appalachian Mountain Advocates, a nonprofit law firm that represented the landowners, said his clients were evaluating their options and declined to comment further.

Had the decision gone the other way, it would have raised huge complications for Mountain Valley by throwing into question the property rights to land it has already bulldozed and dug trenches through for its 42-inch diameter buried steel pipe.

But with the 4th Circuit’s blessing of Dillon’s order, the next step will be to complete the process of deciding how much money each owner should receive from Mountain Valley.

Under the laws of eminent domain, private property can be taken for a public use such as a highway or a power line — as long as the owner receives just compensation.

For about 85 percent of the land through which the pipeline will pass, Mountain Valley negotiated deals with the owners for 125-foot wide easements, access roads and other areas it needed to complete the linear construction project.

The company forced its way onto the remaining properties — which according to court records have an estimated value of at least $8.5 million — by using the muscle of eminent domain, which it obtained after the Federal Energy Regulatory Commission found there was a public need for the pipeline.

Of the 300-some properties covered by Dillion’s order, agreements on a price have been reached between the company and the owners in about two-thirds of the cases since her ruling a year ago. Other negotiations are continuing. In at least eight cases where no agreement has been struck, jury trials are being scheduled.

Because it can take so long to determine just compensation, Dillon and her two counterparts in West Virginia ruled that Mountain Valley would suffer “irreparable harm” if it was forced to wait until the process was completed before starting construction.

“The district courts held that the balance of equities favored Mountain Valley, principally because the Landowners’ harms would be the same whether access was granted prior to or only after just compensation was paid,” Judge Pamela Harris wrote in the panel’s opinion. “We find no error in the court’s reasoning.”

Although the case was a win for Mountain Valley, the $4.6 billion construction project still faces a series of regulatory and legal obstacles, some of them placed in its way by the 4th Circuit.

In earlier decisions, the court threw out federal permits the company must now regain before it can build through the Jefferson National Forest and under more than 1,000 rivers, streams and wetlands.

And since land-clearing began in the spring, the Virginia Department of Environmental Quality has claimed in enforcement actions and a lawsuit that the company violated erosion control regulations more than 300 times, allowing sediment-laden water to run off work sites and into nearby streams.

In mid-December, the State Water Control Board voted to reconsider its water quality certification for the Virginia portion of the pipeline, which crosses the counties of Giles, Craig, Montgomery, Roanoke, Franklin and Pittsylvania.

No meeting to follow up on that action has been announced, and pipeline opponents are growing anxious.

“DEQ has already waited nearly six weeks without any move” to inform the public of what will happen next, attorney Tammy Belinsky wrote in a January 23 letter to the water board on behalf of the Blue Ridge Environmental Defense League and four other conservation groups.

“We call on the board to meet as soon as possible to make clear with a vote that DEQ and the Attorney General act immediately to stop the violations and prevent damage that is certain to result from continued construction by MVP.”

Marcellus shale region includes “wet gas” portion rich in ethane plus some higher hydrocarbons (propane, butane, etc.)

From an Article by Liz Hampton, Reuters News Service, February 5, 2019

HOUSTON, TX — Two of the founders of Rice Energy, which EQT Corp bought in 2017, are pushing for a change in the company’s strategy and replacement of its board due to its ongoing underperformance.

Appalachian-focused EQT acquired rival Rice Energy for $6.7 billion, making it the largest natural gas producer in the United States. However, its share price has tumbled more than 30 percent since the merger, which brothers Toby and Derek Rice blame on operational and managerial mismanagement.

In a presentation to shareholders, the brothers proposed appointing Toby Rice, former chief operating officer of Rice Energy, as the company’s new chief executive.

When EQT released its 2019 guidance in January, the brothers said they would challenge the board in a shareholder ballot.

The brothers, who own around 3 percent of EQT, said in their presentation they could improve EQT’s free cash flow by $500 million per year. They proposed streamlining aspects of the organization, digitizing workflows, and improving planning to reduce well costs.

A spokeswoman for EQT said on Tuesday the company disagreed with the analysis put forward by the Rices and that the firm looked forward to continued discussions with shareholders. “EQT remains focused on reducing costs and generating substantial free cash flow to create further value for EQT shareholders,” she added.

Shares of EQT were down 2.4 percent to $19.31 in afternoon trading on Tuesday and are off 28 percent in the past 52 weeks.

EQT’s average Marcellus well cost for a 12,000-foot lateral was $1,250 per foot in 2018, while Rice Energy, before its merger with EQT, averaged $790 per foot for wells with laterals reaching 8,800 feet in the same region, according to the Rice presentation. The brothers also said EQT has “erroneously adjusted downwards” its well costs.

In a presentation, the brothers said operations could be improved by altering well designs to include more sand, water and stages per foot. The presentation also said they had initiated dialogue with EQT to improve its business, but claimed those suggestions have been ignored, prompting it to bring their concerns to shareholders.

The Rice brothers owns 7.5 million shares in EQT, worth more than $145 million.

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NOTE (OVERLY?) OPTIMISTIC ECONOMIC OUTLOOK:
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There is much more than has been told!

From an Article by Laurence Hammack, Roanoke Times, January 28, 2019

WASHINGTON — The good of the Mountain Valley Pipeline — a steady supply of needed natural gas — met the bad Monday, when opponents told a federal appeals court there’s really no public need for a project that is already polluting Southwest Virginia.

In a sweeping attack, a coalition of environmental groups asked the U.S. Circuit Court of Appeals for the District of Columbia to reverse a federal agency’s approval of the 303-mile pipeline.

When the Federal Energy Regulatory Commission green-lighted the pipeline in October 2017, it voted 2-1 that its public benefits will outweigh any adverse impacts. But in finding there was a market demand for the natural gas, FERC relied entirely on contracts between the pipeline’s owners and its shippers, which are all part of the same corporate structure.

The complex affiliations of Mountain Valley Pipeline LLC were not the result of “arms-length negotiations” that would have demonstrated a true market based on public need, the court was told by Ben Luckett of Appalachian Mountain Advocates, a nonprofit law firm that represented pipeline opponents during Monday’s oral arguments.

Attorneys for FERC and Mountain Valley countered that the partners would never have invested in the $4.6 billion venture unless they were convinced it was worth the risk — an argument that seemed to resonate with the three-judge panel hearing the case. “They’re putting skin in the game, which tends to show they are using their best judgment about future demand,” Judge Gregory Katsas said in one of several questions put to Luckett.

And the pipeline’s capacity is fully subscribed to the Mountain Valley shippers, is it not? asked Judge David Tatel. Yes, Luckett responded, but 80 percent of the end users — the homeowners, businesses or power plants that will actually burn the gas — have yet to be identified and are based solely on speculation.

That may be so, Judge David Sentelle interjected, but the Mountain Valley shippers “are purchasers. They are buyers. They are creating a demand for the gas that is passing through the pipeline.”

In past decisions, the D.C. Circuit generally has been reluctant to second-guess FERC’s judgment. A written decision is expected within three to six months.

Of more than a dozen claims raised by Appalachian Mountain Advocates, the three judges devoted most of their questions to FERC’s reliance on so-called precedent agreements to identify market demand.

One such agreement involves RGC Midstream, which has a 1 percent ownership in the pipeline and is helping to pay for its construction. Its parent company, RGC Resources, has another subsidiary — Roanoke Gas Co. — which as a shipper will pay a fee to Mountain Valley for the transportation of the fuel it will then sell to its customers.

Challenging the government’s reliance on such agreements was seen by some as a long shot. “We do not expect the D.C. Circuit will ultimately rule against FERC given the court’s deference to the agency’s expertise on issues that fall under its jurisdiction,” Height Capital Markets, an investment banking research firm that has been monitoring the project, stated Monday in its weekly update. “However, an unfavorable decision here risks further delays and cost increases for the beleaguered project.”

Since it began work on the pipeline a year ago, Mountain Valley has been warned repeatedly by environmental regulators in West Virginia and Virginia that it is violating standards meant to limit erosion and sedimentation.

A lawsuit filed by Virginia’s Department of Environmental Quality accuses construction crews of breaking the rules more than 300 times in the six counties — Giles, Craig, Montgomery, Roanoke, Franklin and Pittsylvania — through which the pipeline will pass.

Mountain Valley has also lost two permits awarded by federal agencies following FERC’s initial approval of the pipeline. In separate legal challenges, environmental groups have said that the U.S. Forest Service did not properly address erosion controls when it allowed the pipeline to cross through the Jefferson National Forest, and that the Army Corps of Engineers failed to follow state-imposed conditions meant to reduce sedimentation during work in streams and wetlands.

The 4th U.S. Circuit Court of Appeals threw out those permits in July and October. Mountain Valley has said it hopes to obtain new authorizations in time to complete the project by the end of this year.

In challenging FERC’s approval in the D.C. Circuit, Appalachian Voices and 23 other organizations and individuals cited a number of environmental concerns raised by burrowing a 42-inch diameter steel pipe along steep mountainsides and through pristine waters.

Other than the question of public need, the only other claim mentioned during Monday’s 30-minute session was the assertion that FERC had failed to adequately consider the impact of greenhouse gases to be released from the burning of natural gas provided by the pipeline.

Lawyers for FERC and Mountain Valley said that questions about where the gas eventually will wind up made it difficult to gauge its impact on climate change. “The tools for that simply don’t exist,” said Lona Perry, a U.S. deputy solicitor who made arguments on behalf of FERC.

“But why?” Tatel later asked when an attorney for Mountain Valley raised the same defense. “You didn’t have any doubt that all this [gas] will be burned, correct?”

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See also: Appalachian Mountain Advocates of Lewisburg, WV, and Charlottesville, VA