2015 Marcellus and Utica Shale Databook - Vol. 2

Marcellus and Utica Shale Databook 2015 Volume 2: 2015 May-Aug Drilling Permit Maps; Comprehensive List of Infrastructure Projects

64 Detail Maps & Charts; Individual County Maps for Permits Issued May-Aug; Regulatory/Legal Update; Big Data and More!

September 2015 Edition

©Marcellus and Utica Shale Databook 2015 – Volume 2 Sample Pages

Table of Contents

Section I - Overview

Introduction & Methodology 6

Drilling Update May-Aug 2015 7-9

Houston – We Have a [Production] Problem 7

Marcellus/Utica Production Last 5 Yrs (chart) 7

Marcellus/Utica Prices in the Basement 8

Henry Hub vs Marcellus Gas Spot Price (chart) 8

Marcellus/Utica Permits Plunge 8

Marcellus/Utica Permits Issued – Trends (chart) 8

Rig Counts Continue Steep Decline 9

BH U.S. Rig Counts – Year to Year (chart) 9

Marcellus/Utica Rig Counts by State (chart) 9

Permit Counts – Databook Innovation 10

Permits by Driller 2013-15: PA, OH, WV (chart) 10-13

Permits by County 2013-15: PA, OH, WV (chart) 14-15

Regulatory/Legal Update: PA, OH, WV, NY, MD 16-20

Marcellus/Utica Latest Lease Offers (map) 21

Guide to Using the County Maps (chart) 22

Section II - Pennsylvania Permits

PA Gas Well Permits – Entire State (map) 23

Allegheny County (map) 24

Armstrong County (map) 25

Section II - Pennsylvania Permits (continued)

Beaver County (map) 26

Bradford County (map) 27

Butler County (map) 28

Cameron County (map) 29

Clarion County (map) 30

Clearfield County (map) 31

Clinton County (map) 32

Elk County (map) 33

Fayette County (map) 34

Forest County (map) 35

Greene County (map) 36

Jefferson County (map) 37

Lawrence County (map) 38

Lycoming County (map) 39

McKean County (map) 40

Potter County (map) 41

Sullivan County (map) 42

Susquehanna County (map) 43

Tioga County (map) 44

Washington County (map) 45

Westmoreland County (map) 46

Wyoming County (map) 47


Table of Contents

Section III - Ohio Permits

OH Gas Well Permits – Entire State (map) 48

Belmont County (map) 49

Carroll County (map) 50

Columbiana County (map) 51

Guernsey County (map) 52

Harrison County (map) 53

Jefferson County (map) 54

Monroe County (map) 55

Noble County (map) 56

Portage County (map) 57

Trumbull County (map) 58

Tuscarawas County (map) 59

Washington County (map) 60

Section IV - West Virginia Permits

WV Gas Well Permits – Entire State (map) 61

Barbour County (map) 62

Brooke County (map) 63

Doddridge County (map) 64

Harrison County (map) 65

Lewis County (map) 66

Marion County (map) 67

Marshall County (map) 68

Monongalia County (map) 69

Ohio County (map) 70

Preston County (map) 71

Ritchie County (map) 72

Taylor County (map) 73

Tyler County (map) 74

Wetzel County (map) 75


Table of Contents

Section V – Big Data in the Marcellus/Utica

Disclaimer: Select Analytics, LLC, dba “ShaleNavigator” and Marcellus Drilling News, are not liable for any direct or indirect damages suffered related to the use of this Databook product arising from any errors, omissions, inaccuracies, or any other inadequacies of the Databook or the Recipient’s use of the Databook. In no event will Select Analytics, LLC’s, dba “ShaleNavigator”’s or Marcellus Drilling News’ liability to the Recipient or anyone else exceed the fee paid for the Databook product. Use of information provided in this report is at your own risk. Editor’s Note: If you spot anything you believe is inaccurate or should be added, tell us! You may qualify for a free MDN or ShaleNavigator subscription.

Introduction 76 Examples 76 Sample Decline Rate Analysis (chart) 77 Efficiency & Cost Savings 78

Data Sources & Availability 78 Putting it All Together – Analyzing Big Data 79 Sample Map Analysis (map) 79 Conclusion 80

Section VI – Marcellus & Utica Shale Midstream/Infrastructure Projects – 2015 & Beyond

Introduction 81-82 Antero Midstream 83 Blue Racer Midstream 83 Boardwalk Pipeline Partners 83 Calumet Specialty Products 83 Columbia Pipeline Group 83 Crestwood Midstream 83 Dominion 84 Energy Transfer 84 EQT Midstream 84 Iroquois Gas Transmission 84 Kinder Morgan 85 Marathon Petroleum 85 MarkWest Energy 85-86 Millennium Pipeline 86

National Fuel Gas 86-87 Odebrecht 87 PTT Global Chemical 87 Regency Energy Partners 87 Rice Midstream 87 Shell Chemical 87 Spectra Energy Partners 87-88 Summit Midstream 88 Sunoco Logistics 88 Tallgrass Energy 88 TransCanada 88 UGI 89 Velocys 89 Williams 89


DRILLING UPDATE: MAY-AUG 2015 Contributed by James Willis, Editor, Marcellus Drilling News


Houston – We Have a [Production] Problem To properly understand the data and conclusions we put forward in the following pages, you first must begin with the enormous production experienced in the Marcellus/Utica over the past five years. The chart below shows the combined output of natural gas from the two plays—nearing 20 billion cubic feet per day (Bcf/d). We are, quite frankly, victims of our own success. While production from the Marcellus and to a lesser extent the Utica has grown exponentially, demand for natural gas has not grown at the same rate. And even if it had grown at the same rate, the demand is not all found in the same geography as where the gas is extracted. The problem? Lack of pipelines to transport the gas to markets where it is in demand and fetches a higher price. Production in the Marcellus has tapered off over the past few months. Drillers are not drilling new wells at the same brisk pace, and in some cases, they’re choosing to choke back and shut-in wells, waiting for prices to go higher. Thing is, there is such a huge inventory of wells already drilled and waiting to be hooked up to production, it doesn’t seem likely that production in the northeast will decline all that much. Time will tell.


PERMITS BY DRILLER 2013-2015

Who’s Drilling & How Much?


In this section it we take a look at the number of permits issued by “trimesters” or Jan-Apr (1T), May-Aug (2T) and Sep-Dec (3T)—for each driller active in either the Marcellus and/or Utica Shale. The numbers reflect a permit received by that driller for a distinct, unique well (not pad, but individual well). That is, if the driller applied for and received a permit for any purpose—to begin drilling, to continue drilling, to frack, to re-drill, etc.—that number is included. This chart shows intent—an indication of potential activity. We filter out multiple permits for the same well and show only unique, distinct well locations. So a driller with a “46” for a given period means that driller received at least one permit for 46 different, distinct wells. Use this information to spot trends and get a high-level overview of activity for a particular driller—where, when, and how much they are drilling now—or soon will be.

1T13 2T13 3T13 1T14 2T14 3T14 1T15 2T15 1T13 2T13 3T13 1T14 2T14 3T14 1T15 2T15 1T13 2T13 3T13 1T14 2T14 3T14 1T15 2T15

AB Resources 5 3

Abarta Oil & Gas 8 1

Alpha Shale 4 1 9 8 1 6

Alta Mesa 2 2

American Energy/Ascent Res. 1 8 8 33 63 59 50 20 25

American Petroleum Partners 2

Anadarko Petroleum 20 60 41 3 5 36 3 7 3

Antero Resources 12 19 18 30 52 59 35 17 204 213 216 241 329 309 146 113

Apex Energy 4 2 4 8

Arrington Oil & Gas 1

Atlas Resources 2 12 1 1 12 1 8 1 3 4

BEUSA Energy 1

BP 3 2 4

Brammer Engineering 1 1 3

BRC Operating 11 2 4

Burnett Oil 1

Cabot Oil & Gas 46 53 63 63 47 45 27 43

Cameron Energy 1

Cambell Oil & Gas 1 2 1 3 2 2

Carrizo 8 11 20 1 2 4 15 15

Chesapeake Energy 250 137 77 329 211 131 131 97 92 96 63 82 72 50 48 43 67 119 87 96 95 50 31 4

Chevron 59 25 39 39 10 17 25 19 2 3 3 3 3 24 31 11 45 37 53

Chief Oil & Gas 36 53 74 35 68 15 13 4 4 4 2

Citrus Energy 5 2 2

CNX Gas/CONSOL Energy 31 26 27 53 60 53 37 14 8 7 4 22 9 18 10 58 105 75 64 96 78 61 9

Pennsylvania Ohio West Virginia


REGULATORY/LEGAL UPDATE Contributed by James Willis, Editor, Marcellus Drilling News

Pennsylvania Permitting and drilling in Pennsylvania is regulated by the Department of Environmental Protection (DEP). Proposed Severance Tax in Limbo As this edition of the Databook goes to press, the issue of whether or not the state will pass a new severance tax is still not settled. Which is surprising. The state budget is now over 100 days past due. The main sticking point on passing the budget is a Marcellus Shale severance tax. PA’s Gov. Wolf was elected on a platform promising to tax the oil and gas industry and use the money to fund education. His original proposal was 5% plus 4.7 cents per thousand cubic feet (Mcf). The tax would assume an average sale price of $2.97 per Mcf. If you work out the math, the tax actually would be somewhere around 17% according to independent experts, not the 5% advertised by Wolf. Wolf eventually dropped the demand of an assumed average sale price of $2.97/Mcf, but his latest plan was still voted down. By the next Databook this issue will be resolved one way or the other. The industry is laying down rigs, laying off people, and producing less—because they can’t make money as it is. If a new tax is enacted it’s quite possible the Marcellus will see an unprecedented decline in production, providing a small fraction of the money Wolf wanted with his tax proposal. DEP Goes on CPP “Listening Tour” In August, the Environmental Protection Agency released President Obama’s Clean Power Plan (CPP). The plan aims to reduce the amount of carbon being generated by the energy industry 32% by 2030. Individual states must submit their own plans for how that will happen within their own state. Coal is pretty much history. Natural gas will play a much-diminished role as well under the President’s CPP. The plan focuses on so-called alternative energy sources like wind and solar as the preferred solution for reducing carbon, which Obama believes leads to manmade global warming. Gov. Wolf and DEP Secretary John Quigley immediately jumped on the bandwagon and endorsed Obama’s CPP. The DEP and Quigley subsequently launched a series of 14 “listening sessions” around the state to gather input, and “educate” residents on how the state might scale back its carbon output. The meetings had just begun when this issue was published—no word yet on how the DEP plans to cut back on carbon emissions. If the Obama plan holds, it will have a profound effect on the Marcellus industry in the state. More Inspections, Fewer Violations With fewer new wells being drilled in PA, and more inspectors added to the roles at the DEP, as you might expect, there have been more inspections of existing/older gas and oil wells. In fact, the DEP has conducted 1,700 more inspections over the first seven months of 2015 than they did in 2014. The oil and gas division of the DEP has added 25 new employees in the past 12 months–even though drilling activity has gone down. More inspectors with fewer wells to inspect means the number of inspections is up. Despite 16% more inspections of shale operations this year, the total number of violations has gone down—from 283 violations for the first seven months of 2014, to 205 violations for the first seven months in 2015. Environmental Justice In a sign that the PA DEP continues let politics influence policy, DEP Secretary John Quigley recently announced that he wants to create an office of “environmental justice” and hire the “right person” to advise him on matters related to environmental justice. Which is a bit befuddling. The DEP has had an Environmental Justice Advisory Board (EJAB) since 1999.


http://www.depweb.state.pa.us/


GUIDE TO USING THE COUNTY MAPS


#1 – The municipality or

operator name is followed by two sets of numbers, with the second number in parentheses. Example: Cogan House – 8 (8). The first number - “13” in this case - shows the total number of permits issued. The second number - “(8)” in this case - indicates how many wells the permits were issued for. Usually a single well requires several permits during drilling, to allow the driller to continue to the next stage.

#2 – A red dot indicates where a

well pad is located. Each well pad can have from one to ten wells on it. Typically a pad will contain 2-4 wells. Because of the size of the maps (vastly reduced to show an entire county), sometimes the red dots will be “on top of each other” and sometimes will not be labeled with a driller’s name.

#3 – The boundary of each

county is indicated with a blue outline.

#4 – Major gas pipelines are

indicated with red lines and the name of the pipeline somewhere along the line.

#5 – The location for pipeline

compressor stations is indicated by a green triangle–the name is next to it.


Lycoming County

Section II – Pennsylvania Permits

By Municipality: Anthony – 1 (1) Cogan House – 8 (8) Eldred – 2 (2) Gamble – 12 (12) Hepburn – 1 (1) Jackson – 7 (7) Lewis – 1 (1) McNett – 1 (1) Penn – 1 (1) Pine – 2 (2) By Operator: Anadarko Petroleum – 6 (6) Atlas – 8 (8) Chief Oil & Gas – 1 (1) EXCO Resources – 2 (2) Inflection Energy – 3 (3) Range Resources – 16 (16)


Belmont County

Section III – Ohio Permits

By Municipality: Goshen – 5 (5) Mead – 2 (2) Pease – 4 (2) Pultney – 1 (1) Smith – 6 (5) Washington – 1 (1) Wheeling – 9 (8) York – 8 (7) By Operator: American Energy – 10 (7) Ascent Resources – 3 (3) Rice Energy – 19 (17) XTO Energy – 4 (4)


Doddridge County

Section IV – West Virginia Permits

Entire County: 246 (60) By Operator: Antero Resources – 146 (34) CNX Gas – 2 (2) EQT – 98 (24)


Section V – Big Data in the Marcellus/Utica

BIG DATA CREATES NEW EFFICIENCIES FOR OPERATORS,

OPPORTUNITIES FOR MINERAL RIGHTS OWNERS & BUYERS Contributed by Edward Camp, II, ShaleNavigator Founder

Introduction The advent of horizontal drilling coupled with hydraulic fracturing technology is rapidly changing the global energy landscape. This new efficient technology has made once un-economical extraction profitable across the US in both known—and yet to be discovered—shale geographies that, combined, cover hundreds of thousands of square miles over 22 states. As a result of fracking technology, oil and gas companies have been rapidly leasing, drilling, and producing in areas across America to capitalize on the opportunity that is predicted to ultimately lead to American energy independence by 2019. A secondary but significant outcome of fracking technology advancement is the proliferation of data—information related to all aspects of the energy revolution. From lease offer information to well production results, data can now be accessed with the right data mining tools and techniques. This wealth of data, if properly managed and analyzed, can create new efficiencies for energy companies as well as opportunities for those in the supply chain. Even with more limited resources, mineral rights owners and buyers can also use “Big Data” to create opportunity. Some examples of these opportunities are: • Property values are greatly affected by fast-moving oil and gas development. Factors such as pipeline proximity, comparable property lease offers

(bonus, royalty, and term), oil and gas well results, and new oil and gas permitting all have a profound effect on property values. Once scattered and difficult to acquire information is now becoming more available to those who know where to find it. Used properly, this data can be the key information needed to appraise or negotiate lease offers received, to renegotiate leases at time of lease expiration, or to negotiate the sale of mineral rights.

• Service providers in the oil and gas development supply chain who need to know where and when well permitting is occurring can also locate and use data for real-time service delivery, and to know where to target their marketing efforts.

• Property investors and mineral rights buyers need to know where and when shale development activities are occurring to project “paths of development” and to predict where future value can be found today. Big Data combined with mapping systems is now making it possible.

As more and more well production data becomes available, geologists can now assemble and analyze over five years of data in the three-state Marcellus & Utica Shale geography. The data availability, often collected and published by state permitting agencies, allows geologists to assemble decline rate curve models—a key analysis for drilling companies to pinpoint their leasing and drilling efforts. For landowners, the same information can also help predict royalty income into future years of well production. Decline curve analysis is a key foundational component for wealth management strategies and mineral estate valuation.


Section VI – Midstream/Infrastructure Projects

MARCELLUS & UTICA SHALE MIDSTREAM/INFRASTRUCTURE PROJECTS – 2015 & BEYOND Compiled by James Willis, Editor, Marcellus Drilling News

Operator Project Name Description Type Geography Stage In-Service Capacity CapEx ($MM)

Antero Midstream Regional Gathering Pipeline 50 miles of additonal gathering pipeline Expansion WV Under Construction 4Q15 1.4 Bcf/d $400

Blue Racer Midstream Berne III Third cryogenic processing plant at the Monroe County, OH location Expansion OH Planning 2Q16 200 MMcf/d $100

Blue Racer Midstream BRM Gathering 200 additonal miles of rich gas gathering pipeline Expansion OH, WV Under Construction 2016 200 MMcf/d $200

Boardwalk Pipeline Partners Northern Supply Access ProjectTurns a portion of the Texas Gas Transmission pipeline bidirectional by

upgrading compressor stations in multiple statesExpansion

OH, IN, LA, KY,

TN, MSRegulatory Review 2Q17 584 MMcf/d $150

Boardwalk Pipeline Partners Ohio-Louisiana Access ProjectTurns a portion of the Texas Gas Transmission pipeline bidirectional by

upgrading compressor stations in IN and LAExpansion IN, LA Under Construction 2Q16 758 MMcf/d $110

Calumet Specialty Products/Velocys Karns City Gas-to-Liquids Plant GTL plant converting methane to other hydrocarbons in Karns City, PA Expansion PA Planning TBD 1,100 bbl/d $1,000

Columbia Pipeline Group East Side Expansion ProjectUpgrade existing compressors and install 19 miles of new pipeline in Chester

County, PA and Gloucester County, NJExpansion PA, NJ Under Construction 4Q15 312 MMcf/d $269

Columbia Pipeline Group Leach XPress160 miles of natural gas pipeline and compression facilities in southeastern

OH and WV’s northern panhandleExpansion OH, WV Regulatory Review 4Q17 1.5 Bcf/d $1,400

Columbia Pipeline Group Modernization ProjectReplace aging infrastructure, including 1,000 miles of existing interstate

transmission pipelines, compressor stations, moreExpansion

KY, MD, OH,

PA, VA, WVUnder Construction 4Q17 NA $1,500

Columbia Pipeline Group Mountaineer XPress165 miles of pipeline from Marshall to Wayne County, WV, build 3 new

compressor stations, modify 3 existing stationsNew WV Regulatory Review 4Q18 2.7 Bcf/d $2,000

Columbia Pipeline Group Utica Access5 miles of new pipeline, modifications to existing compression facilities in

Kanawha CountyExpansion WV Regulatory Review 4Q16 205 MMcf/d $45

Columbia Pipeline Group WB XPress Project2 new compressor stations, 26 miles of pipeline replacement located along

existing corridors, 2.9 miles of new pipelineExpansion VA, WV Regulatory Review 4Q18 1.3 Bcf/d $850

Crestwood Midstream MARC I Pipeline Expansion New supply interconnect w/Williams gathering system and Transco pipeline Expansion PA Under Construction 4Q15 250 MMcf/d $7

Crestwood Midstream MARC II Pipeline30 Mile pipeline connecting MARC I, North-South & Stagecoach storage to

PennEast, Transco and Atlantic Sunrise pipelinesNew PA Planning 4Q17 1 Bcf/d $30

Crestwood Midstream Seneca Lake Gas StorageProposed LPG (propane) underground storage facility on the shore of Seneca

Lake in depleted salt cavern in Schuyler County, NYNew NY Regulatory Review TBD 2.0 Bcf $40


Marcellus and Utica Shale Databook 2015

Volume 1: 2015 Drilling Permits (Jan-Apr); Drilling Contacts, Regional Pipelines, Property Valuations

Publish Date: May 2015

Volume 2: 2015 Drilling Permits (May-Aug), List of Pipeline/Infrastructure Projects, Big Data

Publish Date: Sep 2015

Volume 3: 2015 Drilling Permits (Sep-Dec), Waste Facility List, Calculating Well Decline Rates

Publish Date: January 2016

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2015 Marcellus and Utica Shale Databook - Vol. 2