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Rail Permit for New Fortress to Ship LNG Expired, Putting Future Projects at Risk
12/14/2021
The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) granted Energy Transport Solutions a permit on Dec. 5, 2019, to transport refrigerated liquid methane in tank cars that meet specifications set by the Department of Transportation. Yet, the permit to ship liquefied natural gas (LNG) by rail expired on Nov. 30, prompting to wonder whether the company will proceed with related initiatives.
One of the projects in question is located in northeast Pennsylvania, Wyalusing: where New Fortress originally planned to transport NLG from its future liquefaction plant to Gibbstown, New Jersey. Afterward, customers in the Caribbean and elsewhere would have received LNG shipped from Gibbstown port.
However, The Pennsylvania liquefaction plant, which would liquefy natural gas from the Marcellus shale, still awaits a final decision about construction from New Fortress. It is unclear whether or not this development halted any plans.
According to PHMSA regulations, a special permit holder must apply for renewal at least 60 days before the expiration date in order to avoid expiration. Yet, Delaware Riverkeeper, a group opposing the LNG project, claims that there has not been a renewal request submitted for this permit.
Fortress Transportation, PHMSA, and New Fortress officials did not immediately return messages requesting comment.
Meanwhile, in the same period that the special permit is running out, President Joe Biden's administration is pausing regulations allowing LNG-by-rail so the PHMSA can study safety issues regarding this method of transportation. The action contrasts with that of former President Donald Trump, who in 2019 attempted to dramatically increase the export of LNG from the US, dubbing it as the molecules of freedom.
Despite concerns about the proposed Gibbstown LNG export terminal, Delaware Riverkeeper still believes that New Fortress may continue to pursue it. Even If LNG by rail cannot be accomplished, New Fortress could still transport LNG by truck to the port. After all, New Fortress already spent about $159 million developing the Pennsylvania facility through 2020, according to federal filings.
However, New Fortress appears to have abandoned or stalled its plans to build a liquefaction plant in Wyoming, introduce a new pipeline to deliver feed gas to Wyalusing from shale gas wells, and build a fleet of railcars for transporting LNG, according to Delaware Riverkeeper and other sources.
As a public company, New Fortress invests in, builds, and operates natural gas infrastructure and logistics in order to provide quick, turnkey energy solutions that promote economic growth, enhance environmental stewardship, and increase local prosperity.
For now, though, it remains to be seen, what changes if any, this development will bring to the Fortresses Pennsylvanians projects.
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Look At The Future Of American And Appalachian Gas Production
The crux of the matter is rather simple: productivity gains of local energy operators have been stable not only because they are drilling better acreage, but also because players finally realized capital efficiency gains. And even if some new obstacles impede Appalachia's growth at the same rate as the Permian or Haynesville, it does not detract from the value of the Marcellus and Utica basins. The Appalachians will still be the top producers at a very competitive pace as long as commercial inventory exists. After all, as long as there is commercial inventory, somebody will have to drill.
$7 Billion Merger of Colgate and Centennial, the 2 Largest Permian Operators
Despite the circulating rumors concerning Colgate’s attempt to launch an IPO, on May 19 the company decided to combine with Centennial Resource Development Inc. This merger of equals is estimated at $7 billion and will found the biggest pure-play E&P company in the Delaware Basin of the Permian. The transformative combination essentially enlarges companies’ potential and hastens the growth across all financial and operating metrics. According to Centennial CEO Sean Smith, the combined company is anticipated to furnish shareholders with quickened capital return program due to a fixed dividend coupled with a share repurchase plan. Due to a recent report, the merger would increase production 7%, to 145,000 boe/d by the fourth quarter would further ratchet up next year. By third-quarter 2023, the company predicted 160,000 boe/d based on a drilling program of 140 wells per year. Colgate Energy was reported to be getting an IPO last December that sources said would value the company at approximately $4 billion. The combined company will have over 15-years of drilling inventory, assuming its current drilling pace, the companies will produce over $1 billion of free cash flow in 2023 at current strip prices.
The Williston Basin is a big area filled with layers of rock that sits next to the Rocky Mountains in western North Dakota, eastern Montana, and the southern part of Saskatchewan in Canada. This area covers roughly 110,000 square miles. Geologically, it's very similar to the Alberta Basin in Canada. People started drilling for oil in the Williston Basin back in 1936, and by 1954, most of the land where oil could likely be found was already claimed for drilling. The Bakken Formation with parts of Montana, North Dakota, Saskatchewan, and Manitoba has become one of only ten oil fields globally to yield over 1 million barrels per day (bpd) since the late 2000s. It is currently the third-largest U.S. shale oilfield, behind the Permian and Eagle Ford. The boom in the Bakken started around September 2008, coinciding with the U.S. housing market crash. The application of new technologies, such as swell packers enabling multiple-stage fracturing, significantly enhanced oil recovery, making the Bakken Formation a key player in the U.S. In 2022, the Bakken oil field saw big improvements in how much oil and gas it could produce. At the start of the year, 27 drilling rigs were working there, more than double the 11 rigs from the start of 2021. Important upgrades included making the Tioga Gas Plant able to process 150 million cubic feet more gas each day, and making the Dakota Access Pipeline bigger, increasing its oil transport capacity from 570,000 to 750,000 barrels every day.
Continental Resources is expanding its operations in the Midland Basin, including taking over some assets that used to belong to Occidental Petroleum. The company plans to use its expertise in exploration in this area.
Equinor and EQT Corporation have agreed that Equinor will exchange its operated assets in the Marcellus and Utica shale formations in Ohio for a stake in EQT’s non-operated interests in the Northern Marcellus formation.