Appalachian oil runs drop laid to Marcellus

By OGJ editors
HOUSTON, June 30
-- A shift in drilling emphasis from conventional to unconventional plays the past 2 years, particularly the Marcellus shale, has resulted in a substantial drop in crude oil production available to refiners in the Appalachian basin, said Ergon Oil Purchasing Inc.

Ergon, which operates refineries in West Virginia, Arkansas, and Mississippi, said the average load volume of crude oil it purchases from tank batteries in the basin is shrinking.

The company enacted a tier posted price schedule under which it pays $2-3.50/bbl less than its posted price to truck less-than-full loads from leases. The changes took effect June 1.

Ergon said, “To remain competitive with our finished products, it is important that we deliver crude oil to our Newell, W.Va., refinery at a price competitive to refineries with lower gathering, storage, handling, and transportation costs. This is extremely difficult due to the age and geography of the Appalachian basin.”

The 20,000-b/d Newell refinery processes 100% Appalachian grade paraffinic crude oils, particularly Pennsylvania grade gathered from 40,000 points throughout Ohio, Pennsylvania, West Virginia, Kentucky, and New York, Ergon said.

Ergon pays full posted price for loads of 156 net bbl of crude oil or more from one or more tanks at a single location. If basic sediment and water exceeds 2%, however, the price paid is subject to tier two posting.

Tier two posting covers loads of 60-155.99 net bbl of crude oil from one or more tanks at a single location at $2/bbl less than Ergon’s posted price, and tier three posting applies to loads of 30-60 net bbl of crude oil at $3.50/bbl less.

Related Articles

PwC: Low oil prices might drive surge in restructuring in 2015

01/29/2015 Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to a report f...

ETP, Regency to merge in $18-billion deal

01/26/2015 Energy Transfer Partners LP (ETP) and Regency Energy Partners have agreed to merge in a unit-for-unit transaction, plus a one-time cash payment to ...

Range cuts 2015 capital budget to $870 million

01/15/2015 Range Resources Corp., Ft. Worth., has reduced its capital budget for 2015 to $870 million from the previously reported $1.3 billion, which already...

American Energy Appalachia makes executive appointments

01/13/2015 Jeffrey A. Fisher has been named chief executive officer of the newly formed American Energy Appalachia Holdings LLC (AEA), a unit of American Ener...

American Energy’s Utica, Marcellus units to merge

01/08/2015 American Energy–Utica LLC (AEU) and American Energy–Marcellus LLC (AEM), both affiliates of American Energy Partners LP (AELP), will merge in an al...

New York state moves to ban hydraulic fracturing

01/05/2015 High-volume hydraulic fracturing will be banned in New York state, Gov. Andrew Cuomo's administration announced Dec. 17, citing health risks and co...

Severance tax would backfire, Pennsylvania association leaders warn

01/05/2015 Enacting a severance tax aimed at Pennsylvania's unconventional natural gas activity would substantially harm the commonwealth beyond the industry ...

Southwestern agrees to second Marcellus acquisition this month

12/23/2014

Southwestern Energy Co., Houston, has agreed to acquire 20% of the Marcellus shale assets belonging to Statoil ASA for $394 million.

Severance tax would backfire, Pennsylvania association leaders warn

12/17/2014 Enacting a severance tax aimed at Pennsylvania’s unconventional natural gas activity would substantially harm the commonwealth beyond the industry ...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected