Facts & Rumors # 565
August 25, 2024
NatGas Producers Cutting Back. A natural-gas glut is forcing drillers to dial back—again. WSJ. A glut of natural gas is depressing prices and prompting fresh cutbacks in America’s drilling fields, despite one of the hottest summers on record. Big producers such as EQT and Coterra Energy are choking back output, waiting to connect new wells to pipelines and delaying drilling projects. They aim to buoy prices that have rarely been lower during the heat of the summer, when air conditioning creates a lot of power demand.
U.S. O&G Companies Resilient Thanks, MDN. Powerhouse consulting and accounting firm Ernst & Young (EY) has just published its annual study, “US Oil and Gas Reserves, Production and ESG Benchmarking Study” (full copy below). The EY study reveals an industry with “remarkable resilience and financial performance” despite facing a challenging economic landscape in 2023. The study, which examines the 50 largest publicly traded exploration and production (E&P) companies, highlights the industry’s ability to navigate price fluctuations and maintain a trajectory of growth and profitability.
Enbridge CEO Bullish on Oil. Enbridge sees strong oil demand in 2050, with U.S. supply growing. Bloomberg. Enbridge Inc. Chief Executive Officer Greg Ebel said oil demand may continue to grow in the decades ahead, putting his company’s internal assumptions among the more bullish forecasters of long-term crude usage. Oil demand by 2050 will be “well north” of 100 million barrels a day and possibly exceed 110 million daily barrels, Ebel said Tuesday in an interview at Bloomberg’s New York headquarters. That contrasts with an International Energy Agency projection that demand will decline to 97 million barrels a day by mid-century.
More Production Increases Coming. U.S. shale oil to accelerate production on efficiencies, BNEF says. Bloomberg. US oil production will grow by 600,000 barrels a day in 2025, about 50% more than this year, due to higher well productivity, according to BloombergNEF. Shale producers are pumping more oil per dollar invested in oil fields by drilling wells with fewer rigs and using better fracking techniques, BloombergNEF said in a report published Thursday. The US will increase production 4.5% to a record 13.9 million barrels a day next year.
Verdun Oil Leading Eagle Ford Refracs. Verdun Oil: Quietly leading the Eagle Ford’s refrac rally. Hart Energy. Growing in the oil and gas business might seem a battle of inches, like slogging through the sodden trench warfare in the hills of Verdun in World War I. It seemed that way to the founders of Verdun Oil Co., so the name stuck. But Verdun Oil’s battleground isn’t in northern France—it’s in South Texas, where the EnCap-backed producer has fought to grow a position in the Eagle Ford and Austin Chalk plays since launching in 2015.
U.S. Oil Export Slows. U.S. oil export gains slow as output, global demand turn tepid. Reuters. U.S. crude oil export gains should plateau in 2024 after years of strong growth, with domestic output expected to increase by the smallest amount since the pandemic at a time when global oil demand remains sluggish. Crude oil exports from U.S. ports averaged about 4.2 million barrels per day so far this year, according to U.S. government data. That was up 3.5% from a year earlier, or the lowest percentage increase since 2015, when the U.S. exported its first cargo of domestic crude oil after a 40-year federal ban on export of domestic crude ended.
Outlook for Permian Production Growth. Permian production forecast growth driven by well productivity, pipeline capacity. EIA. In our latest Short-Term Energy Outlook (STEO), we forecast that crude oil production in the United States will grow to an average of 13.7 million barrels per day (b/d) and marketed natural gas production will grow to an average of 114.3 billion cubic feet per day (Bcf/d) in 2025. Most of the forecast growth in oil and natural gas production comes from the Permian region of western Texas and eastern New Mexico, where we expect productivity gains, new and expanded infrastructure, and high crude oil prices will support rising production.
BIG BROTHER Satellites Are Watching. New satellite to track methane super emitters. E&E News. A new satellite that can pinpoint greenhouse gas super emitters took off from California on Friday, adding another tool to global efforts to tackle the drivers of global warming. Tanager-1, which launched alongside SpaceX’s Transporter 11, can detect major emitters of carbon dioxide and methane, a highly potent gas that is 80 times more effective than CO2 at trapping heat in the atmosphere.
Oil & Gas M&A Up 57% in 2023. U.S. oil, gas M&A activity jumped 57% last year amid industry consolidation. Reuters. Dealmaking activity in the oil and gas industry increased 57% last year as energy companies boosted development spending, driven by higher cash flows from profits in prior years, according to a report released on Tuesday. Top energy companies spent $49.2 billion on mergers and acquisitions in 2023, up from $31.4 billion in 2022, according to a report, from Ernst & Young. The increase was mainly driven by mega deals among integrated oil and gas companies.
Enterprise to Acquire Piñon Midstream for $950 million. Oil and Gas Journal. An Enterprise Products Partners LP affiliate has agreed to acquire Piñon Midstream LLC for $950 million, expanding its natural gas processing footprint into the eastern flank of the Delaware basin in New Mexico and Texas. Piñon Midstream, about 50 miles of natural gas gathering and redelivery pipelines, five 3-stage compressor stations, 270 MMcfd of existing H2S and CO2 treatment plants with an expansion to 450 MMcfd of capacity expected to be completed in second-half 2025, and two of the highest capacity and deepest acid gas injection wells (about 18,000 ft) below the surface in the basin, Enterprise said in a release Aug. 21
APA Explores $1-billion Sale. Oil producer APA explores $1-billion sale of Permian assets, sources say. Reuters. APA Corp, exploring the sale of oil and gas drilling properties spread across parts of the Permian basin of Texas and New Mexico, in a deal that could be valued at about $1 billion, people familiar with the matter told Reuters. APA, which owns the properties through its Apache subsidiary, is working with investment bankers at RBC Richardson Barr and Truist Securities on the sale process, the sources said, requesting anonymity as the discussions are confidential.
ARCH2 Hub Finds Home in Morgantown. The regional hydrogen development initiative known as ARCH2 officially opened its project office at the WVU Innovation Corp. center located in the former Chestnut Ridge Viatris drug-manufacturing facility in Morgantown, West Virginia. It’s the first brick and mortar location for the Appalachian Regional Clean Hydrogen Hub (ARCH2), the multistate project that was one of seven so-called hydrogen hubs tapped for $925 million of an overall $8 billion in federal funding from the Bipartisan Infrastructure Law and will end up attracting an estimated $6 million in private investment for ARCH2 alone. The goal is to make Appalachia a major producer and user of hydrogen, a cleaner energy source that federal and others hope will not only clean up industrial emissions but also drive down the cost of clean energy by building up an infrastructure around it.
Hydrogen in general — and the creation of a multilayer ecosystem of natural gas production and conversion to hydrogen, pipelines, infrastructure and carbon capture and storage needed for a robust system in West Virginia and the rest of Appalachia — has been the dream of U.S. Sen. Joe Manchin, the soon-to-retire lawmaker and a powerful voice for West Virginia and the energy industry in Washington, D.C. Manchin said Wednesday that envisioning a role for hydrogen and in West Virginia was easy to imagine because it’s been known for decades.
“It just needed someone to invest in it,” Manchin said.
ARCH2 has some blue-chip backers, including not-for-profit research organization Battelle, Allegheny Science & Technology, the National Energy Technology Laboratory and, among the private sector, companies with major presences in the Pittsburgh region including EQT Corp. (NYSE: EQT), CNX Resources Corp. (NYSE: CNX) and up-and-coming fuel-cell developer Watt Energy, based in Mount Pleasant. West Virginia University and Marshall University are also involved. EQT, for instance, is planning a major facility that will convert natural gas to sustainable aviation fuel. CNX and another ARCH2 partner, KeyState Energy, are developing a sustainable aviation fuel hub at Pittsburgh International Airport.
“ARCH2 is going to provide a scale and going to provide so many things that move hydrogen forward,” said Lou Von Thaer, president and CEO of Battelle. The program office will initially take up 1,500 square feet in the former Mylan/Viatris research and development and manufacturing center, which is being redeveloped by the WVU Innovation Corp., a joint venture of WVU and the WVU Health System. About five to nine people will work there at first but that could grow, Battelle officials told the Business Times. Another major tenant at the WVU Innovation Corp.’s complex, Hope Gas, hosted a news conference and ribbon cutting ceremony for the ARCH2 headquarters at its space. Hope Gas, the regulated gas utility in West Virginia run by former Peoples CEO Morgan O’Brien, is also a big part of the ARCH2 projects.
There’s been plenty of work behind the scenes since the highly competitive process selected ARCH2 and the other projects for additional vetting by the U.S. Department of Energy; they are collectively the largest cooperative agreements that DOE has ever funded. ARCH2 received an initial tranche of $30 million in a DOE announcement in July; now more work is being done to make the projects a reality. It will, however, take years before the DOE’s and BIL’s vision of a hydrogen economy in West Virginia, Pennsylvania and Ohio to come to reality. James Haug, associate director of hydrogen hubs for the U.S. Department of Energy, said the United States is projected to be the leading producer of clean hydrogen and the largest potential exporter, to industry and other users that want it here and also abroad. “This hub, ARCH2, is of strategic importance to the United States,” Haug said.
PA Permits August 12, to August 22, 2024
County Township E&P Companies
1. NO NEW PERMITS
OH Permits August 11, to August 17, 2024
County Township E&P Companies
1. Guernsey Madison Ascent
2. Guernsey Madison Ascent
WV Permits August 12, to August 16, 2024
1. Harrison Arsenal
2. Harrison Arsenal
3. Tyler Antero
4. Tyler Antero
5. Tyler Antero
6. Tyler Antero
7. Tyler Jay-Bee
8. Tyler Jay-Bee
9. Wetzel EQT
10. Wetzel EQT
11. Wetzel EQT
12. Wetzel EQT
13. Wetzel EQT
14. Wetzel EQT
15. Wetzel EQT
16. Wetzel EQT
17. Wetzel SWN
18. Wetzel SWN
19. Wetzel SWN
20. Wetzel SWN
