Shale Directories Conferences
April 21, 2022
Hilton Garden Inn, Southpointe
Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
Appalachian Basin Producers with Europeans. (Thanks, MDN) According to Reuters, at least a dozen U.S. shale gas executives met yesterday in Houston, TX, with European energy officials to discuss expanding U.S. fuel supplies to Europe. Among those in the meeting were “top executives” from Chesapeake Energy, Coterra Energy (formerly Cabot Oil & Gas), and EQT Corp., the largest natural gas producer in the U.S. Individual meetings are planned between the execs and representatives from Latvia, Estonia, and Slovakia. It seems that Europe has finally opened its eyes (and its mind) to the benefits of American natural gas.
Encino Focused in Southern Ohio. Utica Shale in southern Ohio is a key part of Encino Energy’s operations. The Utica Shale is proving to be more productive, with oil and natural gas wells exceeding the expectations of Encino Energy Partners. The Houston company claimed a stake in the Utica Shale in eastern Ohio with a $2 billion acquisition of Chesapeake Energy’s operations here. Encino partnered with the Canada Pension Plan in 2018 to buy Chesapeake’s holdings. Since making the move, Encino has drilled about 150 new wells, giving it roughly 1,000 oil and gas wells in the formation, which extends from Stark and Columbiana counties south to the Ohio River and into Pennsylvania and West Virginia.
Bullish Outlook for NatGas Prices. Price volatility and rising demand revive U.S. natural gas trading. Natural gas trading is seeing a renaissance in the United States with the return of price volatility, while market turmoil in Europe could keep gas demand and exports high for years, according to trading industry executives. Sharp natural gas price swings that can bring huge profits to traders have resurfaced due to severe weather events and the European Union’s search for alternatives to Russian gas imports. Prices at the main U.S. gas trading hub are up 64% this year, touching their highest level since 2008.
EIA Wants More Pipelines to Control NatGas Prices. EIA says U.S. needs more natural gas pipes to boost output, stabilize prices. If U.S. natural gas infrastructure is not expanded to meet growing demand, prices would escalate and more electricity generation is likely from renewables, coal and nuclear sources over the next three decades, according to federal researchers. EIA’s research team said the higher gas prices that would result from capacity constraints “primarily affect natural gas consumption in the U.S. electric power sector, which is more price-sensitive than the residential, commercial, and industrial sectors.” In its No Interstate Natural Gas Pipeline Builds case, EIA is projecting 11% less U.S. gas-fired generation during 2050 than in the Reference case.
Scarce Steel Keeps Drilling Flat. Scarce steel a reason for flat U.S. output, oil drillers say. Add steel shortages to the growing list of reasons U.S. shale producers aren’t raising output as fast as needed amid a global energy crisis. To drill more wells, they need steel tubes to line the inside of the holes and get the crude out. Those pipes have become more expensive and scarcer. Oil and gas producers also have to boost wages to find and retain workers. They say those higher expenses, along with Biden administration’s tough environmental policy and investors’ pressure to keep costs under control, make them reluctant to ramp up production. “The largest cost increase over the past 12 months for the oil and gas industry is from tubular steel,” one energy executive told the Federal Reserve Bank of Dallas in the survey released in March. “Steel availability and pricing are also delaying quick activity ramp-up among several operators. This is impairing the ability to bring production online faster.”
New Production Highs in the Permian. Oil and gas production hit new highs in Permian in a carbon resurgence. The clean energy transition has been interrupted. With soaring prices and the disruptions caused by Russia’s invasion of Ukraine, the world is turning to fossil fuels again. Governments are releasing strategic reserves, lining up new supplies and urging oil and gas producers to pump up production. Call it the carbon resurgence, and it’s a reminder that fossil fuels remain as essential as ever. Even strong advocates of clean energy, such as Larry Fink, CEO of investment giant BlackRock, acknowledged the reset. He said the U.S. was focused on boosting oil and gas supply, and Europe and Asia may increase coal consumption over the next year.
PA Court Blocks RGGI. Pennsylvania court blocks governor’s carbon emissions plan. A Pennsylvania court on Tuesday blocked the centerpiece of Gov. Tom Wolf’s plan to fight climate change, the latest challenge to the Democrat’s effort to make Pennsylvania the first major fossil fuel state to adopt a carbon pricing policy. Commonwealth Court, in a one-line unsigned order, said it will not allow the official publication of the regulation “pending further order of the court.” The regulation would require fossil fuel-fired power plants to pay a price for every ton of carbon dioxide they emit starting July 1 in a state that has long been one of the nation’s biggest polluters and power producers.
Manchin and Capito Push for MVP. With the goal of the United States to provide more LNG (liquid natural gas) to Europe in the wake of the Russian invasion of Ukraine, the Mountain Valley Pipeline (MVP) remains mired in court cases, but that could change.
Sen. Shelley Moore Capito, R-W.Va., said during a virtual press briefing from her Washington office Thursday the pipeline is almost 95 percent complete but court cases related to federal permitting processes have delayed completion.
That has prompted her and Sen. Joe Manchin, D-W.Va., to try to streamline the approval regarding remaining court cases involving federal permitting.
“We see this as a stalling technique (by pipeline opponents), as a way to hope the investors and the company will go away like they did with the Atlantic Coast Pipeline (ACP),” Capito said.
In July 2020, Dominion Energy and Duke Energy canceled the $8 billion 600-mile natural gas ACP that would have transported natural gas from north-central West Virginia to Lumberton, N.C., because of “legal uncertainty” after spending an estimated $4 billion on it.
Opponents of the MVP have expressed optimism the same fate could be met by the 303-mile, 42-inch-diameter MVP, which would run from north-central West Virginia to Chatham, Va., crossing Summers and Monroe counties in West Virginia and Giles County, Va.
The MVP initially had a $3.5 billion price tag and was scheduled to be in operation in late 2018. However, protests and court cases continue to delay the project, which is now estimated to cost $6.2 billion and may be finished by 2023.
Capito said the MVP is needed to meet demand here and in Europe, which now needs LNG to replace the gas lost because of sanctions against Russia.
“We are looking at energy security and energy independence, our own resources, especially when you frame it up with what is going on in Ukraine,” she said. “We have many, many pipelines existing in this country so this is not a new concept.”
The latest major setback for the MVP was a decision made by the U.S. Court of Appeals for the 4th Circuit in Richmond, Va., to invalidate approvals previously granted by the U.S. Forest Service and the Bureau of Land Management (BLM) to construct the pipeline on federal land.
That includes Jefferson National Forest, which the MVP must pass through in Monroe and Giles counties, with a total of about 3.5 miles on federal land involved. The pipeline also must run under the Appalachian Trail where it crosses along the ridge line of Peters Mountain in Monroe County.
“The company has asked if they can get it (this court case) in the D.C. court,” Capito said. “Most businesses don’t want to do that, but that tells you they will have a more objective hearing in the D.C. court. At the same time, we’ve got to make sure (federal agencies) move quicker and faster and fairer to make sure the proper environmental permits are permitted so they can finish this project.”
Capito said “it just makes common sense, in my view” because the pipeline is almost 95 percent complete and is needed.
“Our president has promised Europe more liquid natural gas,” she said. “Where is he going to get it from? He can get it from West Virginia if we had the infrastructure to manage that.”
Time is important, she added.
“It is frustrating to me to think it will be possibly another year (before completion), and it’s another year the company can sit and spend and have an incomplete pipeline and not get any revenues,” she said. “We are trying to help as much as we can.”
Manchin has shown the same frustration.
“We cannot get a pipeline out of the Marcellus Shale (in north-central West Virginia),” he said recently. “The Mountain Valley Pipeline is 95 percent complete. That means the pipeline is in the ground, covered and reclamation done (on the land above it). But they have been blocked. That pipeline must be connected to the market.”
Manchin also called for the 4th Circuit case in Richmond to be moved to the D.C. court.
“We need to ramp up (the supply of natural gas),” he said, and the Marcellus Shale is the “richest formation in the world.”
According to the U.S. Energy Information Administration (EIA), in 2020 West Virginia produced 7.1 percent of the natural gas in the U.S. with Texas the most at 23.9 percent.
The Brookings Institute, a nonpartisan think tank, said the U.S. LNG producers have been going all-out in response to high European prices and the United States became the world’s largest LNG exporter in January, before the Russian invasion of Ukraine.
“In addition to undermining U.S. foreign policy, cutting back on LNG exports is unlikely to make much difference in prices at home,” Brookings said on its website. “The United States consistently enjoys some of the world’s lowest natural gas prices. U.S. LNG export capacity is expanding, but the United States has huge natural gas reserves and production is likely to expand along with export capacity. The world will eventually move away from natural gas as it transitions to a zero-carbon energy system, but the United States is likely to enjoy its price advantage in natural gas for the foreseeable future, even with expanding exports.”
The EIA said Russia has been providing about 40 percent of the natural gas needed by European countries, with the U.S. poised to help fill that void.
MVP opponents have pointed out the impact on the environment, especially in areas like Monroe County which includes karst (underground limestone which has been eroded by dissolution, producing ridges, towers, fissures, sinkholes and other characteristic landforms), and also the dangers of a large-capacity pipeline that could leak or explode with the underground instability.
They also have questioned the eminent domain component, with many landowners not wanting the pipeline on their land but having no choice.
Opponents said the pipeline was not for the “public good,” but for corporate profit.
For Monroe County landowner Maury Johnson it’s also personal, a matter of fighting for the environment and rights.
Johnson has fought the MVP since it first surfaced in 2014, and here is his response when the ACP project was abandoned:
“Today is a great day for those people who have devoted their lives to educating the public and fighting for their water, air, and property, and to lead the way to a cleaner energy future,” Johnson said. “But the job is only half finished. Today we enjoy this victory, but tomorrow we must double down our efforts, pull together and send MVP and the MVP Southgate to the scrap heap of bad ideas with the ACP.”
FERC to Push for MVP Construction. FERC heads to court to defend Mountain Valley pipeline restart. The Federal Energy Regulatory Commission will defend allowing the Mountain Valley Pipeline to continue some construction, despite allegations the agency failed to consider the project’s necessity, in oral arguments before the D.C. Circuit on Thursday. Environmental groups took FERC to court after it granted the pipeline’s request in 2020 to resume work on parts of the project where it has valid permits. FERC said it didn’t need to complete additional environmental review, because it wasn’t making substantial changes to the project proposal. The commission said pipeline construction and restoration was in the best interest of the environment and landowners. Even though some permits were later invalidated, the commission was still empowered to allow construction generally, the agency told the U.S. Court of Appeals for the D.C. Circuit.
Drilling Permits Up in TX in February. The Railroad Commission of Texas (RRC) reported that it issued 38% more original drilling permits year/year across the Lone Star State in February.
The natural gas and oil industry regulator granted 836 drilling permits in February, compared to 606 during the same month last year.
Texas, particularly the Permian Basin, has been leading “the U.S. onshore in completion activity,” Primary Vision’s Mark Rossano, partner/lead analyst, told NGI. “The Permian is operating at levels we saw in 2018/2019 given the pricing and proximity to the coast, but we are currently running at or near full utilization rates in the area.”
The most recent Baker Hughes Co. (BKR) rig count for the week ending April 1 showed a 44% year/year increase in Permian drilling units.
Of the 836 original drilling permits awarded in February, 700 were permits to drill new oil or gas wells, eight were to re-enter plugged wellbores and 119 were re-completions of existing wellbores, according to RRC. Based on well type, 181 of the original drilling permits were for oil, 81 were gas, 518 were oil or gas, 46 were injection and 10 were other permits.
The RRC said that its Midland District, located in the heart of the Permian, accounted for 355 of the 700 February permits to drill new wells – more than any other district.
The agency’s data also shows 358 of Texas’ 530 new oil completions for February and 34 of the 101 new gas completions for the month were in the Midland District.
In its February report, RRC said that its staff had processed 1,747 total well completions year-to-date across Texas for new drills, re-entries and re-completions. It was a 5% year/year statewide increase from the 1,663-completion total for February 2021.
Rossano, whose firm tracks hydraulic fracturing fleets via its Frac Spread Count, said that demand for U.S. crude and natural gas liquids in the global market – particularly from Europe – remains strong and is supporting activity throughout Texas.
TX Pipeline Being Converted from NatGas to Oil. Texas pipeline company Max Energy has purchased the Upper Gulf Coast Pipeline from Southcross Gulf Coast Transmission Ltd. and is working to convert the system from natural gas to crude oil.
Max said the eight-inch to 16-inch diameter natural gas pipeline is dormant and “strategically located.” The Southcross intrastate system has numerous intersection points with major crude pipelines that run across Texas, from the Eagle Ford Shale and Permian Basin toward coastal destinations in Corpus Christi, Houston and Edna.
The deal adds another 328 miles of existing pipeline to Max infrastructure on the Texas coast, it said.
“By purchasing the Southcross Gas Pipeline, Max Energy can now connect oil from all over the state to our Edna facility,” said Chair Todd Edwards.
The Edna facility southwest of Houston has capacity to store 1.5 million bbl of crude and condensate.
By year-end, Max also plans to have completed an interconnect with the Grey Oak Pipeline and the Victoria Express Pipeline, which would further expand access to crude production from the Permian and Eagle Ford basins.
Max said it is also developing plans to connect to both the Houston and Corpus Christi export markets. Through its subsidiary Max Midstream, the company also operates a carbon neutral export terminal on the Texas coast at the Port of Calhoun.
PA Permit March 28, to April 7, 2022
County Township E&P Companies
1. Bradford Herrick SWN
2. Fayette German EQT
3. Fayette German EQT
4. Fayette German EQT
5. Fayette German EQT
6. Fayette German EQT
7. Fayette German EQT
8. Fayette German EQT
9. Lycoming Lycoming Beech
10. Susquehanna Forest Lake Coterra
11. Susquehanna Forest Lake Coterra
12. Susquehanna Forest Lake Coterra
13. Washington Fallowfield EQT
OH Permits March 27, to April 2, 2022
County Township E&P Companies
1. Carroll Harrison INR
2. Carroll Harrison INR
3. Guernsey Wills Utica Resources
4. Guernsey Wills Utica Resources
5. Guernsey Wills Utica Resources
6. Harrison German EAP OHIO
7. Harrison German EAP OHIO
8. Harrison German EAP OHIO
9. Jefferson Mount Pleasant Ascent
10. Jefferson Mount Pleasant Ascent
WV Permits March 28, to April 1, 2022
1. No New Permits
Joe Barone 610.764.1232