Shale Directories Conferences
November 10, 2022
Hilton Garden Inn, Southpointe
Canonsburg, PA (near Pittsburgh)
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Sustained NatGas Rally. $12 – $14? U.S. natural gas prices are significantly lower than Asian or European prices, but as exports increase U.S. prices are set to surge and converge with international prices.
A hotter than normal summer in the U.S. could push U.S. natural gas prices even higher, as international demand isn’t going anywhere.
Everyone seems to assume U.S. gas production will continue to climb, but there are problems looming for the country’s largest shale plays.
Record LNG exports and unseasonably high demand for electricity have combined in recent weeks to push U.S. gas prices considerably higher than they normally are at this time of the year. And this may only be the beginning.
Gas prices have jumped twofold since the start of the year; that could increase another 25 percent if the summer turns out hotter than normal, CNBC reported last week. The report cited a senior analyst from S&P Global Community Insights who noted that natural gas production was not rising fast enough to meet growing demand, which was bound to push prices even higher.
“Asian and European natural gas prices stand at $35 per mmBtu, versus $8.20 per mmBtu here in the United States. Given the underlying fundamentals that have now developed in US gas markets, we believe prices are about to surge and converge with international prices within the next six months,” natural resources investment firm Goehring & Rozencwajg wrote in its latest quarterly market commentary.
The report details the evolution of the current energy crunch in Europe and how it pushed prices to the current historic heights, beginning with the colder than usual end of winter last year, which pushed up demand, leaving inventories lower than normal because Russia was not pumping additional gas on top of its contracted volumes.
Over the months that followed, things worsened as demand for natural gas, especially LNG, remained strong in Asia, too. By the start of the new heating season in Europe, the natural gas fundamentals were extremely bullish and unleashed the price rally that pushed natural gas to prices equivalent to $300 per barrel of oil. And all that, as Leigh Goehring and Adam Rozencwajg note in their report, happened before Russia invaded Ukraine.
Meanwhile, the U.S. has been enjoying a stable supply of natural gas and higher LNG exports—so much so that plans are in place to build additional LNG export capacity to satisfy a thirsty Europe that is trying to wean itself off Russian gas—if it can.
“Almost everyone takes it for granted that US gas production will continue to grow strongly as we progress through this decade,” Goehring and Rozencwajg wrote. “With production having nearly doubled in the last 10 years, few analysts bother to even consider underlying shale gas supply issues. But something else has happened that receives no comment – never before has production been concentrated in so few fields.”
The authors of the report then proceeded to explain that just two shale plays—the Marcellus shale and the Haynesville shale—account for as much as 40 percent of total U.S. natural gas production. Associated gas from the Permian brings in another 12 percent of the total. And production will not grow forever because it never does. The question, according to the report, is when production will begin to decline, the way it did in the Barnett shale and in Fayetteville.
“We’ll be topping $10 for sure. I would put $12 to $14 as the upper band,” John Kilduff, partner of Again Capital, told CNBC last week. “This is a commodity that trades parabolically a lot. It’s no stranger to parabolic moves up and down. It’s incredibly volatile, and it also has the ability to reset. We could get to $10 or $12 and if you have a cool August, then you could be down below $8 again.”
Kilduff seems to refer to current demand patterns as compared with supply. According to Goehring and Rozencwajg, the price of U.S. gas could shoot up considerably the moment “the US gas market swings from even marginal surplus to marginal deficit.” The question of production trends in the U.S. gas shale patch, then, becomes all the more pressing.
According to Goehring and Rozencwajg’s analysis based on production patterns from the Barnett and Fayetteville shale plays, Marcellus could be close to peaking and plateauing before production begins to decline—production there could reach a plateau within the next 12 months. This would be bad news because, after the plateau, shale gas plays seem to go straight into a sharp production decline. That sharp decline could begin in 2025.
The situation is not much different for the Haynesville shale play, although production growth patterns there have been less linear than those in the Marcellus. Even so, the authors expect gas production there to reach a plateau by October 2023.
In other words, within the next year or so, shale plays that account for 40 percent of U.S. gas production may well reach the peak of production rates and soon after begin declining. Demand for LNG, meanwhile, is very likely to remain as strong as it is now, if not stronger—after all, the EU is in a mad rush to reduce all imports from Russia. The current gas price rise in the U.S., then, may also be only the beginning of a sustained price rally.
Big Jump in CAPEX! Investment in global oil and gas production expected to grow 20 percent in 2022. A major energy research firm now says investment in oil and gas production will grow by 20 percent to $344.4 billion this year, up from the 8 percent predicted at the start of 2022. Norwegian firm Rystad Energy said it’s the highest forecasted growth rate since 2008, with investment set to go up 35 percent in shale oil areas like the Permian Basin, and offshore deepwater drilling investment is expected to increase around 30 percent. However, it’s not investment in the U.S. spearheading the growth. “Brazil, Guyana, West Africa, and Australia will drive most of this growth,” said Espen Erlingsen, head of upstream research at Rystad, in a brief update. “The higher activity caused by high commodity prices is the main driver of this record-high investment growth.”
Pittsburgh International Airport and CNX to Reduce Carbon Emissions. Pittsburgh International Airport and CNX Resources Corp., a gas development, production, midstream, and technology company, have entered the next phase of their partnership to reduce carbon emissions.
CNX developed a technology that converts on-site dry natural gas into liquefied natural gas (LNG), compressed natural gas (CNG), and electricity for various uses. The process will reduce local and operating costs at the airport.
The partners also plan to create a sustainable fuel hub at the airport for airlines, transit, cargo, fleet, military, and other energy-intensive business purposes.
In addition, CNX will develop the Utica shale on airport grounds. Dry gas from the Utica shale can be converted easily into LNG and CNG alternative fuels and hydrogen.
“We feel that natural gas and derivative products provide a path for the transportation industry both to reduce carbon emissions in the short-term while working toward a goal of net-zero in the long-term as hydrogen and other potential solutions mature,” Christina Cassotis, Pittsburgh International Airport CEO, said. “We believe this strategy can have a global impact.”
In 2014, CNX began natural gas development-related activities at the airport. In 2016, it brought its Marcellus shale wells into production, with the airport sharing the resulting revenue.
TX New Permits Drop. Railroad Commission reports drop in new permits, completions. The number of permits to drill new oil and gas holes dropped in the Permian Basin and across the state during the month of April, according to the Railroad Commission of Texas. The commission reported that the number of permits issued inside the Midland district fell from 557 in March to 404 in April. That 27.4 percent clip was greater than the percentage drop across the state during the same period (19.2 percent). The RRC still reported Midland accounted for 48.32 percent of all permits issued in April and was more than 300 greater than the next closest district, San Angelo area (86).
BlackRock Wants Back In. BlackRock told Texas it will still invest in oil and gas. Rigzone. BlackRock Inc. told Texas it’s committed to helping clients invest in the energy industry, rebutting suggestions by state officials that the firm boycotts fossil-fuel companies through its advocacy for sustainable investing. The world’s largest asset manager oversees about $310 billion of investments in energy firms worldwide, including more than $115 billion in Texas companies, BlackRock said in a letter to state Comptroller Glenn Hegar. “We do not boycott energy companies,” BlackRock’s Dalia Blass, head of external affairs, and Chief Client Officer Mark McCombe wrote in the May 13 letter, obtained through a public-records request. “On behalf of our clients, we are invested in industries and in communities across Texas.”
Rigs Up Ninth Week in a Row. U.S. drillers add oil and gas rigs for ninth week in a row. U.S. energy firms this week added oil and natural gas rigs for a ninth week in a row, data showed on Friday, as mostly small producers respond to high prices and prodding by the government to ramp up output. Baker Hughes said that puts the total rig count up 273, or 60%, over this time last year. U.S. oil rigs rose 13 to 576 this week, their highest since March 2020, while gas rigs gained one to 150, their highest since September 2019. More than half of U.S. oil rigs are in the Permian shale in West Texas and eastern New Mexico where total units this week jumped by eight to 343, the most since April 2020.
What Will Manchin Do About FERC? Senate fight escalates over FERC chair. What will Manchin do? The head of the Federal Energy Regulatory Commission has teed up an ambitious policy agenda for the next several years, with implications for renewable energy, carbon emissions and pipelines. But FERC Chair Richard Glick’s plans face an uncertain fate, as he’ll need to win approval this year from the Senate — evenly split among Democrats and Republicans — to stay on at FERC for five more years. The outcome of that process is far from certain, analysts say. “I think it’s way too hard today to predict what the outcome might be in a 50-50 Senate,” said Neil Chatterjee, a former Republican FERC commissioner and chair.
FERC’s Causing Pipeline Wars. FERC enforcement ramp-up spurs pipeline wars. Last year, the head of the Federal Energy Regulatory Commission delivered a message to the energy industry: “The cop is back on the street.” Chair Richard Glick was referring to FERC’s Office of Enforcement, which seeks to ensure energy and power companies comply with the independent agency’s rules. Last fiscal year, the office opened 12 new investigations compared to six the previous year. The uptick in cases includes a new focus on energy infrastructure, including the country’s pipelines — and how companies handle their construction and operation. The bottom line, Glick said, is that pipeline companies must abide by the conditions in the permits that FERC issues.
Stephanie Catarino Wissman: Natural Gas Fundamental to Bringing Manufacturing Back to Pa. Not long ago, the U.S. was reliant on unstable regimes for natural gas and oil. Now, the U.S. is the largest producer of natural gas and oil in the world thanks in large part to the shale revolution and expansion of hydraulic fracturing and horizontal drilling. This homegrown energy now supports 11.3 million jobs nationwide, nearly 500,000 right here in Pennsylvania, and contributes more than $1.6 trillion to the U.S. economy. Rather than sending jobs and industries overseas, we should be encouraging domestic production in Pennsylvania. And that starts with framework that fosters economic development, attracts business to Pennsylvania and supports domestic energy production and infrastructure expansion.
Summit Carbon Emissions’ Pipeline Update. Supervisors get update on Summit carbon pipeline. A representative for Summit Carbon Solutions, one of the two companies planning carbon pipelines through the state, gave an update on the project to the Webster County Board of Supervisors on Tuesday. Paul Phillips, with TurnKey Logistics of Houston on behalf of Summit, told the supervisors that construction of the pipeline is projected to start in the summer of 2023. He said the company is about 60 percent complete with land easement acquisitions in Iowa. During its April 26 meeting, the Board of Supervisors signed a letter to the Iowa Utilities Board to record its objection to the use of eminent domain for carbon capture pipeline projects.
Matterhorn Pipeline Update. Natural gas pipeline from the Permian Basin to Katy is a step closer to becoming reality. The Houston Chronicle. A 490-mile pipeline set to carry natural gas from the Permian Basin to Katy is one step closer to becoming a reality, said the companies involved in its construction. Devon Energy, along with the natural gas transmission company EnLink Midstream, Marathon Petroleum’s midstream company MPLX, and infrastructure company WhiteWater said they reached a final investment decision for the Matterhorn Express Pipeline, according to a statement from WhiteWater. The decision was made after an adequate number of shippers signed onto transportation agreements. The Matterhorn is expected to be able to move up to 2.5 billion cubic feet per day of natural gas from Waha, Texas in the Permian Basin to Katy, Texas in the greater Houston area.
FERC Policy Changes Would Cause Uncertainty and Hamper LNG Export and Reliability Goals. The American Petroleum Institute (API) today filed reply comments to the Federal Energy Regulatory Commission (FERC) addressing the assertions of other commenters and continuing to express concerns that the Commission’s two revised policy statements would chill investment in critical natural gas infrastructure. Increasing regulatory uncertainty and permitting delays, these policy changes directly conflict with FERC’s mandate to ensure a reliable supply of natural gas under the Natural Gas Act (NGA) and run counter to the goals of the United States and European Union joint task force to increase LNG exports to Europe.
In filed reply comments on FERC’s Draft GHG Emissions Policy Statement, API Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola highlighted API’s shared goal of reducing GHG emissions through economy-wide and industry-led initiatives to address emissions associated with energy production. However, Macchiarola cautioned that the Commission should not regulate outside its statutory authority.
“Other regulators have greater levels of expertise, not to mention congressionally-granted authority to regulate in these areas. FERC should not complicate or contradict the broader regulatory framework affecting industry by inserting itself in these areas,” Macchiarola said. Resources like EPA’s Mandatory Greenhouse Gas Reporting Program (GHGRP) are better suited to monitoring GHG reduction and mitigation efforts and FERC’s involvement could unnecessarily complicate the regulatory process.
“Natural gas pipeline infrastructure provides access to natural gas electric generation facilities, which can, and often do displace coal-fired electric generation and facilitate the integration of renewable energy resources into the nation’s power mix,” Macchiarola said. “API encourages FERC to view our industry as a vital partner in the efforts to reduce our nation’s GHG emissions, not as an obstacle.”
According to U.S. Energy Information Administration (EIA) analysis released prior to the U.S.- EU joint task force, U.S. natural gas consumption is predicted to increase by 18 percent by 2050. “API believes that any action by FERC that would slow the approval of critical natural gas projects, or chill investment in natural gas infrastructure, would run counter to the Biden Administration’s efforts to both aid Europe and reduce GHG emissions, and should be reconsidered. Given this expected growth in the industrial and power sectors as well as the goal to surge LNG exports to Europe, FERC should look for ways to streamline the permitting process for natural gas infrastructure so that the needs of consumers and our allies abroad can be met,” Macchiarola noted in filed reply comments on FERC’s 2022 Draft Certificate Policy Statement.
Here at home, organizations like the North American Electric Reliability Corporation have highlighted the vital role natural gas plays in ensuring grid reliability. As two U.S. electric grid operators – the California Independent System Operator and the Midcontinent Independent System Operator – have announced the possibility of rotating outages to address insufficient peak electricity supply, an energy mix with reliable fuel supply like natural gas is critical as electric utilities advance a lower carbon future.
“API is concerned that the draft policy statements will slow or halt the development of natural gas pipeline infrastructure needed to serve gas-fired power plants that are critical to maintaining the stability of the power grid, particularly as demand grows due to electrification efforts,” Macchiarola said.
“API encourages FERC to continue to work with our industry to develop truly durable, meaningful policies which would reduce GHG emissions and ensure fulsome reviews by FERC Staff, while allowing our industry to continue to build critical natural gas infrastructure that meets the needs of consumers,” Macchiarola concluded.
API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our nearly 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.
Oil is $100+. Permian Producers to Slow. Permian oil producers about to slow despite $100 crude. Publicly traded independent oil companies, which produce more than half of U.S. crude, are now giving about a third of their cash flow back to investors. The pressure to prioritize shareholders over production is a direct result of the industry’s pre-pandemic, grow-at-any-cost model that, according to Deloitte LLP, led to nearly $300 billion of cash burn over the previous decade. Though shale output will rise this year, forecasters say there’s minimal additional growth coming as a result of the war in Ukraine, despite the rally in crude prices. Wall Street isn’t the only source of shale’s growing pains. The global supply-chain crisis is particularly acute in the Permian Basin, which will make up 80% of this year’s US production growth, according to research and data firm Enverus.
Enlink Makes a Purchase. EnLink Midstream buys Barnett Shale assets for $275 million. Dallas-based EnLink Midstream is buying the Barnett Shale assets of a Houston company for $275 million. The deal with Crestwood Equity Partners, announced after Wednesday’s market close, includes 500 miles of natural gas gathering pipelines and three processing plants with capacity of 425 million cubic feet per day. Some of the assets could be deployed to EnLink’s other segments, including the Permian Basin and its carbon solutions business. The pipelines and plants also are near existing and planned liquefied natural gas export facilities along the Gulf Coast.
Oilfield Water Conference July 29th. Marcellus-Utica shale E&P operator majority to speak at Appalachian shale water conference in July. The first Marcellus-Utica Shale Water Business Update conference will be held July 29th at the Pittsburgh Westin. At this event, the majority of northeastern shale gas producers (as measured by well completions activity) will share their views on water management. Specifically, E&P operator representatives from top producers that together comprise more than half of the total active frac crews working in the Marcellus Shale and Utica Shale natural gas plays will take the stage to discuss their latest thoughts and efforts in full-cycle shale water management. Some of the E&P companies that will have delegates speaking at the event include: EQT, Range Resources, Chesapeake, Southwestern Energy, Coterra, Gulfport, Repsol, and more.
PA Permit April May 16, to May 26, 2022
County Township E&P Companies
1. Armstrong East Franklin Snyder
2. Armstrong East Franklin Snyder
3. Armstrong East Franklin Snyder
4. Armstrong East Franklin Snyder
5. Armstrong East Franklin Snyder
6. Armstrong East Franklin Snyder
7. Bradford Herrick SWN
8. Bradford Herrick SWN
9. Susquehanna Bridgewater Coterra
10. Westmoreland Hempfield Apex
11. Westmoreland Hempfield Apex
12. Westmoreland Hempfield Apex
13. Westmoreland Hempfield Apex
14. Westmoreland Hempfield Apex
OH Permits May 15, to May 21, 2022
County Township E&P Companies
1. Belmont Richland Gulfport
2. Belmont Wayne Gulfport
3. Belmont Wayne Gulfport
4. Belmont Wayne Gulfport
5. Carroll Brown EOG
6. Guernsey Wills Ascent
7. Guernsey Wills Ascent
WV Permits May 16, to May 20, 2022
1. Marshall Tug Hill
2. Marshall Tug Hill
3. Ohio SWN
4. Ohio SWN
Joe Barone 610.764.1232