Shale Directories Conferences
FALL 2022 Hydrogen & Carbon Capture Conference IV
November 10, 2022
Hilton Garden Inn, Southpointe
Canonsburg, PA (near Pittsburgh)
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Manchin Permitting Bill Release Fails to Appease Skeptics. E&E News. Senate Energy and Natural Resources Chair Joe Manchin released his much-anticipated permitting reform bill Wednesday, but the text does not appear to have calmed the progressive rebellion and Republican indifference to the effort. The West Virginia Democrats’ text largely mirrors an outline released in recent weeks. It includes new timelines for permitting and a list of priority projects to accelerate. The bill also includes efforts to ease Clean Water Act and grid approvals, according to a summary. Democratic leaders now have to gather enough support to attach the legislation to an upcoming short-term government funding measure in order to fulfill their promise to Manchin, who sees the permitting language as going hand-in-hand with the recently enacted Inflation Reduction Act. Note: New York Times also reports.
NatGas Shortage Looming. As natural gas demand around the world breaks new records, U.S. shale producers are struggling to keep up with demand.
While natural gas prices in the United States fell after a railway strike was averted last week, it looks likely that prices both at home and abroad will spike this winter.
A hotter-than-expected summer and a lack of alternative energy sources have left U.S. inventories below the seasonal average.
Last week, the media rushed to report that natural gas prices in the United States had fallen sharply after trade unions and railway companies reached a tentative deal that averted a potentially devastating strike.
Indeed, natural gas prices fell by nearly a dollar per million British thermal units, helped by a respectable build in inventories. And yet, inventories remain below the seasonal average, exports are running at record rates, and producers are beginning to struggle to meet demand, both at home and abroad.
Reuters’ John Kemp wrote in a recent column that domestic and international gas consumption had risen to record highs, and shale producers—the ones that account for the bulk of U.S. natural gas output—were having a hard time catching up with this demand.
Meanwhile, although higher on a weekly basis, inventories remained at the second-lowest for this time of the year for the last 12 years, Reuters’ market analyst noted. He also added there were no signs of any improvement in the level of inventories despite the rise in prices.
None of this suggests lower prices for natural gas are coming to either the United States or international markets as the northern hemisphere heads into winter. On the contrary, the latest figures suggest more financial pain for gas consumers. And they confirm, to an extent, forecasts made earlier this year.
In the spring, the principals of investment firm Goehring & Rozencwajg said U.S. gas prices will converge with international prices towards the end of 2022. They noted something few other analysts tend to mention: the concentration of much of U.S. gas production in a handful of fields, with just two—Marcellus and Haynesville—accounting for as much as 40 percent of the total.
The Permian contributes another 12 percent of the U.S. total gas output, and the rig count in the Permian has been down for two weeks in a row, according to the latest data. Less drilling means less associated gas to add to the national total.
Meanwhile, on the demand side, electricity generation in the United States is seen reaching a record high this year, Kemp noted in his column, driven by the post-pandemic economic rebound. A hotter summer also contributed. A cold winter would certainly push gas consumption even higher.
Another contributor is the lack of alternative sources of electricity generation: coal plants are being retired, and droughts in many parts of the country have compromised its hydropower capacity, the Reuters analyst also noted.
While this is happening at home, demand for gas continues strong across the globe, too, as everyone seeks to stock up on fuel for the winter. U.S. energy companies are exporting liquefied natural gas at record rates. And disgruntlement at home is beginning to rear its head.
“We appreciate that the [Joe] Biden administration has been working with European allies to expand fuel exports to Europe. A similar effort should be made for New England,” a group of governors from New England wrote in a letter to Energy Secretary Jennifer Granholm this summer, per a Financial Times report.
The governors then went on to call on the administration to make sure there was enough LNG for American consumers, essentially asking politicians to reduce LNG exports. This does not bode well for balance in the U.S. gas market.
In May, John Kilduff from Again Capital told CNBC he expected gas prices to top $10 per mmBtu and maybe reach $12 to $14. “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,” he said at the time.
The Energy Information Administration this month revised its gas price forecast for the full year upwards, seeing the commodity average $9 per mmBtu in the final quarter before falling to $6 per mmBtu in 2023. The decline would come as a result of rising local gas production, the EIA noted.
In the meantime, however, until this increase in production materializes to a degree that begins to affect prices, there seems to be only one way they will be going: up. With heating season around the corner in both Europe and the United States and with a lot of people in both places using gas for heating, the price outlook for gas does not look good from a consumer’s perspective. It does look good from a gas exporter’s perspective, however.
It is unlikely that U.S. gas prices will climb anywhere near European levels, but they are up by a whopping 300 percent from a few years ago when gas was cheap because it was abundant. That sort of price increase affects everything along the supply chain that involves electricity produced using gas, sending ripples across the economy. And the more gas utilities use for lack of reliable alternatives, the longer the energy-driven inflation will continue.
Putin Pumping Up Oil Prices. Oil prices surge as Putin mobilizes more troops. Reuters. Oil jumped nearly 3% on Wednesday after Russian President Vladimir Putin announced a partial military mobilization, escalating the war in Ukraine and raising concerns of tighter oil and gas supply. Brent crude futures rose $2.26, or 2.5%, to $92.88 a barrel by 1051 GMT. U.S. West Texas Intermediate crude was at $86.09 a barrel, up $2.15, or 2.6%. Putin said he had signed a decree on partial mobilization beginning on Wednesday, saying he was defending Russian territories and that the West wanted to destroy the country. “The partial mobilization is definitely a bullish factor as it increases the risks of a prolonged war in Ukraine,” said Viktor Katona, lead crude analyst at Kpler.
In the Permian, Biden’s Against Native Americans. Biden admin sides against Native Americans in crackdown on oil leasing near Indigenous site. Fox News. The Biden administration is expected to soon finalize a rule banning oil and gas leasing near a Native American historical site despite heavy opposition from local Indigenous leaders, who say the administration’s rule would prevent them from collecting royalties on their land. The rule, which the Department of Interior (DOI) announced in November 2021, would implement a 20-year moratorium on federal oil and gas leasing within a 10-mile radius of the Chaco Culture National Historical Park located in northwest New Mexico. Interior Secretary Deb Haaland said the rule, which would amount to a withdrawal of 336,000 acres of public lands from mineral leasing, would protect the environment and “rich cultural legacy” of the region.
NatGas is the Bridge Fuel. Gas, a ‘bridge fuel,’ dominates U.S. power at any price. E&E News. Surging natural gas prices normally result in booming coal generation. But 2022 isn’t normal. Power companies are shrugging off the highest gas prices in over a decade as they ramp up electricity generation at U.S. gas plants, which are producing 7 percent more power through September compared to last year. Coal generation, by contrast, is down 8 percent. The unusual dynamic reflects the energy transition in America. Gas has long been referred to as the bridge fuel that would connect a period of declining coal usage to a future ruled by renewables. The U.S. is now stuck in the middle of that bridge, unable to tap the full promise of clean energy, nor turn back to coal after a decade of power plant retirements.
Permitting Is Slowing Down. Oil and gas permitting in the U.S. slows down. Oilprice. Oil and gas permitting in the United States slowed down last month, with the decline particularly marked in the Permian. This is according to data from Evercore ISI, cited by Natural Gas Intelligence, which also showed that despite the slowdown in permitting activity, it remained stronger than it was a year ago. In absolute numbers, oil and gas permits issued in the Lower 48 last month were 3,106 fewer than those issued in July. Yet the August total was 27 percent higher than the number of permits issued in August 2021 and 178 percent higher than the number of permits issued in August 2020, the investment bank’s data also showed. Note: NGI also reports.
Delaware Basin Fracking Ban to Continue. An attempt by state lawmakers to overturn a ban on fracking in part of Pennsylvania has failed in a federal appeals court. The lawmakers, led by Sen. Lisa Baker and Sen. Gene Yaw, sued to reverse a ban on fracking in the Delaware River watershed. Last year, the Delaware River Basin Commission voted to prohibit hydraulic fracturing or fracking. The ban includes Wayne, Pike, and Monroe Counties in our area. The federal appeals court ruled Friday that the lawmakers didn’t have the proper standing to file the lawsuit.
Whistler Pipeline and Cheniere Plot in TX. Whistler Pipeline, Cheniere plot gas pipeline in Texas to Corpus Christi LNG terminal. S&P Global. Cheniere’s Corpus Christi Liquefaction LNG terminal would receive a new source of feedgas from Texas’ Permian Basin as soon as 2024, midstream developer WhiteWater Midstream said Sept. 19 in announcing plans for a new natural gas pipeline. Cheniere has partnered in a joint venture with the WhiteWater-backed Whistler Pipeline to build the ADCC Pipeline, a 42-inch, intrastate pipeline that will run 43 miles between the terminus of the Whistler Pipeline in Agua Dulce, Texas, to Corpus Christi LNG terminal on the Texas Gulf Coast, the companies said Sept. 19. The ADCC line will offer initial maximum capacity of 1.7 Bcf/d in gas supply but can be expanded to deliver up to 2.5 Bcf/d. Note: Reuters and Seeking Alpha also reports.
CPV Announces $3 Billion NatGas Power Station in WV. Competitive Power Ventures (CPV) today announced that it has selected West Virginia for a ~1,800 MW combined-cycle natural gas power station utilizing carbon capture and storage. Following permitting and construction, the project will go into operation later this decade. The project was made possible by the advancement of the recently passed federal legislation, known as the Inflation Reduction Act, that expanded the 45Q federal tax credit for carbon capture.
“Competitive Power Ventures and the innovation they bring to the energy industry is amazing. We welcome them to West Virginia and will continue to support this excellent company as we compete on the world-stage to recruit the best to our great state. I couldn’t be more proud.”
The 45Q federal tax credit was recently expanded to incentivize carbon capture and sequestration for power generation. Earlier this year, the state of West Virginia passed legislation that was signed into law by Governor Jim Justice establishing state rules for carbon sequestration. Together, these two actions make West Virginia an ideal location for this investment.
“The Inflation Reduction Act is already having a positive impact for the people of West Virginia and carbon capture utilization efforts here in the United States,” said United States Senator Joe Manchin, who chairs the Senate Energy and Natural Resources Committee. “I’m pleased Competitive Power Ventures is investing in the Mountain State and look forward to seeing the benefits of this investment – including long-term, good-paying jobs and supporting our regional economies – for years to come.”
Nationwide, large technology and industrial customers have made pledges to lower their environmental footprint, which often includes the sources of energy they rely on for their operations. A low carbon baseload energy source in West Virginia will be an asset to the state’s existing manufacturing and industrial companies, while also attracting future investments.
“This is an outstanding day for West Virginia,” said Governor Jim Justice, “Competitive Power Ventures and the innovation they bring to the energy industry is amazing. We welcome them to West Virginia and will continue to support this excellent company as we compete on the world-stage to recruit the best to our great state. I couldn’t be more proud.”
“Competitive Power Ventures’ multi-billion-dollar investment in this combined-cycle power plant demonstrates that West Virginia can provide natural gas to markets in our neighboring states, as needed energy supplies for our allies abroad, as a manufacturing input here at home and across America, as well as power generation here in West Virginia,” said Senator Shelley Moore Capito. “I’m proud that my bipartisan work on the 45Q carbon capture tax credit – and in specifically calling for the addition of a direct pay option – paved the way for this project, which I hope will be the first of several carbon capture, utilization, and storage investments in West Virginia.”
The construction of the project will utilize well over 1,000 skilled tradespeople from across the region, including prevailing wage labor and apprenticeships, to fulfill the requirements created by the Inflation Reduction Act to utilize the expanded tax credits for carbon sequestration. The natural gas utilized by the facility will support hundreds of additional jobs in West Virginia.
“Pennsylvania and Ohio have built numerous combined-cycle natural gas power plants over the last few years,” said Chuck Parker, President of the WV State Building & Construction Trades Council. “Now it is finally West Virginia’s turn. We have been training our members for a project like this and will be able to supply the workforce needed.”
Numerous companies across West Virginia have been working with CPV and the project for over a year to advance it to this decision point. The project has already started the extensive regulatory approval process. Once finalized, a firm timeline for commercial operations will be announced.
TX Permits Fall. Drilling permits fall; oil completions soar. Midland Reporter-Telegram. While the number of permits to drill has dropped since April, the number of oil completions is up – by 67% — according to the Railroad Commission of Texas. The RRC report released the past week showed completion numbers in August reached 708 across the state – up from 423 in April. At the same time permits to drill a well dropped from 836 to 788 during the same period. The RRC also reported Midland region again dominated statistics in August, accounting for 54.4% of the 788 permits to drill oil and gas wells statewide in August, 59.3% of the 708 new oil completions and 66.2% of the 148 new gas completions. In August 2022, commission staff processed 834 oil, 176 gas and 560 injection completions for new drills, re-entries and re-completions, compared to 649 oil, 109 gas, and 291 injection completions in August 2021, the RRC reported.
Magnolia Oil & Gas CEO Steps Down for Health Reasons; Successor Takes Over. Houston Biz Journal. Longtime energy executive Stephen Chazen has stepped down from Houston-based Magnolia Oil & Gas Corp. (NYSE: MGY) due to serious health reasons, the company said Sept. 21. Christopher Stavros, most recently executive vice president and CFO of Magnolia, has succeeded Chazen as president and CEO, effective immediately. Stavros also joined the company’s board of directors, and he will continue to serve as CFO until a permanent successor is appointed. Dan Smith, who previously served as Magnolia’s lead independent director, succeeded Chazen as chairman of the board.
PA Permit September12, to September 21, 2022
County Township E&P Companies
1. Clearfield Girard PPG Oper.
2. Indiana Center XTO
3. Indiana Center XTO
4. Tioga Delmar Seneca
5. Tioga Delmar Seneca
6. Tioga Delmar Seneca
7. Tioga Delmar Seneca
8. Tioga Middlebury Seneca
9. Tioga Union PA GEN Energy
10. Tioga Union PA GEN Energy
11. Tioga Union PA GEN Energy
OH Permits September11, to September 17, 2022
County Township E&P Companies
1. Guernsey Richland Ascent
2. Guernsey Richland Ascent
3. Guernsey Richland Ascent
4. Monroe Center Gulfport
WV Permits September 11, to September 16, 2022
1. Marshall SWN
2. Marshall SWN
3. Monongalia Northeast Nat. Ener
4. Ohio SWN
5. Ohio SWN
Joe Barone 610.764.1232
