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
EQT, TC Energy and Williams Create Coalition for LNG Export. U.S. natural gas heavyweights launch coalition to export more LNG. NGI. EQT Corp., the largest U.S. natural gas producer, has teamed up with midstreamers TC Energy Corp. and Williams to establish a coalition that will focus on increasing American LNG exports to help displace dirtier fuels abroad and lower greenhouse gas emissions. The Partnership to Address Global Emissions, or PAGE, would help develop and promote policies aimed at developing the infrastructure needed to increase liquefied natural gas production and export it. EQT, TC Energy and Williams are PAGE’s founding members. Think tanks, including the Progressive Policy Institute, trade unions and academia would also serve on an advisory council and provide guidance to the coalition and its members. LNG exports are expected to average 12.7 Bcf/d next year, according to the EIA. Peak U.S. export capacity is also on track to exceed 18 Bcf/d by 2025.
Oil Production Down in 2023. EIA revised down global oil production forecasts for 2023. Oil & Gas Journal. In its October issue Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) forecasts global oil production for 2023 to average 100.7 million b/d. In its October issue Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) forecasts global oil production for 2023 to average 100.7 million b/d. The forecast is 600,000 b/d lower than in the September STEO and reflects announced cuts from OPEC+ as well as lower forecast crude oil production in the US. EIA’s forecast for global oil consumption forecast for 2023 is 101 million b/d, which is 500,000 b/d lower than in the September STEO and reflects Oxford Economics lowering its forecast for global GDP growth in 2023 to 2.2% this month from 2.7% last month.
NatGas Tank Filling Up. America’s natural-gas tank is filling fast. Wall Street Journal. 460 BILLION CUBIC FEET. That’s how much natural gas has been pumped into U.S. storage facilities over the past month, the biggest four-week build of the shale era, according to Energy Information Administration data released Thursday. Injections of gas into underground caves by traders hoping to sell the fuel for higher prices this winter has reduced by about half the deficit to normal inventories that spooked the market in August and sent prices to their highest levels since frackers flooded the market with shale gas more than a decade ago.
Henry Hub $7.40 in 4th Qtr. Winter natural gas costs seen rising for U.S. households, and henry hub at $7.40 in 4q, EIA says. NGI. A result of both higher retail prices and higher forecast consumption, the Energy Information Administration (EIA) expects U.S. households to spend more on energy this winter compared with the 2021-22 heating season, with the largest increase for homes that heat with natural gas. The agency’s latest Winter Fuels Outlook, included in its updated Short-Term Energy Outlook (STEO) Wednesday, predicted a 28% year/year increase in winter expenditures for homes that heat with natural gas.
EQT 3rd Qtr. Report. EQT Reports $1.6B Loss in 3Q on Natural Gas Derivatives. EQT Corp. said in a regulatory filing late Tuesday it expects to report steep losses on derivatives for the third quarter as U.S. natural gas prices have hit their highest levels in more than a decade.
In a Form 8-K filed with the U.S. Securities and Exchange Commission, EQT forecast a $1.6 billion loss on derivatives for 3Q2022 and a $5.5 billion loss through the first nine months of the year. EQT, the country’s largest natural gas producer, also said it expects to report more than $2 billion in cash payments to settle derivatives during the third quarter, bringing the total to about $4.7 billion through the first nine months of 2022.
The company has not scheduled its third quarter earnings report, and the final numbers could change. EQT reported a net loss of $1.2 billion (minus $3.58/share) for 2021, partly because of losses on derivatives not designated as hedges.
[Shale Daily: Including impactful news and transparent pricing for shale and unconventional plays across the U.S. and Canada, Shale Daily offers a clear snapshot of natural gas supplies for analysts, investors and global LNG buyers. Learn more.]
Natural gas prices started climbing sharply last year as global demand rebounded after the worst of the Covid-19 pandemic. The market tightened further as 2022 drew near and tensions between Russia and Ukraine ratcheted up.
Strong power burns and high levels of LNG exports in the United States have cut into storage inventories this year, putting upward pressure on Henry Hub prices. Slower production growth most of the year, along with gas shortages in Europe amid Russia’s war in Ukraine have also pushed prices higher.
The market has driven Henry Hub volatility, a measure of how much daily prices change, to an all-time high this year, according to the Energy Information Administration.
EQT and other U.S. gas producers have repeatedly been hit with steep losses on wrong-way bets as they’ve tried to strike a balance between protecting against downside and capturing upside as price increases.
Record Production Does Not Cut It. Record U.S. oil output might not be enough to keep prices in check. Wall Street Journal. U.S. energy forecasters’ latest estimate for domestic oil production next year would be a record, topping 2019’s 12.3 million barrels a day. But it would also be about half the year-over-year increase that the U.S. Energy Information Administration expected this summer. The tighter outlook shows how disciplined North American producers have been despite the highest fuel prices in years and suggests there won’t be a flood of shale oil to offset the barrels lost when the U.S. stops pumping crude from its Strategic Petroleum Reserve this autumn and OPEC cuts its output, Bernstein analysts say. “The market therefore requires demand or price to provide the needed balance, and we believe it will be the latter,” they wrote in a note to clients, suggesting that investors stick with shares of exploration and production companies, which have led the S&P 500 this year and last.
TX July Production. Texas oil, gas production statistics for July 2022. The OA Online. Crude oil and natural gas production as reported to the Railroad Commission of Texas for July 2022 came from 160,276 oil wells and 87,551 gas wells, a press release detailed. The RRC reports that from August 2021 to July 2022, total Texas reported production was 1.5 billion barrels of crude oil and 11.1 trillion cubic feet of total gas. Crude oil production reported by the RRC is limited to oil produced from oil leases and does not include condensate, which is reported separately by the RRC.
Wells Go Dry. Drilling for New Wells Is Need Continually. Oil and gas exploration suffers decline in 2022. Forbes. Opinion. While oil and gas exploration are at odds with the Biden administration’s climate agenda, a lack of interest by the industry is also holding back new projects. Norwegian oil and gas data provider Rystad sees both of these factors at play globally as reluctant governments are colliding with risk-averse companies that fear recession while still feeling the lingering effects of the Covid-19 pandemic that had oil prices plunge to never-before-seen lows. Rystad expects only 44 oil and gas lease round to take place globally this year—the fewest since the year 2000. Data by the company further shows that only two new blocks had been licensed for drilling in the U.S. as of the end of August this year.
What Are FERC and the White House Doing? (Thanks, MDN) In a March 3rd Senate Energy and Natural Resources Committee hearing, Senator Bill Cassidy (R-LA) asked Federal Energy Regulatory Commission (FERC) Chairman Richard “Dick” Glick this question: “Has anyone higher up in the [Biden] administration ever spoken to you in regards to somehow slow-walking or otherwise impeding or otherwise accentuating policy that would have the effect of impeding the development of natural gas pipelines?” Chairman Glick responded with an unambiguous “no.” Yet FERC refused to release records of communications and meetings with the White House to back up Glick’s statement. The Institute for Energy Research (IER) promptly filed a lawsuit (and nine others since) to probe the extent of the involvement of the Biden White House in reshaping FERC’s policies. FERC continues to stonewall the IER’s requests. What is FERC, and The White House, hiding?
$16 Billion in Deals in the Oil Patch in the 3rd Qtr. U.S. oil patch M&A in Q3 tops $16 billon the most this year. Reuters. Mergers and acquisitions in the U.S. oil patch accelerated to $16 billion in the third quarter, the most this year, although the nine-month total trails the year-ago period’s, according to figures released on Wednesday by data analytics firm Enverus. This year’s activity has been subdued, despite strong energy prices due to the economic recovery from the COVID-19 pandemic and a reshaping of global energy flows triggered by Russia’s invasion of Ukraine. The deal value in the first nine months totaled $36 billion, less than the $56 billion in the same period last year, Enverus Intelligence Research said. Note: Houston Chronicle also reports.
EXXON Looking at Another Takeover. Exxon eyes takeover of Plano-based oil and gas company. Dallas Morning News. Exxon Mobil Corp. is considering a takeover of Plano-based Denbury Inc., an oil and gas producer with the largest carbon dioxide pipeline network in the U.S., according to people familiar with the matter. Irving-based Exxon has expressed preliminary interest in the company, said the people, who asked not to be identified because the matter isn’t public. They added that no final decision has been made, and Exxon could opt against proceeding with a potential deal. If a takeover happens, it would be the biggest carbon-management investment since the Inflation Reduction Act passed in August, providing large tax incentives for burying carbon dioxide. The legislation increased tax credits for carbon capture 70% to $85 a ton. Executives including Exxon CEO Darren Woods have praised the act for its financial support for carbon capture, which Morgan Stanley says could be highly profitable in the future.
Diamondback Energy Buys FireBird Energy. Permian Basin driller FireBird Energy sells in $1.6 billion deal. Dallas Morning News. Diamondback Energy Inc. agreed to buy closely held FireBird Energy LLC in a cash-and-stock deal valued at about $1.6 billion, enabling the U.S. shale oil producer to grow in the Permian Basin Midland-based Diamondback will pay 5.86 million shares and $775 million in cash, it said Tuesday in a statement. The cash portion of the deal is expected to be funded via cash on hand, borrowings under a credit facility, and, potentially, proceeds from an offering of senior notes. The transaction is just the latest in a series of takeovers that are consolidating holdings across the Permian, where land ownership is often fragmented. It’s Diamondback’s biggest deal since it closed the acquisition of QEP Resources Inc. in early 2021, and will give the company about 75,000 gross additional acres in the Midland Basin, which is part of the Permian Basin in West Texas.
TX Republicans Fighting Wall Street. The Texas Republican fighting Wall Street — and protecting the energy industry. Politico. Needling global investment firms and federal regulators, Glenn Hegar is making the most out of an obscure job in state government. The Texas comptroller, a Republican, made a national name for himself this summer when he accused BlackRock, Credit Suisse and UBS of “boycotting” energy companies and barred them from doing business with the state after legislators passed a law designed to protect fossil fuel businesses. “To just holistically say ‘we’re not going to invest in oil and gas and that means the world will transition to renewables in the next X amount of years,’ is just unrealistic,” Hegar said in a wide-ranging interview that discussed rural broadband, threading economic indicators and his own political future. “It’s intellectually dishonest with people and that’s disturbing to me.”
TX Ends Relationships with Environmental and Social Governance Companies. State of Texas cuts ties with environmental and social governance companies. ABC 13. If a financial company does not invest in oil and gas, it can’t do business with the state of Texas. It’s a law passed during the last legislative session and it targets companies that the state defines as boycotting oil and gas. Even though, some suggest it is little more than playing politics in an election year. Oil and gas are a financial pillar in Texas. Upwards of 200,000 Texans make their living in the industry, and the Republican-led legislature passed a law to help protect those jobs and that part of the energy industry. “This law was a way for Texas Republicans to show that they were on the side of the oil and natural gas industry, which is one of Texas’ most important industries,” Baker Institute Political Fellow Mark Jones said.
County Rig Count Leader. Lea continues to lead in oil rig count. Hobbs News-Sun. After almost three years, Lea County still leads all other counties in the nation with active oil rigs, surpassed only by two whole states — New Mexico and Texas. Adding six rigs in the week before Sept. 23, according to data published by oil field services company Baker Hughes, Lea County had a total of 71 active rigs, about two-thirds of New Mexico’s 111 as of that date. “We’re very lucky,” said County Commission Chairman Dean Jackson, “first, to live where we live and, second, to have all the workers we have that go to work every morning before daylight and usually come home after dark, and also have to fight the very dangerous roads.” Jackson said Lea County alone produces more oil and gas than several entire nations, including oil-rich Venezuela, information he recently gleaned while attending the annual conference of the New Mexico Oil and Gas Association in Santa Fe.
Appalachian Basin Constraints Keep Capital Out. Infrastructure constraints in the Marcellus and Utica shale plays are not just keeping the natural gas in, they are keeping capital out, Kevin Little, senior vice president for natural gas at Macquarie Energy, said at Hart Energy’s recent America’s Natural Gas conference.
“The regulatory burdens are creating a dislocation in the markets,” Little said. “Whereas, the Marcellus and Utica led in the terms of growth through 2019, now, we’re expecting this to shift down to Texas-Louisiana—specifically, in the immediate term, Haynesville.
“You’re just seeing a shift in capital away from Marcellus and Utica down to the Gulf Coast.”
Good for the Gulf Coast in terms of its gas industry expansion, but not so good for Appalachia or, really, for anybody. U.S. LNG export capacity is primed to ramp up and the largest, most economic natural gas basin is left out of the action, unable to increase production to meet the higher demand. The result will be higher prices both domestically and internationally, adding to the pressure on struggling European economies.
Agreements to supply LNG, already on the rise, accelerated following Russia’s invasion of Ukraine in February. But the growth in U.S. export capacity really starts when the Golden Pass terminal comes online in 2024, Little said, and peaks in 2026.
The U.S. exports about 11 Bcf/d of gas at the moment, he said, a figure that will jump to 13 Bcf/d when Freeport LNG is able to fully return to service. Maquarie forecasts an expansion to 25 Bcf/d by the end of 2027. U.S. gas production, now around 100 Bcf/d, will creep up to 103 Bcf/d by the end of the year and rise to 110 Bcf/d by the end of 2023, Little said.
PA Permit October 3, to October 13, 2022
County Township E&P Companies
1. Bradford Overton Chesapeake
2. Bradford Overton Chesapeake
3. Susquehanna Bridgewater Coterra
4. Susquehanna Bridgewater Coterra
5. Susquehanna Bridgewater Coterra
OH Permits October 2, to October 8, 2022
County Township E&P Companies
1. Monroe Perry Diversified Products
2. Monroe Perry Diversified Products
WV Permits October 3, to October 7, 2022
1. Tyler Antero
2. Tyler Antero
3. Tyler Antero
4. Wetzel EQT
Joe Barone 610.764.1232