Shale Directories Conferences
November 10, 2022 NEXT WEEK!!!
Hilton Garden Inn, Southpointe
Canonsburg, PA (near Pittsburgh)
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
EOG’s Well Program for Oil. EOG Resources plans 20-well program in newly accumulated Utica acreage. Oil & Gas Journal. EOG Resources Inc. is targeting a 20-well program in the Utica in 2023 after establishing a new position in Ohio, accumulating 395,000 net acres and about 135,000 mineral acres in the southern portion of its acreage footprint—all for less than $500 million, the company said as part of its third-quarter earnings release Nov. 3. The product mix averages about 60-70% liquids across the acreage where the company already has completed four wells and operates 18 additional legacy wells across a 140-mile trend. The company “is now operating seven significant resource basins with the addition of the Utica Combo in Ohio,” said Ezra Yacob, chairman and chief executive officer. The multi-basin position provides flexibility “to allocate capital to the highest return projects across a diverse and improving inventory of future well locations,” he said.
Perry Babb Does Nikola for KeyStates Facility in Clinton County, PA. Nikola Corporation, a global leader in zero-emissions transportation and energy supply and infrastructure solutions, and KeyState Natural Gas Synthesis (“KeyState”), a clean hydrogen and chemicals production facility under development, are working together to create Pennsylvania’s first low-carbon hydrogen production value chain, which includes full integration of commercial carbon capture and storage. The project is intended to represent the transition to lower emissions transportation, chemicals and manufacturing. The parties are working towards a definitive agreement to expand the hydrogen supply for Nikola’s zero-emissions heavy-duty fuel cell electric vehicles (FCEVs).
Nikola Corporation and KeyState Natural Gas Synthesis are working together to create Pennsylvania’s first low-carbon hydrogen production value chain, which includes full integration of commercial carbon capture and storage. The parties are working towards a definitive agreement to expand the hydrogen supply for Nikola’s zero-emission heavy-duty fuel cell electric vehicles (FCEVs).
“Nikola’s participation in the project will allow us to secure sufficient volumes of hydrogen to underpin and accelerate the adoption of zero-emission trucks by unlocking new customer demand and enabling key investments in downstream hydrogen refueling infrastructure in the Mid-Atlantic region,” said Nikola President, Energy, Carey Mendes. “This will be key to our supply strategy and will help develop our refueling network at scale. Additionally, the low carbon, clean hydrogen will allow us to maximize value under the Inflation Reduction Act and future downstream fuel and dispensing incentive programs.”
KeyState plans to supply Nikola with up to 100 tons per day of low carbon hydrogen, which can supply fuel for up to 2,500 Nikola Tre FCEVs and will displace over 51,000,000 gallons of fossil diesel fuel per annum consumed. * Once operational in 2026, the 7,000 plus-acre KeyState site is expected to have the capacity to store the CO2 associated with the hydrogen production and will provide strategic reach and access to premium Mid-Atlantic FCEV markets. KeyState will also produce ammonia and urea for industrial and transportation markets, in addition to Nikola’s hydrogen mobility demand.
The KeyState project is expected to integrate carbon capture from high-efficiency autothermal reforming with onsite geological carbon sequestration and onsite close-system sourced natural gas feedstock, all while generating zero-carbon electricity. A true carbon circle will be completed, with the separation of 99% of carbon from the hydrogen in methane and returning this CO2 to deep underground onsite geological storage.
“KeyState has developed a replicable model for low carbon, low-cost hydrogen at large scale production,” said Perry Babb, CEO of project developer KeyState Energy. “This project will have multi-county, multi-generation, economic impact and job creation in a formerly booming Pennsylvania coal and rail region, demonstrating that unprecedented emissions reduction and great long-term job creation are both possible.”
In addition to working toward the hydrogen supply agreement, the parties are working together to develop a liquefaction solution to support the economic and efficient distribution of hydrogen from the project to Nikola’s planned refueling network under development. The parties also plan to support an application as a principal project of the DOE Hydrogen Hub Program representing the full-use hydrogen ecosystem from production through demand.
PA Impact Fees $275 Million. State revenues from natural gas were high last year, and are expected to set a new record this year buoyed by rising prices and more drilling.
According to a new estimate from the Independent Fiscal Office, impact fees from natural gas wells will hit $275 million in 2022, $40 million higher than 2021.
The impact fee is levied on active wells and raises money for local governments and state agencies for infrastructure projects, emergency services, and environmental uses, among others.
The increase in impact fee revenue mainly comes from a rise in natural gas prices that meant higher per-well fees, with collections from new wells playing a smaller role; the IFO noted higher natural gas prices led to a $34.7 million increase, while new well production had a $5.7 million impact.
In total, the impact fees were assessed on 11,164 horizontal (fracked) wells and 11 vertical wells.
During the pandemic, Pennsylvania had its lowest impact fee revenue in recent years. In 2020, there were only $146 million in revenues. Strong growth in 2021 and 2022 surpassed revenues from 2018 and 2019. Production has increased every year since 2018, from 6,123 billion cubic feet to 7,600 bcf in 2022.
Last year’s IFO estimate slightly underestimated the impact fee, as The Center Square previously reported. With the new estimate, the impact fee has generated about $2.5 billion since 2012. Recent legislation, however, may limit which counties receive impact fee money. A proposed bill would forbid money going to counties if they ban natural gas development.
NatGas Production and Storage Drove down September Prices. High natural gas production and storage injections in September drove U.S. prices down. U.S. Energy Information Administration. U.S. natural gas production has increased to meet growing demand for U.S. liquefied natural gas (LNG) exports throughout the year. U.S. natural gas production has grown through 2021 and 2022. So far in 2022, dry natural gas production has averaged record volumes (over 96 Bcf/d), up 4% from last year and up 2.2% from 2019 annual production. In September, daily U.S. dry natural gas production exceeded 97 Bcf/d every day in September and exceeded 100 Bcf/d on seven days, according to data from PointLogic. Increases in natural gas production from shale plays have been driving growth in U.S. natural gas production this year and, so far, shale natural gas production has accounted for 78% of all U.S. dry natural gas production. The Permian Basin and Haynesville play in the U.S. Gulf region have led in production growth, and they reached record production highs this summer.
MVP Wants Congressional Help. Equitrans wants U.S. legislation to help finish Mountain Valley NatGas pipe. Reuters. U.S. energy company Equitrans Midstream Corp (ETRN.N) said on Tuesday that the best path to complete its Mountain Valley natural gas pipeline from West Virginia to Virginia by the second half of 2023 was through U.S. permitting reform legislation. Equitrans also said in its third quarter earnings release that federal legislation would help the company stick to its previously-announced $6.6 billion budget for the project. Mountain Valley – the only big gas pipe under construction in Appalachia – is one of several U.S. pipeline projects delayed by regulatory and legal fights with environmental and local groups. These fights stem from federal permit problems issued during President Donald Trump’s administration. The project is key to unlocking more gas supplies from Appalachia, the nation’s biggest shale gas basin.
Oil Production at Pre-Pandemic High. U.S. oil production nears 12 mln barrels/day, at pre-pandemic high. Reuters. U.S. oil output climbed to nearly 12 million barrels per day (bpd) in August, government figures showed on Monday, the highest since the onset of the COVID-19 pandemic, even as shale companies have said they do not see production accelerating in coming months. U.S. crude prices have hovered around $85 a barrel after surging into triple-digits this year and boosting fuel costs for consumers. President Joe Biden has called on oil companies to boost production to reduce fuel prices. Overall U.S. output peaked at 13 million bpd in late 2019, and has not returned to that level since the pandemic started as rigs have been shut in and as costs for equipment and labor increased rapidly. Several U.S. shale producers recently said well results are disappointing, and production is falling short of forecasts. “You’ll see production tick higher, but I don’t think we’re going to go ripping higher to 13.1 million barrels,” said Bob Yawger, director of energy futures at Mizuho in New York.
Chesapeake Flat Production in 2023. Chesapeake Energy in Wednesday’s trading after easily beating expectations for Q3 adjusted earnings, helped by higher natural gas prices that surged 43% from the year-earlier quarter to average $6.955/MMBtu.
Q3 adjusted earnings more than doubled to $5.06/share from $2.38/share in the year-earlier quarter.
Chesapeake (CHK) generated $1.3B of operating cash flow in Q3 and had $74M of cash on hand at the end of the quarter.
Q3 net production totaled 4.1B cfe/day (90% natural gas), and CEO Dominic Dell’Osso said the company is planning for flat production next year, as it grapples with steep cost increases for materials and labor.
“In the near term, we really don’t see any need for growth,” Dell’Osso said in Chesapeake’s (CHK) earnings conference call, according to Reuters, “so 2023 is probably setting up to be about flat on a year-over-year basis.”
The CEO said inflation in the Haynesville shale gas region could surpass 15% next year, and the Marcellus shale should see mid-single-digit cost increases, an indication that soaring costs for energy producers are not easing soon.
Company executives said if prices fall to the low to mid-$3/MMBtu range for a sustained period, they would consider pulling back new activity.
The company also said it plans to exercise an option to take a 35% stake in a Momentum Midstream gas transport project from the Haynesville shale to the U.S. Gulf Coast.
Philadelphia Legislation for LNG Port. On Monday, the Pennsylvania Senate’s Environmental and Energy Resources Committee heard testimony about legislation that would look into making the Port of Philadelphia a liquefied natural gas (LNG) export terminal.
The legislation, authored by state Rep. Martina White (R-Philadelphia), would create a task force to study the issue. The task force would not only look into what obstacles are currently preventing Philadelphia from becoming a leader in exporting LNG but also with preparing a report on the issue for the General Assembly and the administration with recommendations. The task force would be made up of those in the natural gas industry, Philadelphia building trade, and the PhilaPort, as well as people representing the General Assembly.
“I think we can all agree the war taking place between Ukraine and Russia has made everyone more aware of the need for an accessible and reliable energy source that does not put the United States at the mercy of other countries,” White said. “Pennsylvania could and should be a leader in the production and export of clean energy sources, like liquified national gas. We have an abundance under the ground that can provide the United States with energy freedom, and we have a port right here in Philadelphia that can be used to export it.”
Witnesses said the legislation would create jobs.
“The potential LNG project in Chester, Delaware County, will greatly benefit hard-working families who work in the building trades like our members of Steamfitters Local 420,” said Jim Snell with Steamfitters Local 420. “Energy jobs drive the economy as well support local businesses. Our members count on growth in the energy sector for employment, and our nation counts on us to help provide the energy to meet the needs of tomorrow.”
Other witnesses included representatives of the Marcellus Shale Coalition, the Chamber of Commerce for Greater Philadelphia, Berkshire Hathaway Energy GT&S, Penn LNG, EQT, the American Chamber of Commerce in Bulgaria, and others.
“As long as we are going to wear clothes, as long as we are going to eat food, as long as we are going to drive cars – even electric ones – the demand for natural gas will not disappear, here or in Europe,” said state Sen. Gene Yaw (R-23), chairman of the Senate Environmental and Energy Resources Committee. “And how blessed are we here in Pennsylvania to be one of the top producers of natural gas in the world? We should be doing more with it.”
As of Oct. 31, the bill, H.B. 2458, was awaiting the governor’s signature. He has 10 days to veto or sign it, or he could do nothing and let the bill become law without his signature.
Gulfport 3rd Qtr. Financials. (Thanks, MDN) Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and new top management. By September of last year, rumors began circulating that the company was shopping itself for sale. The two largest drillers in the Ohio Utica (Ascent Resources and Encino Energy) were reported to be in talks to buy Gulfport. But Gulfport’s performance over the past two quarters, including yesterday’s update on 3Q22, seem to indicate all talk about selling is now off the table. Gulfport turned in respectable results in 3Q. Production is down 6%.
Energy Voters Increasing. Energy voters are becoming more plentiful — and more conservative. Morning Consult. A Morning Consult demographic analysis finds rising shares of GOP and conservative voters who list energy as their top issue — along with steep falls among Democrats and liberals over the past two years amid rising energy costs. 25% of energy voters identify as Republican and another 30% say they’re conservative, up from 14% and 13%, respectively, in 2020. The share of energy voters that identify as liberal has fallen from 62% to 42% over the same period. Oregon, Vermont and New Hampshire have the largest shares of energy voters, while Tennessee, Florida, North Dakota and Delaware have the smallest.
Marathon Buys Ensign. Marathon Oil expands South Texas position with $3 bln Ensign buy. Reuters. Marathon Oil Corp (MRO.N) said on Wednesday it had struck a deal to buy natural gas-focused assets from private equity-backed Ensign Natural Resources for $3 billion in cash, nearly doubling its position in South Texas’ Eagle Ford shale basin. The deal comes as energy producers are reaping massive financial benefits from elevated oil and natural gas prices caused by disruption to markets in the wake of Russia’s invasion of Ukraine. Marathon Oil itself topped Wall Street estimates with its concurrent earnings announcement. While high profit levels have drawn the ire of politicians, in particular with U.S. midterm elections next week, the cash being generated by oil and gas companies is providing resources for them to repay debt, reward shareholders and pursue deals. Note: Houston Business Journal also reports.
PA Pass $2 Billion Tax Credit for Oil & Gas and Other Industries. Gov. Tom Wolf has signed a $2 billion tax credit package for the hydrogen production, milk processing, and biomedical research industries into law, capping months of quiet negotiations between the Democrat and top Republicans in the General Assembly.
Ninety cents out of each dollar offered will be used to encourage the use of natural gas, including $1 billion in tax incentives to attract a new “hydrogen hub” to Pennsylvania.
The package will provide $50 million a year in tax breaks to a company that agrees to produce hydrogen for 20 years and increase an existing methane tax credit from $30 million to $56.5 million annually.
PA’s $30 Million Tax Incentive for NatGas. Pennsylvania lawmakers add $30m in tax incentives for natural gas use, offer carrot for hydrogen hub. NGI. Lawmakers in Pennsylvania, the second-largest U.S. natural gas-producing state, last week signed a bill increasing tax credits by $30 million for in-state fertilizer and petrochemical manufacturers that use locally produced natural gas. House Bill 1059, dubbed the Pennsylvania Economic Development for a Growing Economy (PA EDGE), amends the Keystone State’s tax code, boosting the natural gas use tax credits from more than $26.6 million to around $56.6 million. Companies that have invested a minimum of $400 million into an in-state fertilizer, natural gas liquids or petrochemical project could be eligible to receive the credit at a rate of 47 cents/Mcf of purchased dry gas by filing an application to the state’s Department of Revenue by March 1, once the tax credits come into play. Note: Spotlight PA also reports.
PA Permits October 26, to November 3, 2022
County Township E&P Companies
1. Bradford Leroy Chesapeake
2. Bradford Overton Chesapeake
3. Bradford Overton Chesapeake
4. Bradford Smithfield Chesapeake
5. Bradford Smithfield Chesapeake
6. Lycoming Gamble Inflection Energy
7. Lycoming Gamble Inflection Energy
8. Lycoming Gamble Inflection Energy
9. Lycoming Gamble Inflection Energy
10. Lycoming Lycoming Beech Resources
11. Lycoming Lycoming Beech Resources
12. Lycoming McIntyre Repsol
13. Lycoming McIntyre Repsol
14. Lycoming McIntyre Repsol
15. Lycoming McIntyre Repsol
16. Lycoming McIntyre Repsol
17. Lycoming McIntyre Repsol
18. Susquehanna Bridgewater Coterra
19. Susquehanna Bridgewater Coterra
20. Susquehanna Bridgewater Coterra
21. Susquehanna Harford Coterra
22. Washington Nottingham Range
23. Wyoming Washington BKV OPR
24. Wyoming Washington BKV OPR
25. Wyoming Washington BKV OPR
26. Wyoming Washington BKV OPR
OH Permits October 23, to October 29, 2022
County Township E&P Companies
1. Carroll Green EAP OHIO
2. Carroll Green EAP OHIO
3. Carroll Green EAP OHIO
4. Carroll Green EAP OHIO
5. Monroe Green SWN
6. Monroe Green SWN
7. Monroe Green SWN
8. Monroe Green SWN
WV Permits October 24, to October 28, 2022
1. Marshall CNX
2. Wetzel Tug Hill
Joe Barone 610.764.1232