Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Shell Launches Cracker. Shell Chemical Appalachia LLC, a subsidiary of Shell plc, today announced it has commenced operations of its Pennsylvania Chemical project, Shell Polymers Monaca (SPM). The Pennsylvania facility is the first major polyethylene manufacturing complex in the Northeastern United States and has a designed output of 1.6 million tons annually.
“Building this world-class facility is a fantastic achievement and one the team can be proud of; it’s a showcase of Shell’s project delivery expertise,” said Huibert Vigeveno, Shell Downstream Director. “With great market access, innovative offers and connected infrastructure, Shell Polymers Monaca is well positioned and ready to serve customers with high-quality, competitive products.”
Strategically located within a 700-mile radius of 70 percent of the U.S. polyethylene market, SPM sits on 384 acres adjacent to the Ohio River in Beaver County, Pennsylvania. SPM contracted most of its natural gas feedstock at Final Investment Decision from the nearby Utica and Marcellus basins. The advantages of proximity are not limited to production; SPM also offers customers shorter supply chains, which translates to increased flexibility and access to polyethylene pellets that can be used in a wide variety of products such as common household goods, consumer and food packaging, as well as industrial and utility products.
The start-up of Shell Polymers Monaca represents an important step in growing Shell’s chemicals business as part of its Powering Progress strategy. The company is increasingly participating in value chains closer to end-use customers and using advantaged feedstocks to deliver more high value products while reducing exposure to commodity chemicals over time.
“I’m proud that in delivering this facility we’ve had a strong and innovative safety focus; invested in the community through employment and education; and helped repair and improve the local environment by remediating a brownfield site. These commitments are core to Shell’s Powering Progress strategy today and will remain so in the years to come,” said Vigeveno.
Higher NatGas Prices Are Here to Stay. Are higher natural gas prices durable? No doubt about it, says Ovintiv CEO. NGI. The uplift in natural gas prices didn’t begin with Russia’s invasion into Ukraine and once the war ends, prices should remain “durable,” Ovintiv Inc. CEO Brendan McCracken said recently. “I think really this is a durable, fundamental call on North American gas that preceded the Russian invasion of Ukraine,” McCracken said. “And I think it’s pretty easily forgotten because of the importance of that invasion. But if you look back into what was happening in Europe for gas prices pre-invasion, there was already a dramatic shortage underway. And so, really what we see unfolding is a call on North American gas supply and global LNG demand, whether it’s in Europe or Asia or other parts of the developing world…That’s durable pricing that we see unfolding over decades…”
Earthquake Could Cause Major Problems in the Permian. Earthquake in the epicenter of U.S. oil production adds risk for drillers—analyst. The Wall Street Journal. The 5.4-magnitude earthquake that rattled West Texas on Wednesday is the latest in a growing number of temblors emanating from America’s premier oil patch, posing a risk to drillers, says Truist Securities analyst Neal Dingmann. He counts more than 1,000 quakes so far this year in Texas and New Mexico of a magnitude greater than 2, which is generally the lowest intensity that can be felt by humans. That compares with 260 in 2020 in the prolific drilling region known as the Permian Basin. Hydraulic fracturing, particularly the injection back underground of wastewater from the rock-cracking process, has been blamed for increased seismic activity in shale-drilling regions. “As earthquakes get more frequent, there could be the possibility of increasing regulation throughout the two states,” Mr. Dingmann says. “In the Permian, there are currently over 300 rigs and several of the largest producers in the U.S. that could feel some impacts.”
Ascent 3rd Qtr. Financials. (Thanks, MDN) Ascent Resources, originally founded as American Energy Partners by gas legend Aubrey McClendon, is a privately-held company that focuses 100% on the Ohio Utica Shale. Ascent is Ohio’s largest natural gas producer (352,000 leased acres) and the 8th largest natural gas producer in the U.S. The company issued its third quarter update yesterday. Ascent averaged production of 2.34 Bcfe/d for the quarter, up significantly from the 1.98 Bcfe/d it averaged in 3Q21 (18% increase). Production was also up from the 1.97 Bcfe/d produced last quarter, 2Q22 (19% increase). Nearly all of Ascent’s production (94%) was natural gas, while the rest was oil and NGLs.
EOG’s Ohio Plan. EOG Resources has “double premium” plans for Ohio Utica. Marcellus Drilling News. In 2020, EOG Resources, one of the largest oil and gas drillers in the U.S. (with international operations in Trinidad and China), sold *all* of its Marcellus assets, which were located in Bradford County, PA, to Tilden Resources for $130 million (see EOG Resources Sells Marcellus Assets for $130M, Exits Basin). EOG left the M-U building, so to speak. But the company couldn’t stay away. Two weeks ago, we told you that EOG admitted to stealthily amassing 395,000 net acres in the Ohio Utica for very little money (see EOG Resources Accumulates 395K Acres in Ohio Utica for Under $500M). EOG calls its new position the “Ohio Utica combo play.” We have more details on what EOG means by combo play and its “double premium” plans for the Utica.
Permitting Reform. Will It Happen. Energy & Environment — Republicans show appetite for permitting reform. The Hill. Several Republicans are showing a desire to work with Sen. Joe Manchin (D-W.Va.) on permitting reform, though it’s not clear if they’ll be able to put a package together in the next few weeks. Meanwhile, the U.S. is apparently backing a fossil fuel phasedown in global talks, while major economies are reaffirming their support for limiting warming to 1.5 degrees Celsius. Manchin has been pushing for policies that speed up the approval process for energy projects in order to build out more energy infrastructure. His last attempt ran into opposition from both Republicans — who said it didn’t go far enough — and progressives, who said it could harm communities who live near the projects. Sen. Dan Sullivan (R-Alaska) told The Hill, “Our country needs energy, all kinds of energy: oil, gas, renewables — we need critical minerals. All of those things get boxed out by a
Repsol Supplying Certified NatGas. Repsol has started supplying independently certified natural gas to the market in North America from its upstream operations in the Marcellus Shale.
The certification is designed to reflect the company’s commitment to provide safe, reliable, and responsibly sourced energy while continuing to reduce emissions from its upstream activity. The company has certified 100% of its production in the play, which is more than 400 million cubic feet per day of dry natural gas from more than 680 wells, Repsol said.
The certification was achieved through an independent assessment that evaluated the methane emissions performance of the company’s operations from wellhead to delivery under the standard set by the non-profit MiQ, which certifies 4% of the global gas market and is the leading market standard for methane emissions performance in the United States.
The company continues to make progress toward its goal of reducing the me- thane emissions intensity from its operated upstream assets to 0.20% by 2025 from 1.34% in 2017.
“This is an important milestone that reflects the contribution of our upstream business to achieving Repsol’s energy transition targets, including our goal to have net zero emissions by 2050,” said Sheldon Lillico, Repsol’s Marcellus business unit director. “We’re proud to provide reliable, lower-emission natural gas in the Marcellus Shale, especially at a time when global demand for this fuel continues to surge in response to the current geopolitical situation.”
“Taken together with the recent launch of CG Hub – where gas like Repsol’s can be traded – this shows huge momentum and growth, and demonstrates the potential of certified gas to help the oil and gas industry eradicate methane emissions,” said Georges Tijbosch, CEO, MiQ.
MiQ is an independent not-for-profit established by RMI (formerly the Rocky Mountain Institute), and global sustainability consultancy SYSTEMIQ to facilitate a rapid reduction in methane emissions from the oil and gas sector.
NatGas Output Increasing. Spurred by Haynesville, Appalachia, Lower 48 natural gas output to continue climbing in December. NGI. The Haynesville Shale and the Appalachian Basin will lead continued growth in domestic natural gas production from November to December, with output from seven key U.S. regions set to rise more than 500 MMcf/d month/month to nearly 96 Bcf/d, according to updated modeling from the Energy Information Administration (EIA). In its latest Drilling Productivity Report (DPR), published Monday, EIA said it expects total natural gas output from the seven key U.S. producing regions to reach 95.687 Bcf/d in December, a 564 MMcf/d sequential increase. The seven regions tracked in EIA’s DPR include the Haynesville and Appalachia regions, the Anadarko and Permian basins, and the Bakken, Eagle Ford and Niobrara shales.
$200 Oil??? Bets on $200 oil surge as traders eye extreme volatility. Oil Price. A week ago, the U.S. Energy Information Administration cut its crude oil demand outlook for 2023 by 320,000 bpd, with supply also falling, by 300,000. This week, OPEC also revised down its oil demand forecast for next year by 100,000 bpd, citing economic challenges on the global oil scene. It also warned supply might become more problematic. The chief factor behind the demand outlook appears to be the situation with Covid in China. Updates on that situation have pushed oil prices up or down on a daily basis, depending on their content, and are likely to continue doing it next year as well. An option to buy Brent crude for $200 per barrel in March 2023 at one-point last week became the most traded contract on the market, signaling that despite concern about Chinese demand, expectations of tighter supply were still going strong.
Big Oil Cautious on Investments. U.S. producers remain cautious on investments. Upstream. Decision-makers in the oil and gas industry will become more inclined to consider investment in production and energy transition next year although capital discipline remains a prime mover for the time being, according to findings from the latest survey by management consultancy Deloitte, which has its headquarters in London. A total of 100 US executives or high-ranking officials took part in Deloitte’s survey and a majority, especially those representing listed companies with a sizeable upstream activity, were sticking to a “cautious” strategy when it came to production growth, saying they would continue to prioritize share valuation.
Flaring Returns in TX. As pipelines fill, natural gas flaring set to rebound in Permian Basin. World Oil. Operators in America’s biggest shale oil basin are set to significantly increase the amount of natural gas they burn into the atmosphere because of a lack of pipeline capacity to ship it elsewhere, according to Rystad Energy. Permian Basin gas production has rebounded more quickly than oil since the pandemic, leaving pipelines effectively maxed out. It will be the latter half of next year before several major pipeline expansions come online to ease the shortage. As a result, for many companies it makes more economic sense to flare off the gas, especially since permits are easy to receive from the Texas Railroad Commission, the state’s oil and gas regulator.
Methane Restrictions Will Cut Production. Biden announces restrictions on methane emissions at COP27. WSJ. President Biden touted U.S. plans to cut methane emissions and boost climate funding to developing countries in an address that sought to reclaim the mantle of global leadership on efforts to limit climate change. Speaking before a United Nations climate conference, Mr. Biden said Democrats’ climate, health and tax legislation—which allocates hundreds of billions of dollars to climate and energy programs—helped put the U.S. on track to meeting Mr. Biden’s goal of cutting domestic emissions 50% below 2005 levels by 2030. “The United States government is putting our money where our mouth is to strengthen accountability in climate risk and resilience,” the president said. The Independent Petroleum Association of America, a Washington, D.C., trade group representing smaller producers, said it is also watching closely, citing “a need to assure that the regulatory structure is cost effective and technologically feasible.” The American Petroleum Institute, which represents U.S. oil and gas producers, said it is also reviewing the proposed rule, adding that federal regulation that built on the industry’s own efforts were helpful in accelerating emissions reductions.
More Methane Worries. Energy companies still digesting Biden’s proposed methane rule. The Midland Reporter-Telegram. Oil and gas companies from across the energy spectrum spent the weekend wondering what the proposed methane rules covering methane emissions issued by the Environmental Protection Agency will mean to their operations. President Biden, at the international COP27 UN climate summit in Sharm El-Sheikh, Egypt, announced the new rules that would focus not only on new wells but all drilling sites, including smaller wells that must find and plug leaks. The proposals also require operators to respond to credible third-party reports of high-volume methane leaks. And they create a “Super-Emitter Response Program” to quickly identify and report large ‘super-emitter’ leaks that oil and gas companies would be required to investigate and repair. “Our members continue to review the EPA proposal that was announced at the end of last week in Egypt and are prepared for more regulations from the federal government in the near future,” Ben Shepperd, president of the Permian Basin Petroleum Association, told the Reporter-Telegram by email.
“Fracklog Is Back.” The shale ‘Fracklog’ Is back as US oil drillers hoard wells. Bloomberg. US oil and gas companies fracked fewer wells than they drilled for the first time in more than two years, indicating a possible slowdown in production despite elevated prices and concerns about a global energy crunch. The number of drilled but uncompleted oil and gas wells, also known as DUCs, rose by 8 to 4,408 in October compared with the prior month, the US Energy Information Administration said Monday. The expansion ends a 27-month-long streak of declines in the DUC count, the longest according to EIA records dating back to the early days of shale. Oil and natural gas prices have been resurgent since the end of the pandemic. Yet much of the shale industry has kept a lid on production, due to pressure from investors not wanting to see a repeat of previous boom-and-bust cycles, a shortage of vital machinery such as frack pumps, and costs hitting a record. The industry is also not getting the same bang for its buck that it used to, as the productivity of oil rigs continues to decline.
Rolling Blackouts. Are We Becoming a Third-World Nation? A quarter of Americans at risk of winter power blackouts, grid emergencies. Bloomberg. Large swaths of North America may face blackouts and other energy emergencies during bouts of extreme cold this winter as coal and natural gas supplies tighten, according to a US regulatory agency. The electric grids at most risk of supply shortfalls are in Texas, the central US system stretching from the Great Lakes to Louisiana, New England and the Carolinas, the North American Electric Reliability Council said in its seasonal assessment Thursday. Severe weather may stress grids by causing demand to soar while supplies of natural gas, coal and back-up fuel oil are all tight, leaving little room for error, according to the report. “The trend is we see more areas at risk, we see more retirements of critical generation, fuel challenges and we are doing everything we can,” John Moura, NERC’s director of reliability assessment, said during a media briefing. “These challenges don’t kind of appear out of nowhere.”
William Moving Towards Being an LNG Exporter. Williams one step closer to international LNG trade after Sempra HOA. NGI. Natural gas midstream giant Williams has reached a tentative agreement with Sempra Infrastructure to buy 3 million metric tons/year (mmty) of LNG and develop pipeline projects to feed growing exports from the Gulf Coast. The companies signed a non-binding heads of agreement (HOA) to negotiate the terms of two 20-year agreements for Williams to purchase liquefied natural gas from the Port Arthur LNG project in Texas and the Cameron LNG Phase 2 expansion project. Williams would market those volumes internationally. Williams also would sell 500 MMcf/d to Sempra at the Gillis interconnect in Louisiana for use as feed gas at the terminals. “We see it as an opportunity to combine our capabilities along the natural gas value chain and increase the delivery of low-carbon, affordable and reliable natural gas from the wellhead to the growing international market,” said Williams CEO Alan Armstrong.
Diamondback Speeds Up Permian Expansion. Diamondback speeds Permian expansion with $1.5 billion deal. Bloomberg. Diamondback Energy Inc. agreed to buy drilling rights in the U.S. Permian Basin for about $1.5 billion in its latest expansion in North America’s biggest oilfield. Diamondback will acquire drilling rights across 15,000 net acres in the Permian’s northern Midland Basin in Texas from closely held Lario Oil and Gas Co. for $850 million in cash and 4.18 million shares, according to a statement on Wednesday. The announcement comes just weeks after Diamondback agreed to purchase Permian explorer Firebird Energy LLC for about $1.5 billion. On a combined basis, the Firebird and Lario deals will expand Diamondback’s Permian footprint by an area almost twice the size of Brooklyn.
PA Permits October 31, to November 17, 2022
County Township E&P Companies
1. Armstrong Rayburn Exco
2. Bradford Leroy Chesapeake
3. Bradford Leroy Chesapeake
4. Bradford Leroy Chesapeake
5. Bradford Leroy Chesapeake
6. Bradford Leroy Chesapeake
7. Bradford Leroy Chesapeake
8. Bradford Leroy Chesapeake
9. Bradford Tuscarora Chesapeake
10. Bradford Tuscarora Chesapeake
11. Bradford Tuscarora Chesapeake
12. Bradford Tuscarora Chesapeake
13. Bradford Tuscarora Chesapeake
14. Bradford Tuscarora Chesapeake
15. Bradford Wilmot Chesapeake
16. Bradford Wilmot Chesapeake
17. Lycoming Penn Exco
18. Susquehanna Harford Coterra
19. Washington Amwell Range
20. Washington Amwell Range
21. Washington Amwell Range
22. Washington Amwell Range
23. Washington Morris Range
24. Washington Morris Range
25. Washington Morris Range
26. Washington Morris Range
OH Permits October 30, to November 5, 2022
County Township E&P Companies
1. Carroll Union EAP OHIO
2. Columbiana Elk Run Hilcorp
3. Columbiana Elk Run Hilcorp
4. Columbiana Elk Run Hilcorp
5. Columbiana Elk Run Hilcorp
6. Columbiana Elk Run Hilcorp
7. Columbiana Elk Run Hilcorp
8. Columbiana Elk Run Hilcorp
9. Columbiana Elk Run Hilcorp
10. Columbiana Elk Run Hilcorp
11. Columbiana Elk Run Hilcorp
12. Columbiana Elk Run Hilcorp
13. Columbiana Elk Run Hilcorp
WV Permits November 7, to November 11, 2022
1. Marshall SWN
2. Monongalia Northeast Nat.
3. Tyler Antero
4. Tyler Antero
5. Tyler Antero
6. Tyler Antero
7. Tyler Antero
8. Tyler Antero
9. Tyler Antero
10. Tyler Antero
11. Wetzel EQT
12. Wetzel EQT
13. Wetzel EQT
14. Wetzel EQT
15. Wetzel EQT
16. Wetzel EQT
17. Wetzel EQT
Joe Barone 610.764.1232