Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Global NatGas Demand Up. U.S. gas producers struggle to meet demand [gas in transition]. Natural Gas World. Natural gas demand is increasing globally and, as a result of the war in Ukraine and the resulting massive reduction in Russian gas exports, so is global demand for US LNG. But US shale gas producers are struggling to meet this demand, both domestically and for export. This winter and next are expected to be particularly difficult, especially for Europe, putting even further pressure on gas supplies. But there is a big question-mark as to whether US gas producers can respond. A drier and hotter than expected summer has left US gas inventories low, well below the seasonal average – the second-lowest for autumn for the last 12 years.
NatGas Drilling Slows. Natural gas drilling slows in U.S. as oil count rises, latest BKR tally shows. NGI. The U.S. natural gas rig count dropped two units to fall to 155 for the holiday-shortened week ended Wednesday (Nov. 23), while gains in the oil patch led the overall domestic tally two units higher to 784, according to the latest data from Baker Hughes Co. (BKR). Offsetting the natural gas declines, four oil-directed rigs were added in the United States for the period. Land drilling increased by two rigs, while the Gulf of Mexico held steady at 16 rigs for the week. Two directional rigs were added domestically, with total horizontal and vertical rigs unchanged. The combined 784 active U.S. rigs as of Wednesday compares with 569 rigs running in the year-earlier period, according to the BKR numbers, which are partly based on data from Enverus.
TX Drilling Permits Down. Texas issued 851 drilling permits in October, the fewest since Russia’s Ukraine invasion. Houston Chronicle. The number of new drilling permits issued in Texas ticked down slightly last month as analysts expect oil and gas production to grow at a slower pace heading into the new year. The Texas Railroad Commission, which regulates oil and gas, issued 851 drilling permits in October, the fewest since February when regulators issued 836 permits. After Russia invaded Ukraine, causing oil prices to soar as high as $120 per barrel and exacerbating a tight global supply of oil, drilling permits in Texas rose to 1176 in March. Overall regulators have issued 9,490 permits so far this year, a nearly 35 percent increase from the 7,053 issued in the same period last year.
Good News for NatGas Producers. Freeport LNG expects natural gas shipments to start flowing again mid-December. PoliticoPro. Freeport LNG, a major supplier of U.S. natural gas to Europe, said Friday it expects to start resuming shipments next month after an accident forced it to shut down earlier this year. The facility shut down operations in June after an explosion tore through the Quintana Island export plant. “Our teams have worked diligently over the last several months alongside regulators to ensure the safe restart of our facility. I am immensely grateful for their efforts,” Freeport Chief Executive Michael Smith said in a press release.
Natural gas production could skyrocket as Houston’s LNG industry grows. Houston Chronicle. The North American natural gas market is projected to triple in size thanks to the rapidly growing LNG industry along the Gulf Coast, according to a new report from U.K. research firm Wood Mackenzie. Over the next decade, gas production in North America could jump by 29 billion cubic feet per day as the continent responds to the world’s growing demand for gas, the firm found. “The North America gas market expansion for the next decade will be equivalent to adding two new Permian basins,” said Wood Mackenzie’s Dulles Wang, director of gas and LNG research in the Americas. “As Europe diversifies to more secure supply sources and international buyers across the globe seek reliable low-cost supply, North America is poised to deliver.”
Huge TX Oil Export Project. Biden administration quietly approves huge Texas oil export project. Texas Tribune. The Biden administration has approved plans to build the nation’s largest oil export terminal off the Gulf Coast of Texas, which would add 2 million barrels per day to the U.S. oil export capacity. The approval by the Department of Transportation’s Maritime Administration was filed in the federal register on Monday without any public announcement, a day after the United Nations’ annual climate conference wrapped up in Sharm el-Sheik, Egypt.
Oil $90 in 2023. Oil prices will hover near $90 in 2023 as Russian production bounces back to pre-war levels, JPMorgan says. Business Insider. Oil prices will head higher in 2023, but not as much as JPMorgan originally expected, according to a Monday note. The bank lowered its 2023 Brent crude oil forecast to $90 per barrel from $98 on the grounds that Russia will normalize its oil production to pre-war levels. With Brent crude oil currently trading at $83.55 per barrel, JPMorgan’s forecast represents just 8% upside potential next year. If Russia’s oil production levels normalize as JPMorgan expects, it will likely find a big buyer in India. “Essentially, the US signaled it is ‘happy’ for India to continue buying as much Russian oil as it wants… as long as it doesn’t use Western insurance, finance, and tankers,” JPMorgan explained. Dynamics surrounding the Biden administration’s need to refill the US strategic petroleum reserve should also be supportive of oil prices going forward.
Challenging ’23 for O&G Industry. Energy industry to be tested in ’23. OA Online. An industry as big and powerful as energy may expect challenges almost as big and powerful as it is and that’ll continue in 2023. The past year has been a great one in many respects with booming production and robust profits, but the obstructionist Biden administration, rampaging global demand, a weak investment scenario, shortages of workers, supply chain constraints, seismic issues and over-burdened refineries loom large as 2022 winds down. However, Texas Railroad Commissioners Wayne Christian and Jim Wright and Texas Independent Producers & Royalty Owners President Ed Longanecker are confident the industry will prevail. “Prior to the pandemic in 2019, Texas produced a record 1.8 billion barrels of oil and 10.1 trillion cubic feet of natural gas, making up over 40 percent of the nation’s entire production,” Christian said from Austin. “Then before the industry could recover, Joe Biden was elected president and he created roadblocks that added unnecessary regulatory uncertainty, discouraging growth and additional production.
TX Helps Sending NatGas to Europe. Texas oil plays crucial part in supplying natural gas to Europe. The San Antonio Business Journal. The Texas Independent Producers and Royalty Owners Association (TIPRO) released a report recently highlighting how Texas natural gas played a crucial part in supporting Europe this year. In the first half of 2022, the United States became the world’s largest export of liquefied natural gas, according to the report. The U.S exports of LNG shifted to Europe as the primary destination, helping to fill the gap created by Russia’s invasion of Ukraine. Texas played a significant part in supplying LNG, with the Port of Corpus Christi having the second-highest amount of LNG exports nationwide. The port had 90.1 million tons of LNG move through it from January to June of this year. The port will likely maintain its heavy traffic volume as 96% of planned domestic LNG is expected to be in the Gulf of Mexico.
Investigating Permian Earthquake. Texas oil and gas agency investigating 5.4 magnitude earthquake in West Texas, the largest in three decades. Texas Tribune. Inspectors for the Texas Railroad Commission are investigating a 5.4 magnitude earthquake that was recorded west of Pecos near the border of Reeves and Culberson counties on Wednesday, the agency said. The earthquake, confirmed by the U.S. Geological Survey, was the largest recorded in the state since 1995 and the third-largest in Texas history, according to the USGS National Earthquake Information Center. The largest quake in Texas history was 5.8 magnitude recorded in 1931 southwest of Valentine, according to the USGS National Earthquake Information Center.
Eagle Ford Getting Ready for Second Act. Is the Eagle Ford shale play getting a second wind? Oil Price. Opinion. Over the last year, the Eagle Ford Shale play has seen a lot of renewed interest in investment as well as M&A activity. Just this November, Marathon Oil Company, announced in their quarterly earnings call they had acquired the Eagle Ford assets of privately held Ensign Natural Resources. For a sales price of ~$3.0 bn in a combination of cash and debt instruments, MRO got 67,000 BOEPD of production, 130,000 bolt-on acres, and 600 new derisked drilling locations. Not a bad deal at ~$23,000 per acre on its face, but what drove the deal in the Eagle Ford as opposed to other shale plays? The Ensign acreage continues in the Condensate region and dips down into the Wet Gas region, bringing a new horizon to MRO. The Ensign deal brings a double-down focus on the condensate and new horizons in Wet Gas to Marathon.
Frack Sand Problems in the Eagle Ford. Frack-sand plant fire threatens supplies for Texas shale wells. Bloomberg. A frack-sand plant in the Eagle Ford region of Texas erupted in flames over the weekend, imperiling supplies of a key component in shale drilling. The blaze at Superior Silica Sands LLC’s sand-processing complex in San Antonio began around 2:30 a.m. local time on Saturday, according to reports from the city’s NBC and CBS television affiliates. A voicemail left at Superior’s Chandler, Arizona, headquarters outside of regular business hours wasn’t immediately returned.
Ranger Oil Explores Sale. Texas producer Ranger Oil explores sale. Reuters. Ranger Oil Corp (ROCC.O) is exploring a potential sale as the south Texas oil and gas producer looks to capitalize on high energy prices to pursue strategic options, people familiar with the matter said on Friday. Ranger is working with an advisor and has actively started marketing itself to potential buyers, the sources said, requesting anonymity as these discussions are confidential. Shares in Ranger, which operates in the Eagle Ford shale basin, jumped over 5% on Friday after Reuters reported the company’s sale efforts. This gave the R
Denver Firm Selling TX Operations. Denver oil company selling Texas operations in $1.5 billion deal. Denver Business Journal. A longstanding Denver oil company is selling its operations in the Permian Basin oilfields of Texas in a deal worth $1.5 billion. Midland Texas-based Diamond Energy is acquiring 25,000 acres of mineral rights and about 150 potential drilling locations in the Midland area from Lario Oil & Gas Co., a Denver company with holdings in five U.S. oil-producing areas. Lario, founded in 1927, is selling its Lario Permian LLC, for $850 million in cash and 4.18 million shares of Diamondback Energy stock (Nasdaq: FANG) that were trading Friday about $155 per share, making the stock portion of Lario acquisition worth about $648 million.
Rising Heating Bills in the Northeast. Households in the Northeast brace for costly heating bills. The Institute for Energy Research. According to the Energy Information Administration (EIA), U.S. heating oil prices were 65 percent higher this October than they were in October of last year. Residential heating oil prices on average nationally rose to an annual high of $5.90 per gallon on November 7, 2022, because of tight inventories, low imports, and limited production capacity but fell to $5.79 per gallon on November 14—still 70 percent higher than a year ago. Only 4.1 percent of U.S. households use oil as their primary heating fuel, but in the Northeast, the percentage is much higher – 33 percent. In EIA’s November update of the Winter Fuels Outlook, households that use heating oil as their primary source of heating fuel are expected to spend 45 percent more on average for heating this winter compared with last winter because of higher retail heating oil prices and higher expected consumption. The average price is expected to be $5.14 per gallon—32 percent higher than last year. Biden has been pushing for more energy exports despite his continuing assaults on additional energy production here.
O&G Industry M&A’s Will Not Lead to Increased Drilling. M&A boom may not lead to drilling spree in U.S shale. Oil Price. Opinion. The last two energy crises that threatened hundreds of energy companies with bankruptcy have rewritten the oil and gas M&A playbook. Previously, oil and gas companies made numerous aggressive tactical or cyclical acquisitions in the wake of a price crash after many distressed assets became available on the cheap. However, the 2020 oil price crash that sent oil prices into negative territory has seen energy companies adopt a more restrained, strategic, and environment-focused approach to cutting M&A deals. According to data released by energy intelligence firm Enverus, cited by Reuters, U.S. oil and gas dealmaking contracted 65% Y/Y to $12 billion during the second quarter, a far cry from $34.8 billion in last year’s corresponding period, as high commodity price volatility left buyers and sellers clashing over asset values. We can, therefore, surmise that a rebound in M&A, as well as drilling activity, might not necessarily translate into a full shale comeback especially given the new shale playbook of limiting spending, high inflation as well as high cost of labor and equipment.
AG’s Still Fighting EPA. AGs push back against EPA ‘environmental justice’ rule, say it will increase energy costs. The Highland County Press. Twelve attorneys general have submitted comments to Environmental Protection Agency Administrator Michael Regan expressing concerns about a new proposed rule they argue will increase energy costs and risk Americans’ safety. At issue is the EPA’s proposed rule, “Accidental Release Prevention Requirements: Risk Management Programs under Clean Air Act; Safer Communities by Chemical Accident Prevention.” (87 Fed. Reg. 53,556), which Texas Attorney General Ken Paxton argues is another attempt by the Biden administration to revive an Obama-era “environmental justice” regulation. If implemented, it would far exceed the statutory authority of the EPA, the attorneys general argue, which was curtailed by the Supreme Court earlier this year. The rule would require a range of American facilities and industries to implement costly new processes to minimize “climate change risks,” which the EPA hasn’t proved will reduce such risks, they argue.
ConocoPhillips Moving into LNG. ConocoPhillips agrees to buy more than a third of LNG produced per year at proposed Port Arthur project. Houston Chronicle. Houston independent oil company ConocoPhillips is solidifying its agreement to buy more than a third of the liquified natural gas per year from Sempra’s proposed Port Arthur LNG project in Jefferson County. On Tuesday the companies said they’ve entered into a strategic partnership in which Conoco has agreed to a 20-year sale and purchase agreement for 5 million metric tons a year of liquefied natural gas from the project. It’s cementing a partnership announced in July in which ConocoPhillips agreed to buy a 30 percent stake in Sempra’s project – giving the oil major a significant stake in what has the potential to be one of the next major LNG export terminals in the U.S. to start construction.
Blue Ridge Parkway Approves Dominion Pipeline. Thanks, MDN. In February, MDN brought you news about a “last mile” pipeline from Dominion Energy. Last mile pipes are the pipes utility companies install and maintain to run gas to homes and businesses. Dominion wants to install a new 760-foot pipeline under the Blue Ridge Parkway (managed by the National Park Service) in North Carolina. Naturally, anti-fossil fuel zealots oppose the project because it flows an evil fossil fuel. However, yesterday, the National Park Service issued a FONSI to say there will be no significant impacts from the pipeline on the pretty views from the Parkway.
Permitting Reform Bill. Where was Toomey two years ago. U.S. Senator Pat Toomey (R-Pa.) introduced the Pipeline Permitting for Energy Security Act, which would create regulatory certainty for natural gas pipeline construction and approve Mountain Valley Pipeline completion.
“It is long past time to stop the exploitation of outdated laws to prevent the construction of pipelines, which are the safest and most efficient way to transport natural gas, by activists and the politicians who cater to them. The obstruction of commonsense, essential energy infrastructure projects has resulted in higher energy costs, increased global reliance on energy produced by tyrants like Vladimir Putin, and ironically prevented increased distribution of the energy source most responsible for the declines in U.S. greenhouse gas emissions,” said Senator Toomey.
“Through the Pipeline Permitting for Energy Security Act, Congress would create regulatory certainty for pipeline construction nationwide and greenlight the long-delayed Mountain Valley Pipeline. This would also enable increased access to low-cost, clean, and safe natural gas from Pennsylvania. Real, lasting permitting reform is pivotal to creating a sustainable American energy policy for the 21st century.”
Congressman Mike Kelly (R-Pa.) introduced the House companion to the Pipeline Permitting for Energy Security Act today.
“Pennsylvania is the second-largest natural gas producing state in the country, and I’m committed to making sure the Keystone State can continue to serve as an energy leader in the United States and around the world,” said Rep. Mike Kelly (R-Pa.). “The Biden administration has created so many burdensome regulations on our domestic energy production during his first two years in office, driving costs up and shrinking the value of Americans’ hard-earned dollar. This bill eases regulatory conditions so pipelines can transport that gas from Pennsylvania to the Northeastern United States, ultimately lowering energy costs for families and businesses. I thank Senator Toomey for his joint effort to ensure Pennsylvania can lead America’s energy comeback!”
Several stakeholder groups voiced support for Senator Toomey and Congressman Kelly’s efforts:
“Pennsylvania has world class natural gas assets, but pipeline constraints prevent us from fully unleashing the value of these resources for consumers locally and allies abroad. Natural gas demand is strong – and we’re seeing producers across the state respond with new well activity, but we need to be able to get the product to consumers, domestically and abroad. America needs action on policies that will reduce chronic permitting delays, encourage more local manufacturing uses and build more energy infrastructure. We applaud Senator Toomey for his efforts to streamline the permitting process, once again signaling his long-standing, steadfast support of American energy security,” said Marcellus Shale Coalition President David Callahan.
“We welcome Senator Toomey’s contribution to the ongoing discussion on improving permitting processes for infrastructure critical to meeting our nation’s energy, economic, security, and climate goals. This legislation is focused on meaningfully addressing overly burdensome regulations associated with the Clean Water Act (CWA) and National Environmental Policy Act (NEPA) for both interstate natural gas pipelines and other vital energy infrastructure. We hope this further informs the conversation around permitting reform as we head into the next year,” said Amy Andryszak, President and CEO of the Interstate Natural Gas Association of America (INGAA).
“As a matter of energy security, permitting reform legislation would address and ensure our nation’s ability to produce and deliver our vast domestic energy resources, including renewables, and enhance our ability to effectively transition to a lower-carbon future,” said Thomas F. Karam, Chairman and Chief Executive Officer of Equitrans Midstream.
“UGI Energy Services supports Senator Toomey’s bill that would make important changes to the pipeline infrastructure permitting process. Natural gas and natural gas infrastructure are critical to ensuring our economy can grow and that many U.S. families can live comfortably. It’s time for the Congress to pass legislation that enables an infrastructure to be built that can deliver clean, reliable, and safe energy throughout the U.S. while also protecting the environment. We are grateful for Senator Toomey’s longstanding and unwavering support of our industry and look forward to passage of this important legislation,” said Joe Hartz, President, UGI Energy Services, LLC.
Background on the Pipeline Permitting for Energy Security Act:
- Limits state authority to delay pipeline construction by mandating concrete timelines for Clean Water Act review
- Clarifies factors unrelated to water quality not to be considered in the Clean Water Act review process
- Provides clear scope of navigable waters included in Clean Water Act review
- Protects the use of general permits to prevent duplicative review of construction along the same pipeline
- Streamlines the National Environmental Policy Act review process for major federal projects
- Prevents the expansion of the Endangered Species Act qualifications to obstruct pipeline infrastructure
- Shortens standard Endangered Species Act consultation timeframes and create a new expedited consultation process for projects proven to cause minimal effect
- Permits Mountain Valley Pipeline construction to finally conclude after many unnecessary setbacks
PA Permits November 18, to December 1, 2022
County Township E&P Companies
1. Armstrong Rayburn Exco
2. Bradford Tuscarora Chesapeake
3. Bradford Tuscarora Chesapeake
4. Bradford Tuscarora Chesapeake
5. Cameron Shippen Seneca
6. Cameron Shippen Seneca
7. Cameron Shippen Seneca
8. Cameron Shippen Seneca
9. Cameron Shippen Seneca
10. Cameron Shippen Seneca
11. Cameron Shippen Seneca
12. Cameron Shippen Seneca
13. Susquehanna Dimock Coterra
14. Susquehanna Dimock Coterra
15. Susquehanna Dimock Coterra
16. Susquehanna Dimock Coterra
17. Susquehanna Dimock Coterra
18. Susquehanna Dimock Coterra
19. Susquehanna Dimock Coterra
OH Permits November 13, to November 26, 2022
County Township E&P Companies
1. Carroll Center EAP OHIO
2. Jefferson Cross Creek Ascent
3. Jefferson Cross Creek Ascent
4. Jefferson Cross Creek Ascent
WV Permits November 14, to November 25, 2022
1. Doddridge Antero
2. Marshall Tug Hill
3. Marshall Tug Hill
4. Marshall Tug Hill
5. Marshall Tug Hill
6. Marshall Tug Hill
7. Tyler Antero
Joe Barone 610.764.1232