Appalachian RNG Conference
April 19, 2023
Registration OPENING SOON
Hilton Garden Inn, Southpointe
Canonsburg, PA (near Pittsburgh)
Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
Pipeline Bottlenecks Impacting Long-Term NatGas Outlook. Emerging U.S. pipeline bottlenecks cast shadow on otherwise positive long-term outlook for natural gas. NGI. As the United States works toward casting a wider net on the global natural gas market via exports, key domestic markets could be turned upside down in 2023 as midstream bottlenecks leave gas stranded in producing basins. LNG developers on the Gulf Coast are in a race to boost liquefied natural gas exports to capitalize on rising demand in Europe and Asia. Some projects are under construction and could begin operations in 2024. A handful of others could be sanctioned this year. East Daley Analytics Inc. projects U.S. liquefaction capacity could swell to nearly 30 Bcf/d by 2030. That’s up from around 13 Bcf/d in 2022. Gas companies up and down the value chain also see continued momentum for LNG.
Biden Risks Oil Reserves. Selling to China. Emergency reserves have plunged to four-decade low, gone to China under Biden. The Washington Free Beacon. President Joe Biden promised to refill America’s emergency oil reserves at a low enough price to “actually make money for the taxpayers.” Now, his Energy Department says prices are too high to do so, ensuring that the country’s emergency reserves will remain low. The Biden administration last week rejected all offers it received to purchase oil for the country’s dwindling reserves because those offers “were either too expensive or didn’t meet the required specifications,” Bloomberg reported Friday. The move comes just weeks after the White House said it would “turn a profit for the taxpayers” by buying up to three million reserve barrels at a reduced cost, which Biden’s Energy Department pledged to obtain by February. The blunder is also likely to prompt fresh criticism from congressional Republicans, who have long accused the president of mismanaging the country’s oil reserves.
Republicans Led Effort to Ban STR Oil Going to China. Bipartisan support for China oil ban could be harbinger. E&E News. A Republican-led bill restricting oil reserve sales to China gained wide support from Democrats on Thursday, signaling a bipartisan energy security agenda that House Republicans could take advantage of going forward. The chamber voted 331-97 for H.R. 22, from Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.), to prohibit the sale of any oil from the Strategic Petroleum Reserve to China or Chinese-influenced subsidiaries (Greenwire, Jan. 12). Democrats supported the bill despite attacks from Republicans against the Biden administration for using the oil reserve to lower gas prices. House Republicans zeroed in on one SPR sale last year that delivered nearly a million barrels of oil to a company owned by the Chinese government. “To cover up his failed policies driving our energy and inflation crisis, President [Joe] Biden is draining our nation’s Strategic Petroleum Reserves,” Rodgers said in a statement on the bill’s passage. The bipartisan vote Thursday is yet another early sign that Democrats are willing to support Republican-led initiatives countering China.
Record U.S. Oil Output. Record U.S. oil output seen leading non-OPEC growth next year. Bloomberg. The US is expected to account for the lion’s share of non-OPEC oil growth next year as American drillers pump a record amount of crude. Production is seen reaching 12.8 million barrels a day in 2024, surpassing the current annual high of 12.3 million set in 2019, according to the Energy Information Administration’s monthly Short-Term Energy Outlook. If materialized, next year’s figure would exceed 2023’s projected output of 12.4 million barrels.
Bullish on the Permian. Texas oil patch gears up for more growth and spending with the Permian leading the way. Dallas Morning News. What a difference a few years make in the Texas oil patch. Oil and gas production keeps growing, the sector has been adding jobs at a torrid pace, and most companies have been investing more. In a December survey by Federal Reserve Bank of Dallas, almost two-thirds of oil and gas executives reported an increase in capital spending compared with a year earlier — and almost two-thirds expect to increase spending in 2023. “Like it or not, oil and gas is here to stay for a very long time,” an executive from an exploration and production firm told the Dallas Fed. “Our request is simple: Get out of our way and we will deliver cheap energy.” For the 12 months ending in October, crude oil production rose 7% in the U.S., reaching 12.38 million barrels daily. Texas’ daily production hit almost 5.2 million barrels in October, up 4.6%.
Ethanol Can Drive Up Gas Prices. Gasoline prices are set to rise if corn-belt states win fuel fight. Bloomberg Law. Some Americans could end up paying more for their gasoline thanks to a plan by seven Midwestern state governors, including Ohio’s Mike DeWine, to boost the use of corn-based ethanol. Their request is under review by the federal government. If adopted, it could be good news for corn farmers throughout the region, including the politically important state of Iowa. But it would also force oil refiners supplying the Midwest to provide a specialized gasoline grade and construct new storage tanks and other infrastructure. That has the potential to increase costs, which would likely be passed on to consumers already squeezed by soaring inflation.
Water Permitting Challenges Rio Grande LNG Pipeline. Water permit challenge against Rio Grande LNG, pipeline project tossed. NGI. Work for the Rio Grande LNG terminal and related Rio Bravo Pipeline proposed by NextDecade Corp. in South Texas may proceed after a challenge against the water permits was dismissed. The U.S. Circuit Court of Appeals for the Fifth Circuit last Thursday said a claim brought by a Rio Grande Valley fishermen association and environmental groups against a Clean Water Act permit didn’t prove a fault in the permitting process (No. 21-60889). The groups argued the U.S. Army Corps of Engineers didn’t properly assure the firm’s plan was the “least environmentally damaging” before granting approval. In an opinion written by Judge Carolyn Dineen King, the three-judge panel concluded the groups failed to prove that an alternative plan would reduce impact to wetlands.
Biden Gives Win to Permian Drillers. Biden hands rare win to Permian drillers with pause on smog rule. Midland Reporter-Telegram. The Biden administration is deferring a plan to crack down on smog in the drilling hotbed of the Permian Basin, handing a win to oil producers along with their allies in Texas and New Mexico. The Environmental Protection Agency had been considering formally labeling parts of the region as violating federal air quality standards for ozone — a designation that would have spurred new pollution curbs and potentially deterred drilling in the world’s biggest oil field. But the administration omitted the policy from an agenda of planned regulations released late Wednesday and instead deemed the measure “inactive,” indicating it’s not expected to be finalized in the next six to 12 months. “The wide-open spaces of West Texas and Eastern New Mexico are home to the oil and natural gas that fuel our economy and enhance modern life,” Todd Staples, president of the Texas Oil & Gas Association, said in an emailed statement. “Excessive government regulation is unnecessary and stifles affordable and reliable energy supplies.”
NatGas “Green Energy” in OH. Newly signed Ohio law defines natural gas as green energy. Farm and Dairy. Ohio Gov. Mike DeWine signed a bill into law Jan. 6 that defines natural gas as a “green energy” source and requires state agencies to open public lands to oil and gas leasing. The oil and gas industry is celebrating the new legislation, while at least one environmental group called it unconstitutional. House Bill 507 began its life as a bill to address poultry sales. It decreased the minimum number of poultry chicks that can be sold in a lot from six to three. Provisions around food safety were added in the House.
Penn State Supports Fracking. Penn State presents pro-fracking case to Upper Delaware Council. Marcellus Drilling. The Upper Delaware Council (UDC) hosted a public presentation titled “Water Resource and Environmental Considerations with Shale Gas Development in the Appalachian Basin” last week at the Upper Delaware Council office in Narrowsburg, NY. The program was delivered virtually by Dr. David Yoxtheimer, Ph.D., P.G., assistant research professor and Extension associate with the Marcellus Center for Outreach and Research at Penn State University. Yoxtheimer did a great job of laying out the facts of Marcellus drilling–both the good and the not-so-good, with an eye on how to mitigate the risks.
OH Key Energy State. Ohio is a ‘key state’ for maintaining America’s energy security, API chief says. Toledo Blade. During its annual State of American Energy event on Wednesday, the American Petroleum Institute laid out a new plan for policies intended to make, move, and improve access to domestically produced oil and natural gas. “The state of American energy is strong and resilient,” Mike Sommers, API president and chief executive officer, said in his keynote address. “But we need policies to enhance the American energy supply chain and not hinder it.” During a question-and-answer session with reporters after API’s presentation, Mr. Sommers told The Blade that he is counting on Ohio to continue playing a key role in energy distribution and production given its proximity to America’s heartland. “Ohio is a key state and a large producing state,” he said. “Ohio has always been, as the motto says, the ‘heart of it all.’ It certainly is for the oil and gas industry.”
API’s American Energy Plan. The American Petroleum Institute (API) President and CEO Mike Sommers today released a new report and outlined the policies needed to make, move and improve American energy and prioritize U.S. natural gas and oil as a long-term strategic asset during API’s annual State of American Energy event.
“The state of American energy is strong and resilient,” Sommers said in his keynote address. “But we need policies to enhance the American energy supply chain and not hinder it. The State of American Energy could be much stronger through bipartisan cooperation, a reversal of rhetoric from the Administration, and serious policies that encourage investment and enable development.”
During the event, featuring API Executive Vice President and Chief Advocacy Officer Amanda Eversole, House Energy and Commerce Committee Chair Cathy McMorris Rodgers (WA-05), and U.S. Representatives Henry Cuellar (TX-28), Lizzie Fletcher (TX-07), and Mary Peltola (AK-AL), API announced a plan for the 118th Congress to make, move and improve America’s energy. As consumers face growing energy costs, API urges policymakers to take a more realistic approach and ensure that American natural gas and oil are prioritized as long-term strategic assets.
The theme of the 2023 State of American Energy, “The Solution is Here,” and the new report, focus on three main components:
- Make: Lifting restrictions on energy development in federal waters and lands could increase domestic energy production and increase investment in the U.S. economy, according to a new Rystad study.
- Move: New pipeline infrastructure in the Northeast could add 4.6 bcf per day of natural gas and invest billions locally.
- Improve: American energy is produced to among the highest environmental standards in the world and is leading the way to a lower-carbon future.
“We know the solution is here. Government policy must reflect our resource abundance, our ability to build, and our willingness to get better every step of the way,” Sommers concluded. “API and our industry are here for it. Ready to do the work. Ready to put in the time—this year, with this administration, with this new Congress—to craft and enact bipartisan policies to make, move, and improve American energy.”
Producers Will Focus on Shareholders in 2023. More oil and gas price volatility in 2023 to keep producers focused on shareholder returns. Financial Post. Last year’s seismic disruptions to energy markets made forecasting oil and gas prices particularly tough — and predicting the outlook for 2023 isn’t getting much easier amid persistent geopolitical uncertainty and fears of a global recession. The latest oil price forecast from Deloitte LLP suggests price volatility will continue through the winter as the energy sector scrambles to balance supply and demand in the face of a messy economic recovery in China, risk of a global recession and concerns about the fallout from a price cap on Russian crude. Deloitte’s forecast suggests natural gas prices, which saw huge swings in 2022, will continue to see volatility with growing storage volumes in Europe and North America coming up against fears Russia will cut off gas supply entirely to the European Union.
Public Shale Drillers Leading the Production. Public shale drillers take the lead over private oil operators. World Oil. Publicly traded oil operators such as Occidental Petroleum Corp. and EOG Resources Inc. have taken the lead in expanding shale drilling, displacing private companies that dominated the space for more than a year. Public drillers added 18 rigs during the final three months of 2022, while their private rivals idled 11, Arun Jayaram, an analyst at JPMorgan Chase & Co., wrote in a note to investors. Overall, the fleet of rigs operating in the contiguous U.S. expanded by three from the end of September to Dec. 31, according to the Jan. 11 note. JPMorgan’s analysis separated the very largest operators such as Exxon Mobil Corp. and Chevron Corp. into their own category. Oil operators have been contending with higher production costs, a tightening labor market, supply-chain snarls and a dwindling supply of top-tier drilling locations. Closely held companies that accounted for most of the post-pandemic drilling expansion more recently have been husbanding drilling portfolios with an eye on future monetization, Chase Mulvehill, an analyst at Bank of America, said in October.
Appalachian Companies Methane Coalition. NGI Appalachian Companies Launch Methane Coalition to Give World Window to Natural Gas Operations
Three of the Appalachian Basin’s leading upstream and midstream operators on Wednesday announced a new coalition aimed at better monitoring and reducing methane emissions throughout the Marcellus and Utica shales.
Chesapeake Energy Corp., EQT Corp. and Equitrans Midstream Corp. launched the Appalachian Methane Initiative (AMI). The coalition said it would work to identify and fix fugitive methane emissions in the basin through coordinated satellite and aerial surveys that take into account advanced methane monitoring and reporting frameworks.
“As an industry, we have an important role to play in both meeting global energy needs and reducing climate change risks,” said Chesapeake CEO Nick Dell’Osso. “The AMI coalition offers an opportunity to better measure and understand our emissions profiles as we work to reduce the environmental impact of natural gas production and answer the call for affordable, reliable and lower carbon energy.”
AMI said it would coordinate and share best practices to mitigate methane emissions from natural gas operations, including production and midstream. It also would collaborate on activities and monitor results through transparent, publicly available reporting.
“Applying a basin-wide, sector-agnostic approach to methane monitoring will not only allow accountability for methane emissions from all emitters, we believe it will eliminate any doubt – whether from policymakers, customers or the general public – that Appalachian natural gas is the cleanest form of traditional energy in the world,” said EQT CEO Toby Rice.
AMI plans to focus first on developing a pilot monitoring program this year to cover select areas of interest within Appalachia’s major operating footprints. The coalition said it would ultimately work toward developing a basin-wide monitoring plan in 2024.
Unconventional natural gas development across Ohio, Pennsylvania and West Virginia has transformed the Appalachia Basin into one of the world’s top-producing regions. Combined, unconventional production from the fields is more than 35 Bcf/d.
Appalachian pure-play EQT produces over 5 Bcfe/d across more than one million acres in all three states. Chesapeake produced more than 4 Bcfe/d across all of its assets in the Marcellus, Haynesville and Eagle Ford shales during the third quarter. It holds 650,000 net acres in Pennsylvania. Meanwhile, Equitrans is one of the nation’s largest natural gas gathering companies, moving over 8 Bcf/d in Appalachia.
AMI is the latest in a series of similar efforts announced by the oil and gas industry in recent years to better monitor and curb greenhouse gas (GHG) emissions, including the Oil and Gas Methane Partnership and Our Nation’s Energy Future, among others.
Producers in Appalachia, however, are searching for an edge as they look to gain exposure to an international gas market increasingly requiring more transparent operations and more tools to combat climate change. Both EQT and Chesapeake have touted ongoing efforts to step into the LNG market.
EQT, in particular, has launched an initiative to promote the benefits of the super-chilled fuel over dirtier alternatives like coal.
“At a time when international coal and associated GHG and methane have reached all-time highs, it is imperative that we recognize Appalachian natural gas for what it is, namely a means of meaningfully reducing global emissions,” Rice said Wednesday.
RNG News from Coalition for RNG
BP Completes Purchase of Archaea Energy. At the end of December 2022 bp announced it had completed its purchase of Archaea Energy, a leading provider of renewable natural gas (RNG). The oil giant said this marked a milestone in the growth of bp’s strategic bioenergy business.
“We see enormous opportunity to grow our bioenergy business by bringing Archaea fully into bp,” said Dave Lawler, chairman and president bp America. “The talent, expertise and passion of their team has let them achieve incredible growth so far, and we’re excited to support the next chapter in line with our strategy.”
UGI Announces $150m Expansion in South Dakota. UGI Corporation announced on 4 January that MBL Bioenergy has entered an agreement to develop its second and third clusters of dairy manure waste to renewable natural gas (RNG) projects in South Dakota, US.
In total, these additional projects are said to represent approximately $150 million (€141m) of investment by MBL Bioenergy, and 100% of the funds will be provided by UGI Energy Services – a UGI subsidiary.
PA January 3, to January 12, 2023
County Township E&P Companies
1. Lycoming Eldred Inflection Energy
2. Lycoming Eldred Inflection Energy
3. Susquehanna Bridgewater Coterra
4. Susquehanna Bridgewater Coterra
5. Susquehanna Bridgewater Coterra
6. Susquehanna Bridgewater Coterra
7. Susquehanna Bridgewater Coterra
8. Susquehanna Rush SWN
9. Westmoreland Hempfield Apex Energy
10. Westmoreland Hempfield Apex Energy
11. Westmoreland Hempfield Apex Energy
12. Westmoreland Hempfield Apex Energy
13. Westmoreland Hempfield Apex Energy
14. Westmoreland Hempfield Apex Energy
OH Permits January 1, to January 7 2023
County Township E&P Companies
1. Belmont Richland Ascent
2. Belmont Richland Ascent
3. Belmont Richland Ascent
WV Permits January 2, to January 6, 2-23
1. Wetzel Antero