Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
Biden Trying Make U.S. into Europe. Energy experts say U.S. behind Europe, but energy crisis could happen here. Cowboy State Daily. A continuing increase in wind and solar on the U.S. electrical grid has strained energy resources during extreme weather events, according to grid reliability assessments. But fossil fuel-powered resources have prevented the kinds of problems sweeping across Europe this winter. As Germany has done in the past few months, the United Kingdom is bringing coal plants back online and offering money to citizens to cut down on their energy use because wind energy resources just aren’t providing enough power. Rick Whitbeck, Alaska state director for Power The Future, a nonprofit pro-energy organization, told Cowboy State Daily that the United Kingdom’s power companies should be held accountable for failing to provide a reliable grid and for throwing money at consumers to get them to reduce their demand.
Subzero Weather in East Asia Could Drive up NatGas Prices. Tens of millions of people across East Asia braved a severe cold snap Wednesday as subzero temperatures and heavy snow brought travel chaos during the Lunar New Year holiday, with climate experts warning that such extreme weather events had become the “new norm.”
South Korea has issued heavy snow warnings this week as temperatures in the capital Seoul fell as low as minus 15 degrees Celsius (minus 5 degrees Fahrenheit) and plummeted to record lows in other cities, officials said.
On the popular tourist island of Jeju, harsh weather led to the cancellation of hundreds of flights while passenger ships were forced to stay in port due to huge waves, according to the Central Disaster and Safety Countermeasure Headquarters.
“Cold air from the North Pole has reached South Korea directly,” after traveling through Russia and China, Korea Meteorological Administration spokesperson Woo Jin-kyu told
Woo said that while scientists took a long-term view of climate change, “we can consider this extreme weather – extremely hot weather in summer and extremely cold weather in winter – as one of the signals of climate change.”
Across the border in Pyongyang, North Korean authorities warned of extreme weather conditions as the cold wave swept through the Korean Peninsula. Temperatures in parts of North Korea were expected to dip below minus 30 degrees Celsius (minus 22 degrees Fahrenheit), state media reported.
In neighboring Japan, hundreds of domestic flights were canceled on Tuesday and Wednesday due to heavy snow and strong winds that hampered visibility. Major carriers Japan Airlines and All Nippon Airways canceled a combined total of 229 flights.
High waves caused by a snowstorm on Jeju island, South Korea, January 24, 2023.
High waves caused by a snowstorm on Jeju island, South Korea, January 24, 2023.
Yonhap News Agency/Reuters
Meanwhile, high-speed trains were suspended between the northern Fukushima and Shinjo stations, Japan Railway Group said.
China’s meteorological authority has also forecast big temperature drops in parts of the country and on Monday issued a blue alert for a cold wave – the lowest level in a four-tier warning system.
Mohe, China’s northernmost city, on Sunday saw temperatures drop to minus 53 degrees Celsius (minus 63.4 degrees Fahrenheit) – its coldest ever recorded, meteorologists said. Ice fog – a weather phenomenon that occurs only in extreme cold when water droplets in air remain in liquid form – is also expected in the city this week, local authorities said.
Yeh Sang-wook, a climate professor at Hanyang University in Seoul, attributed the extreme cold wave on the Korean Peninsula to arctic winds from Siberia, adding that more snow in South Korea this year was due to the melting of Arctic ice caps from a warming climate.
“There has been a record melting last year and this year,” he said. “When sea ice is melted, the sea opens up, sending up more vapor into air, leading to more snow in the north.”
It’s now minus 80°F in the world’s coldest city
As climate change worsens, the region would face more severe cold weather in the future, he said.
“There is no other (explanation),” he said. “Climate change is indeed deepening and there is a consensus among global scientists that this kind of cold phenomenon will worsen going forward.”
Kevin Trenberth, from the US National Center for Atmospheric Research (NCAR), agreed that “extreme weather events are the new norm,” adding, “we certainly can expect that weather extremes are going to be worse than they were before.”
He also pointed to the El Niño and La Niña climate pattern cycles in the Pacific Ocean that affect weather worldwide.
La Niña, which typically has a cooling effect on global temperatures, is one of the reasons for the current cold snap, he said.
“There’s certainly a large natural variability that occurs in the weather but … we often hear about the El Nino phenomenon and at the moment we’re in the La Niña phase. And that certainly influences the kinds of patterns that tend to occur. And so that’s a player as well,” he said.
NatGas Shortages in China. Natural gas shortages hit China as temperatures plunge. New York Times. For many people across China, a shortage of natural gas and alarmingly cold temperatures are making a difficult winter unbearable. For Li Yongqiang, they mean freezing nights without heat. “We dare not turn on the heat overnight — after using it for five or six hours, the gas stops again,” Mr. Li, a 45-year-old grocer, said by telephone from his home in northern China’s Hebei Province. “The gas shortage is really affecting our lives.” The lack of natural gas, which is used widely across China to heat homes and businesses, has angered tens of millions of people and spilled over into caustic complaints on social media. The crunch, experts said, has exposed systemic weaknesses in China’s energy regulations and infrastructure, while showing the reach of the global market turmoil provoked last year by Russia’s invasion of Ukraine.
Exxon Stops Flaring in the Permian. Exxon halts routine gas flaring in the Permian, wants others to follow. Reuters. Exxon Mobil Corp (XOM.N) said it has stopped routine flaring of natural gas from production in the top U.S. shale basin and will press for stronger regulations for rivals to do the same, company officials said in an interview. The largest U.S. oil producer is battling lawsuits that accuse it and other oil companies of contributing to global warming and rising sea levels. At the same time, it has moved to cut its own emissions and supported government efforts to crack down on oil and gas operators to find and fix gas leaks. Exxon said its embrace of tighter methane regulation is designed to put oil and gas producers on equal footing. Methane, the main component of natural gas, is a potent greenhouse gas.
O&G Deals Down 13% in 2022. Could 2023 Be Even Lower? Enverus: Oil and gas industry mergers dropped 13% during 2022. Forbes. In its annual report detailing activity around mergers and acquisitions (M&A) for the upstream sector of the oil and gas industry, energy intelligence and analytics firm Enverus finds that deal activity slowed significantly during 2022. The report’s authors said in a release that M&A transactions fell by 13% on a year-over-year basis. Enverus identified 160 deals totaling about $58 billion for the calendar year, with just 26 transactions totaling $13 billion coming during the 4th quarter. Overall, the analysts find that, while the average deal value fell by only about 20%, the volume of transactions collapsed to a two-decade low.
TX Energy & Economic Report. TXOGA released annual Energy & Economic Impact Report. BIC Magazine. The Texas Oil & Gas Association (TXOGA) released its annual Energy & Economic Impact Report highlighting the industry’s continued and unmatched economic impact, the Lone Star State’s global energy leadership, and what is needed to continue meeting our nation and the world’s energy needs. In Fiscal Year (FY) 2022, the Texas oil and natural gas industry paid $24.7 billion in state and local taxes and state royalties—by far the highest total in Texas history—shattering the previous record of just over $16 billion set in 2019 by 54%. $24.7 billion translates to roughly $67 million every day that pays for Texas’ public schools, universities, roads, first responders and other essential services. Production taxes and royalties to state funds more than doubled over FY 2021. Production taxes grew by $5.8 billion, a 116% increase and royalties to state funds increased by $2.2 billion, a 102% increase. Oil and natural gas production taxes exceeded $10 billion for the first time in Texas history.
NatGas Production Expected to Increase on the TX and LA Border. Rystad Energy sees Deep South shale region as U.S. natural gas standout. UPI. A shale reserve straddling the border of Louisiana and Texas is expected to account for the bulk of an expected 7% increase in U.S. natural gas production, Norwegian energy research firm Rystad Energy said Tuesday. Rystad on Tuesday said it expected “significant” growth in U.S. shale natural gas production, with an increase of 6.9 billion cubic feet per day representing a 7% increase from 2022, provided the forecast is accurate. Federal data show the Appalachia basin – a reservoir spread out over West Virginia, New York, Pennsylvania and Ohio – along with the Permian basin in Texas are the most lucrative shale natural gas reserves in the country. Rystad, however, sees the lack of pipelines inhibiting the rate of growth in production, singling out the Haynesville production in east Texas and Louisiana as the most promising for 2023 in terms of production growth.
O&G Delivers to $24.7B to TX. Texas made record-shattering $24.7B off oil and gas last year. The Houston Chronicle. A blockbuster year of high energy prices boosted state coffers in 2022, yielding a record $24.7 billion in taxes and state royalties that fueled Texas schools and county governments. State revenues from oil and gas industry activities during 2022 jumped 54 percent compared to the previous $16 billion record set in 2019, the Texas Oil and Gas Association said Monday as it released its annual economic impact report. The record-breaking state revenues mirror a trend in earnings by big oil companies such as Exxon Mobil, which earned an all-time high of nearly $20 billion in the third quarter. A global energy shortage ignited by the Ukraine war pushed up prices last year and drove demand for Texas energy, both of which helped the state and its oil and gas companies shatter earlier revenue and profit figures. “Our allies are literally knocking at our door in energy need and Texas’ oil and natural gas producers, pipelines, refiners and exporters are playing an essential role in delivering energy stability to our trade partners, even in times of continued global unrest,” TXOGA President Todd Staples said Monday in a statement.
LNG Rates Declining. LNG freight rates sliding with global natural gas prices as Atlantic availability grows. NGI. The rates charterers pay for vessels to move LNG cargoes across the world are declining, especially in the Atlantic Basin, as global natural gas prices dip and ship availability surges after months of tightness. Spark Commodities on Tuesday assessed spot freight rates for Feb. 8-March 10 deliveries in the Atlantic at $60,500/day, unchanged from Monday. Pacific Basin rates on Tuesday dropped $750 to $82,500/day. It was a $14,500/day drop for the Atlantic and a $21,000/day drop for the Pacific compared to a week prior. Both regions fell well below the average price for last year and in 2021. Spark CEO Tim Mendelssohn told NGI that rates have fallen sharply since demand for cargoes. Increasing tonnage in the market is helping to drag down freight rates, he added.
Sempra LNG Facility Moving Forward. Thanks, MDN. Sempra Infrastructure, a subsidiary of Sempra, announced yesterday it had signed its final customer to buy LNG from the Port Arthur (Texas) LNG facility. All of the LNG that Sempra anticipates moving forward with a final investment decision (FID) to build the plant and begin actual construction sometime by the end of March this year. Although located along the Texas Gulf Coast, this is good news for the Marcellus/Utica.
TX ESG Fight. In ESG fight, Texas wants an ‘honest’ conversation with Wall Street. Bloomberg. Texas Comptroller Glenn Hegar is advocating for an “intellectually honest” conversation with the world’s largest financial institutions on their environmental policies. Hegar is charged with compiling the state’s list of companies that have restrictive policies on doing business with the oil and gas industry. He aims to have the best, most accurate information from financial companies so Texas can weigh their policies in accordance with a state law implemented in 2021. “We want to hear from these companies, we want to have their information answer our questions because we think it’s imperative to have that dialogue,” he said in an interview with David Westin on Bloomberg’s Television’s Balance of Power.
Vitol Expanding in the Permian. Vitol expanding U.S. upstream presence with Permian Delaware acquisition. NGI. Swiss commodities giant Vitol Inc. is adding to its Lower 48 upstream portfolio with the acquisition of privately held Delaware Basin Resources LLC (DBR). Vitol affiliate VTX Energy Partners LLC has entered a deal to acquire Midland, TX-based DBR and associated surface and water businesses for an undisclosed sum, management said Thursday. VTX is the successor company to Austin-based ATX Energy Partners. The DBR assets comprise 35,000 net leasehold acres and 46,000 surface acres across Reeves and Pecos counties, located in Texas, in the Permian Basin’s Delaware sub-basin, VTX said. Production from the assets currently stands at about 40,000 boe/d.
EPA Targeting Flaring in WV. New EPA rules would target flaring at WV’s oil, gas wells. Public News Service. Under proposed rules from the U.S. Environmental Protection Agency, oil and gas well operations across the nation would be required to strengthen leak detection, repairs and regular inspections. Morgan King, climate campaign coordinator for the West Virginia Rivers Coalition, explained the new rules would clamp down on the practice of lighting gas on fire at production sites, known as routine flaring, which releases large amounts of methane and other air pollutants into the atmosphere, which nearby communities subsequently breathe in. King says methane emissions from the oil and gas sector especially jeopardize the health and safety of the industry’s workers. Research shows long-term exposure to the toxic air pollution emitted from oil and gas sites increases the risk of death from COVID-19 by 11%.
Water Is Scarce for Fracking in the Permian. Forbes. The Permian basin of West Texas and New Mexico is desert for the most part. The desert is called the Chihuahuan but is not raw desert like the Sahara, but desert due on average 10 inches of rainfall per annum. Sparse, scrubby bushes like creosote and mesquite and few big trees, like Cottonwoods that exist along creek beds that carry water. Water is scarce in the Permian. But not oil!
The Permian basin is the premier basin in the US for oil and gas production. It produces over 5.5 MMbpd (million barrels of oil per day), which is a big part of total US production approaching 12 MMbpd. Success out there has enabled Texas to remain # 1 US state in crude oil production and last year has propelled New Mexico to # 2.
Water is scarce for fracking.
Fracking is key to success in the Permian basin where the shale technique starts with a horizontal well 1-2 miles long, and pumps about 40 separate frac treatments along the well. Total water used is 20 million gallons, which would fill a football stadium to 40 feet above the grassed area. For use in fracking, freshwater has to come from cities, or aquifers, or by recycling produced water.
Since a widespread drought hit the Southwest US about 30 years ago, freshwater is not cheap anymore. And if fracking water competes with aquifer water pumped up by ranchers, this spells trouble.
Expensive to recycle.
Water is produced up a well along with oil and gas. It’s too salty for use but it can be cleaned up. How much produced water? Typically 1 – 5 barrels for each barrel of oil. The Permian basin produces 5 MMbopd which would translate to 5 – 25 MMbwpd (million barrels of water per day). Such enormous volumes of produced water have to be disposed of in some way, or recycled.
Recycling of produced water has increased in the Permian in the last few years. This includes on-site clean up and recycling of dirty water to use it on the next fracking job. Or sending the dirty water for commercial cleanup, such as in a desalination plant.
Over 100 small scale recycling facilities have been in use since 2015, and a handful of larger water recycling plants were planned to be commissioned by 2022.
Although cleanup/recycle methods are more expensive, they are gaining traction as oil and gas companies are feeling pressure to fix a problem that has caused two earthquakes of M5 (magnitude 5) that occurred one month apart at the end of 2022. This is not good for the industry’s image, even if the quakes caused limited damage to property.
Water is cheap for disposal wells.
In 2022, the combined Midland and Delaware sub-basins of the Permian produced 7 billion barrels which amounts to 19 MMbwd. A large fraction of this was injected via disposal wells into deep geologic layers. This enormous volume of water was much greater than what Oklahoma produced in a year, 2015, when that state recorded 890 earthquakes of M > 3.
Looking at Culberson County, where most of the recent earthquakes have occurred (see Figure 1), injected volumes in 2020 were almost 0.7 MMbwpd.
Disposal water causes M5 earthquakes.
In the Permian basin, earthquakes have increased in proportion to volumes of water injected in disposal wells. The correlation is strong, as it was in Oklahoma.
Warnings have appeared that the Permian basin might follow the earthquake trajectory of Oklahoma, which led to a 5.9M quake, Oklahoma’s largest ever, even after regulators had recognized the problem and reduced injections into disposal wells. Such delays fell in the range of 6-12 months.
So what has happened in the Permian? The Texas Railroad Commission (RRC) acted quickly after a 5.4M quake occurred in Culberson County on November 16, 2022 (Figure 1).
Injection volumes in the Culberson area had to be reduced about 70% from early 2022 — and this was to be completed by mid-2023. This area has 78 disposal wells that are active. 19 of these are deep wells operated by Chevron and Coterra. The new injection limits had to be 745,000 bwpd in Chevron’s 10 wells, and 615,000 bwpd in Coterra’s 9 wells.
The clincher from RRC was how RRC would react if another M5 earthquake occurred in the area. If another M4.5 or larger quake occurs in the Culberson area, deep disposal wells close to the source of the quake will be shut in for two years. That would mean finding alternatives to dispose of the produced water: either truck the water to disposal wells in other areas or cleanup/recycle the produced water onsite.
However, this would be just a mild hand slap, and would barely touch the huge profits being made out of the Permian basin.
Another M5 earthquake did occur just a month later.
Another big earthquake, M5.3, did occur just one month later, on December 16, 2022. This appeared to follow the Oklahoma pattern, but with an important difference. The second M5 quake occurred in a different area altogether – about 15 miles to the west of Midland, Texas (Figure 1).
The quake was widespread – and felt by people from Amarillo and Abilene in Texas to as far west as Carlsbad, New Mexico, according to USGS.
To understand this, RCC has identified enhanced seismic activity in certain areas called SRAs (Seismic Response Areas). According to R. J. DeSilva, Director of Communications Division, Railroad Commission of Texas, the purpose is “to address and reduce seismicity and protect residents and the environment in different parts of West Texas. Each SRA is tailored to respective regions.”
The Northern Culberson-Reeves SRA is where the first M5 quake occurred on November 16, 2022.
The second M5 quake that occurred near Midland on December 16, 2022, is in a separate SRA called the Gardendale SRA. All deep injection wells have been suspended in the Gardendale SRA, said DeSilva.
The simplest explanation for the two M5 earthquakes is that they overlie two separate fault systems in the granite basement below. DeSilva says these basement-seated faults extend up into the sedimentary section where deep disposal wells are located. And this is how water pressure from disposal wells gets into basement faults that are critically-stressed and prone to shift and create earthquakes.
Control of disposal wells in SRAs.
In general, the RRC in 2019 adopted guidelines for operating disposal wells in seismically active areas, which include volume and pressure limits and a consideration of local geologic conditions. The RRC currently follow those guidelines.
Gardendale SRA: Deep disposal wells generally mean below the top of the Strawn Formation which lies under the Wolfcamp formation which has the deepest oil production intervals. All deep disposal wells have been suspended in the Gardendale SRA.
Northern Culberson-Reeves SRA: Deep disposal wells generally mean below the base of the Wolfcamp Formation, again the deepest productive formation. According to DeSilva, two deep wells in the SRA were already suspended in March 2022 following a 4.5 magnitude earthquake.
Also, after the November 16, 2022, earthquake the general guidance was specifically expanded to include this: “Should a future 4.5M+ event occur within the 9 km (roughly 5 mile) boundary identified on December 9, 2022, deep wells within the 9 km boundary will be shut in for 24-months from the date of the event.” So it’s not all wells within the SRA that would be suspended, but only wells within a 9km radial.
RNG News from Coalition for RNG
Roanoke Gas’ RNG Project. Roanoke Gas gets state nod for renewable natural gas project. The Roanoke Times. State regulators have approved a plan by Roanoke Gas Co. to convert biogas from a sewage treatment plant into natural gas for distribution to customers in the region. In an order issued Monday, the State Corporation Commission found that the joint project with the Western Virginia Water Authority is in the public interest. “Roanoke Gas’s project has the potential to achieve a rare combination of increasing local fuel supply, reducing greenhouse gas emissions, and increasing a utility’s profit while also lowering rates,” a SCC hearing examiner determined. Plans call for the installation of a large piece of equipment at the authority’s water treatment plant in Southeast Roanoke that will convert biogas created from the processing of sewage into natural gas. “We are pleased to be the first gas utility in Virginia to receive Commission approval of a renewable natural gas project,” Roanoke Gas said in a statement.
Clean Energy to provide RNG fuel to Amazon. Clean Energy Fuels Corp., the largest provider of the cleanest fuel for the transportation market, announced the opening of another renewable natural gas (RNG) fueling station that will provide an anticipated 1.4 million gallons of the clean fuel annually for Amazon and other truck fleets in the greater Chicago area.
PA January 16, to January 26, 2023
County Township E&P Companies
1. Elk Jason Seneca
2. Susquehanna Forest Lake Coterra
3. Susquehanna Forest Lake Coterra
4. Susquehanna Springville Coterra
5. Susquehanna Springville Coterra
6. Susquehanna Springville Coterra
7. Susquehanna Springville Coterra
OH Permits January 15, to January 21, 2023
County Township E&P Companies
1. Carroll Washington INR OHIO LLC
2. Carroll Washington INR OHIO LLC
3. Carroll Washington INR OHIO LLC
4. Monroe Benton Diversified Prod.
5. Monroe Benton Diversified Prod.
WV Permits January 9, to January 9, 2023
1. Brooks SWN
2. Clay Mountain V O&G
3. Marshall SWN
4. Marshall SWN
5. Marshall SWN
6. Marshall SWN
7. Marshall SWN
8. Marshall SWN