Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
Biden Backing MVP. Why is Biden backing Manchin’s pet pipeline? Politico. The Biden administration is supporting an embattled natural gas project championed by Democratic Sen. Joe Manchin — angering climate advocates and prompting some Capitol Hill Democrats to question the president’s motives. Energy Secretary Jennifer Granholm voiced support in a letter to regulators this week for the $6.6 billion Mountain Valley pipeline, which would carry gas 303 miles through West Virginia and Virginia to mid-Atlantic and Southeastern markets. It’s not sitting well with progressive lawmakers and environmentalists, who are still burning after the administration approved a massive oil project in Alaska. They call Mountain Valley a climate and health hazard.
Latest Outlook for NatGas Prices in 2023. According to the U.S. Energy Information Administration (EIA), the natural gas spot price at the U.S. benchmark Henry Hub will average $4.90 per million British thermal units (MMBtu) in 2023, more than $1.50/MMBtu lower than the 2022 average1. The EIA expects prices to stay nearly the same in 2024 as dry natural gas production continues to grow in the United States and outpaces domestic natural gas demand and exports for most of the year.
Some of the external factors that influence the natural gas price predictions include weather, demographics, economic growth, price increases and poverty, fuel consumption, storage, and exports2. However, it is also important to look at factors that impact the supply side of the price forecast, as well as the demand side of the forecast.
Latest Outlook for WTI Price in 2023.According to the U.S. Energy Information Administration (EIA), the WTI crude oil price (the U.S. benchmark price) is forecast to average $77/b in 2023 and $72/b in 2024, down from $95.88/b in 20221. The EIA expects prices to decline in the second half of 2023 as global petroleum inventories build up and production outpaces demand2.
Other sources have different forecasts for WTI oil prices in 2023. For example, Long Forecast predicts that WTI oil prices will average $81.46/b in 2023, ranging from $76.18/b to $87.49/b3. Capital reports that Bank of America expects WTI oil prices to rise to $104/b by the end of 2023 and stay at that level in 2024, while Fitch projects WTI oil prices to trade at $80/b in 2023 and decline gradually to $50/b in 20264.
Bright Future for the Marcellus. ‘The future is bright’ for Marcellus Shale, U.S. natural gas, says retiring Range CEO Ventura. NGI. Range Resources Corp.’s outgoing CEO Jeff Ventura was upbeat about the long-term prospects of the company and the Marcellus Shale in his final quarterly earnings call with the firm on Tuesday (April 25). Ventura and his management team highlighted Range’s liquids-rich, low-cost Appalachian Basin pure-play portfolio, as well as the importance of natural gas to ensure global energy security and meet decarbonization goals. “For the Marcellus, the future is bright as we sit at the very low end of the global cost curve with one of the lowest emissions intensities of any play,” said Ventura, who is stepping down after nearly 20 years with the Fort Worth, TX-based gas producer. His tenure included the discovery and early development of the mighty Marcellus, which helped turn the United States into a leading supplier of natural gas to the global market.
U.S. Shale Catches a Break to Grow. U.S. shale catches a break with chance to grow again. Bloomberg. US shale appears to be catching a break on service costs, just at the right time. Cost inflation, spanning everything from frack gear to laborers, is moderating after running white-hot for the last two years. A drop in natural gas drilling is freeing up rigs, trucks and materials for oil fields like those in the Permian Basin. Halliburton Co., the biggest provider of shale services, is relocating crews. In the past week, Baker Hughes Co. and SLB, the other two major service companies, warned that producer spending will grow less than expected. Helmerich & Payne Inc. is seeing a drop in demand for rigs. Lium, a research firm, said bids for fracking have slipped more than 20% since January.
$8 Billion Off the Table. $8 billion in free cash flow for shale gas drillers “off the table”. Marcellus Drilling News. Free cash flow (FCF) refers to a company’s available cash repaid to creditors and as dividends and interest to investors. Companies typically use FCF to buy back shares of stock, pay fatter dividends, or pay off creditors. When the price of natural gas went through the roof last year, natural gas drillers were rolling in the FCF. Now with NatGas commodity prices in the basement, FCF money has been wiped off the table. How much? For six large natural gas-focused drillers (five of them focused on the Marcellus/Utica, one on the Haynesville), some $8 billion of FCF is “now off the table” according to an article by Bloomberg.
Bet on the Permian. Put your money on the Permian — the Phar lap of oil and gas basins. Forbes. One year ago, the Permian basin in West Texas and New Mexico had just reached 5 million barrels per day (MMbpd) which was almost half of the total US supply of crude oil. It was projected at the time the U.S. had 76 billion barrels of untapped reserves, and most of this lay under the Permian. The peak of crude oil production in the Permian before the pandemic was 4.9 MMbpd. But production in the Permian will rise to a record 5.7 MMbbl/d in May 2023, according to figures released by the U.S. Energy Information Administration (EIA) on April 17. The Permian is still running hard.
Scott Sheffield Stepping Down at Pioneer. CEO of shale giant Pioneer Natural Resources to retire. WSJ. Scott Sheffield, one of the most prominent oil executives in the U.S., plans to retire as chief executive of Pioneer Natural Resources Co. PXD 0.02%increase; green up pointing triangle at the end of the year. Richard Dealy, currently Pioneer’s chief operating officer, will succeed Mr. Sheffield, who has led the driller for more than two decades over two stints as its CEO. The announcement marks Mr. Sheffield’s second retirement as the head of the company. Mr. Sheffield, 70, previously retired in 2016, only to come back to helm Pioneer in 2019. Under his leadership, the company morphed from a medium-size oil producer to one of the biggest U.S. shale companies. Pioneer, which used to operate from Alaska to Canada, is now solely focused on the Permian Basin of New Mexico and West Texas, where it holds vast reserves of oil and gas.
Permian’s M&A Activity to Pick Up in 2023. M&A activity in the Permian to pick up in 2023. Oil Price. Reports of supermajor ExxonMobil holding informal discussions to buy the top pure-shale firm, Pioneer Natural Resources, reignited market talk about the start of the next phase of mergers and acquisitions in the U.S. oil industry. Operators and acreage in the top oil-producing basin, the Permian, are expected to make the biggest waves in a new consolidation stage, analysts say. This year, the M&A activity in the shale patch could pick up as most oil producers generated record cash flows in 2022 and are looking to grow by adding top-tier assets adjacent to their acreage. In addition, small and mid-sized firms could seek mergers with peers as they are likely struggling to either find buyers or sellers, or access debt markets with the rise in interest rates, according to various analysts and investment banks.
Sheffield M&A Boom Unlikely. Outgoing oil titan says M&A boom is unlikely. Barron’s. Analysts have been predicting a wave of acquisitions in the oil patch this year, but one of the industry’s top CEOs doesn’t expect it to happen. Scott Sheffield, one of the architects of America’s shale-oil drilling boom of the past 15 years, announced late Wednesday that he will retire from his role as CEO of Pioneer Natural Resources PXD –4.35% (PXD). On Thursday, Sheffield and incoming CEO Rich Dealy talked about the company and industry’s future in an interview with Barron’s. Sheffield says deals will prove elusive in today’s market. “For buyers and sellers, it’s very hard to agree to terms,” he said.
Mitsui Buys TX NatGas Field. Japan’s Mitsui buys 92% stake in Texas natural gas field. Oil Price. Japan’s Mitsui has bought a 92% stake in a shale gas field in Texas, from which it eyes production of over 200 million cubic feet daily, Reuters has reported, citing the company. The size of the deal was not disclosed but the Japanese company said the acquisition was a “pragmatic solution” for the transition away from fossil fuels. Mitsui’s acquisition deal in Texas may well be one version of securing long-term gas supply. The company said the field has a connection to LNG export plants on the Gulf Coast as well as ammonia production facilities.
Recession Fears Keeping Oil Down. Economic fears put oil prices under pressure. Oil Price. While oil prices rebounded slightly on Friday morning, they remain on course for a weekly decline. Worrying economic data in the U.S. and the expectation of another interest rate hike have added significant downward pressure to oil markets this week. While promising signs of oil demand in China and a report of inventories declining gave oil prices some support, bearish sentiment appears to be driving the market. Oilprice Alert: Whether you are new to the oil and gas industry or an energy market veteran, you will regret not signing up for Global Energy Alert. Oilprice.com’s premium newsletter provides everything from geopolitical analysis to trading analysis, and all for less than a cup of coffee per week.
PA NatGas Production Fell in 2022. Capacity limits restrain Pennsylvania natural gas production. Progress News. Pennsylvania natural gas production fell by two percentage points in 2022 as pipelines run at full capacity and future development slows. Although the state maintains its number two status nationwide – just behind Texas – industry advocates say politics disconnect northern states from a pipeline network that could boost demand for Pennsylvania gas. “The natural gas resources in Pennsylvania are world-class, and operators here are steadily producing energy in the most responsible manner,” Marcellus Shale Coalition President David Callahan said. “Yet, pipeline constraints – mostly due to political and extreme activism – constrict flow to key demand centers, including the Northeast, limiting the ability for more Americans and allies abroad to benefit from clean, affordable Pennsylvania-produced natural gas.”
OH Producers Paid $57 Million in 2021. Ohio oil & gas generated $57m in property tax revenue in 2021. Marcellus Drilling News. According to data recently compiled and shared by the Ohio Oil & Gas Association (OOGA), during 2021 (the most recent year available), the oil and gas industry in Ohio paid a cumulative $57.6 million in ad valorem property taxes to the state. That is separate from a severance tax also paid by drillers in the Buckeye State. The O&G industry not only provides millions in tax revenue, but it also employs “more than 200,000” people in Ohio, and of course, all of those workers pay state income tax too. The economic impact of oil and gas (largely shale) in Ohio is enormous.
NatGas Prices See Higher Prices and Volatility in the Future. Major shifts in global energy market could spell the end of cheap natural gas. Hellenic Shipping News. While U.S. natural gas futures prices have fallen sharply in recent months, higher prices and increased volatility could be on the long-term horizon as the energy transition accelerates and European markets respond to recent supply constraints. Rising U.S. exports of liquefied natural gas (LNG), fewer opportunities for fuel-switching between coal and gas and supply chain bottlenecks could all contribute to higher domestic energy costs in the years to come. According to a new report from CoBank’s Knowledge Exchange, growth in U.S. LNG export capacity will lead to an increasing interconnection between previously disconnected markets, creating a situation where events in one market will strongly influence outcomes in others.
Flaring at Lowest Level in a Decade. Gas flaring intensity in 2022 fell worldwide, with the United States playing a significant role in the decline according to the World Bank’s latest Global Gas Flaring Tracker Report. In short, the report finds that in 2022 global gas flaring decreased by three percent from 144 billion cubic meters (bcm) to 139 bcm, making it the lowest level since 2010. Notably, global gas flaring progress coincided with global oil output increase. Oil production rose by five percent – to 80 million barrels per day (bbl/d) from 77 million bbl/d in 2021. The analysis found that U.S. flaring fell by nine percent between 2021 and 2022, despite the United States being in the top nine flaring countries. Notably, the United States led the pack as one of three countries – Nigerian and Mexico included – to account for the majority of the decline in global gas flaring in 2022. Even better is that flaring intensity declined by 14 percent to “the lowest value recorded for the United States in the last ten years.” This is a particularly relevant feat considering that the United States also increased its oil production by almost six percent during 2022.
TX Supporting Gas and Diesel Fuel Vehicles. Landgraf’s bill to prohibit cities from banning gas engines passes. CBS 7. Legislation sponsored by State Representative Brooks Landgraf to ensure gasoline and diesel-powered engines can never be outlawed by local governments in Texas passed out of the Texas House of Representatives on Tuesday. Senate Bill 1017, the companion legislation to House Bill 2374 filed by Landgraf, passed by a vote of 116 to 30. “SB 1017 is about individual liberty, and when people are free to choose and the market is allowed to be competitive, Texas oil and natural gas always win,” Landgraf said. “It’s an honor to fight for the hard-working men and women of the Permian Basin, to fight for freedom and for energy independence.”
Bad News for Big Oil. Climate Lawsuits Will Go to State Courts. US Supreme Court moves big oil climate lawsuits to state courts. Offshore Technology. The US Supreme Court has declined to hear appeals by major oil companies that would move lawsuits against them into federal courts. The supreme court rejected five appeals from Exxon Mobil, Suncor Energy and Chevron, which determined that the lawsuits belonged in state courts. The rulings in these cases will help determine whether future cases will be waged in federal courts or at the state level. When compared with federal courts, state courts are often seen as more favourable to plaintiffs in damage cases, potentially increasing the liability of the companies. The relevant lawsuits were filed by the state of Rhode Island and municipalities or counties in Maryland, Colorado, California and Hawaii accused the companies of worsening climate change.
Biden Readies Executive Order on Environmental Justice. Biden order tackles environmental justice. E&E News. Environmental justice advocates were set for a hard-fought win Friday as President Joe Biden readied an executive order Scheduled to be signed in the White House Rose Garden on Friday afternoon, the order will target environmental reviews around projects like pipelines and highways, along with chemical plants and waste sites. Federal agencies would also be directed to work much more closely with affected communities at early stages of project development, considering health and environmental factors and notifying residents of risks.
Methane Tax Confusion. Uncertainty, confusion continue to grow around methane tax. JPT. Confusion and uncertainty reign when it comes to the pending methane emissions tax included in last year’s Inflation Reduction Act. There is concern that the tax will most heavily affect mid-size independent producers, as Grant Swartzwelder, president of OTA Environmental Solutions said. “Anyone below 25,000 tons, it won’t affect you. The large companies, because of their size and lobbying efforts, won’t be affected. It seems those in the middle ground are the ones to get impacted the most and possibly the most negatively,” he told Lee Fuller, officer, environment and general strategy, with the Independent Petroleum Association of America during a monthly Oilfield Strong webinar.
March DUCs Report. Fueled by a 127% jump in the number of drilled, but uncompleted wells in the Niobrara in the Central Plains, total “DUCs” in the U.S.’s seven most important shale plays rose 9.4% in March from one year ago.
Just-released Energy Information Administration data shows the year-over-year increase compared to a 0.2% increase in “DUCs” from February to March of this year.
The number of DUCs last month totaled 4,676, up 403 wells from March 2022’s total of 4,273.
Five of the seven major shale plays in the U.S. reported a YoY increase in drilled, but uncompleted wells, ranging from 10 in the Anadarko, to the Niobrara’s whopping 402-well jump.
The Niobrara, located primarily in Colorado and Wyoming, with small slices found in Nebraska and Kansas, rose to 719 DUCs last month, from just 317 one year ago. The latest EIA data compares to 704 DUCs in February of this year.
The Haynesville Shale Play saw its DUCs total jump 336, or 87.7%, to 719, from 383 one year ago. In Appalachia, which includes the Marcellus and Utica Shale plays, the number of DUCs rose by 239, to 706 last month, from 406 a year earlier.
The Bakken’s DUCs total increased 46.5% (193 wells), to 608 from 415, a 51.2% jump, the EIA reported. In the Anadarko play, the number of DUCs YoY rose by 10, or 1.4%, to 750, from 740.
Two of the country’s seven major shale plays reported substantial drops in DUCs. The Permian recorded the largest YoY drop, down 548 DUCs, or 41.9%, to 761, from 1,309. The latest number was down 32 DUCs from February 2023.
In the Eagle Ford Shale play, the number of DUCs dropped by 229, or 35.7%, to 413 last month, from 642 in March 2022.
PA Permits April 10, to April 26+, 2023
County Township E&P Companies
1. Greene Aleppo EQT
2. Greene Jefferson EQT
3. Greene Jefferson EQT
4. Greene Jefferson EQT
5. Greene Jefferson EQT
6. Greene Jefferson EQT
7. Greene Whitely Greylock
8. Greene Whitely Greylock
9. Greene Whitely Greylock
10. Greene Whitely Greylock
11. Greene Whitely Greylock
12. Greene Whitely Greylock
13. Lycoming Plunketts Creek PA Gen Energy
14. Susquehanna Jessup Coterra
15. Susquehanna Jessup Coterra
16. Susquehanna Jessup Coterra
17. Susquehanna Jessup Coterra
18. Susquehanna Jessup Coterra
19. Susquehanna Jessup Coterra
20. Susquehanna Jessup Coterra
21. Susquehanna Jessup Coterra
22. Susquehanna Springfield Coterra
23. Washington Cecil Range
24. Washington Cecil Range
25. Washington Cecil Range
26. Washington Cecil Range
27. Washington Fallowfield Rice
28. Washington Morris CNX
29. Washington Nottingham Range
30. Washington Nottingham Range
31. Washington Nottingham Range
32. Westmoreland Penn Olympus
33. Westmoreland Washington Olympus
34. Westmoreland Washington Olympus
OH Permits April 9, to April 22, 2023
County Township E&P Companies
1. Belmont Richland Ascent
2. Carroll Washington INR
3. Carroll Washington INR
4. Carroll Washington INR
5. Monroe Salem Equinor
6. Monroe Salem Equinor
WV Permits April 10, to April 21, 2023
1. Marshall SWN
2. Marshall SWN
3. Marshall SWN
4. Marshall SWN
5. Marshall SWN
6. Marshall SWN
7. Marshall SWN
8. Marshall SWN
9. Marshall SWN
10. Marshall Tug Hill
11. Marshall Tug Hill
12. Ohio SWN
13. Ohio SWN
14. Tyler Antero
15. Tyler Antero
16. Tyler Antero
17. Tyler Antero
18. Tyler Antero