Latest facts and a rumor from the Marcellus, Utica, and Permian, Eagle Ford Plays
MVP Restart End of June. (Thanks, MDN) The restart will occur after U.S. Army Corps of Engineers issues a Section 404 water permit (deadline is June 24), construction will resume to finish up the final 6% of the MVP project.
MVP Asks FERC for Extension in NC. Mountain Valley Pipeline asks FERC for extension to finish Southgate project in NC. NC Newsline. The owners of the Mountain Valley Pipeline sent a letter to federal regulators today, asking for a three-year extension to finish the southern leg, most of which would run through North Carolina. The controversial MVP Southgate Project would start in Chatham, Virginia, and enter North Carolina in Eden, in Rockingham County. From there, the natural gas pipeline would continue roughly 46 miles southeast, ending near Haw River in Alamance County. It originally was scheduled to be finished and in service this month, but it has not received the necessary permits.
NatGas Price Surge. Could It Last? Natural gas futures surge, spot prices extend rally on surprisingly bullish inventory data. NGI. Natural gas futures on Thursday rallied for a fourth consecutive session, bolstered by a bullish storage print that came on the heels of hotter weather and lower production. The July Nymex gas futures contract settled at $2.533/MMBtu, up 19.1 cents day/day. August jumped 19.6 cents to $2.609. Futures and cash markets have gained ground every session this week.
Global Oil Demand to Peak in 2028. Global oil demand expected to grow through 2020s, IEA says. E&E News. The world may hit “peak oil” demand in 2028, even as investments in oil and gas exploration, extraction and production increase, according to the International Energy Agency. In an analysis released Wednesday, IEA predicts that global oil consumption will grow 6 percent between 2022 and 2028, driven by a boom in petrochemical plants in China and the rebound of air travel after Covid-era restrictions. Oil demand will then “hit its apex” as the world shifts to electric vehicles and clean energy technologies, the analysis found. “This milestone marks a historic pivot towards lower-emission sources,” the report said. “The slowdown [in oil demand] has been hastened by Russia’s invasion of Ukraine amid heightened energy security concerns and by governments’ post-Covid recovery spending plans.” Most of the increase in oil demand through 2028 will come from Asian economies, with India and China among the top sources of growth, the IEA predicted. But oil demand in Europe and North America “spends most of the forecast period in contractionary mode,” according to the report.
U.S. Oil Output Record High in July, BUT…. U.S. oil output to rise to record high in July but growth narrowing -EIA. Hellenic Shipping News. U.S. oil output from top shale-producing regions is due to rise to the highest on record in July, but the size of the increase is expected to be the smallest since December, U.S. Energy Information Administration data showed on Monday. U.S. oil output is expected to rise to 9.38 million barrels per day (bpd) in July, EIA data showed. Output is due to rise by about 0.1% versus the previous month, which would be the smallest monthly gain since production was seen falling in December, the data showed.
No Oil Price Rally in 2023! Wall Street oil-watchers abandon belief in a 2023 price rally. Bloomberg. Wall Street oil-watchers have given up their belief in a rally this year. JPMorgan Chase & Co. on Wednesday became the last of the major banks to slash crude price forecasts, cutting its Brent targets for the second-half by 11% to $82 a barrel. Morgan Stanley led the way in calling time on a potential bull run, saying early last month that the supply tightness widely expected by the markets in the second half no longer looks likely to materialize. Earlier this week, Goldman Sachs Group Inc. — perhaps the street’s most enthusiastic crude bull — lowered forecasts as supplies from troubled producers like Russia and Iran prove surprisingly resilient. Last month, Bank of America Corp.
Biggest O&G Deal of the Year! The biggest oil and gas deal of the year so far. Oil Price. The recently announced merger of pipeline operators ONEOK and Magellan Midstream Partners is the biggest deal in the oil and gas sector so far this year, with the $18.8-billion value more than fourfold higher than the biggest deal in April, data from S&P Global Market Intelligence has shown. The two major pipeline operators said in the middle of May that ONEOK would buy Magellan Midstream Partners in a cash-and-stock deal valued at $18.8 billion, creating a combined U.S. oil and gas pipeline giant with a total enterprise value of $60 billion.
Major Oil Field Services Firms Merger. Patterson-UTI, NexTier merge to form $5.4 billion oilfield services firm. Reuters. Patterson-UTI Energy (PTEN.O) and NexTier Oilfield Solutions (NEX.N) on Thursday agreed to merge in an all-stock deal to create a $5.4 billion oilfield services firm. The merger brings together Patterson-UTI’s sizeable land drilling business and NexTier’s well completion operations. Analysts said the combined entity’s 3.3 million hydraulic fracturing horsepower would make it the largest pressure pumper by capacity in North America, slightly bigger than Halliburton (HAL.N). NexTier shareholders will receive 0.752 shares of Patterson-UTI common stock for each share of NexTier common stock they own. Patterson-UTI shares rose about 12%, while NexTier was up 6%.
Dominion Revives Plans NatGas Power Plant in VA. Dominion reviving plans to build a natural gas peaker plant in Chesterfield. Virginia Mercury. Dominion is reviving pre-pandemic plans to build a natural gas peaker plant in Chesterfield County as part of its recently announced strategy to invest in more gas generation to meet growing grid demand in the coming years. Four natural gas combustion turbines will be proposed for the facility, which will be similar to one Dominion originally sought in 2019 but put on hold as the utility shifted its focus toward renewable energy sources to comply with the Virginia Clean Economy Act, which seeks to decarbonize the state’s electric grid by 2050.
Encino Setting Records Producing Oil in OH. (Thanks, MDN) The Ohio Dept. of Natural Resources (ODNR) recently released production numbers for the first quarter of 2023, and wow! What a surprise! Oil production in the northern Utica Shale skyrocketed, led by wells drilled by Encino Energy. According to an analysis by the Youngstown Business Journal, four shale wells drilled by Encino in Columbiana County have “shattered previous production figures in the county.” Adding up all oil production by all drillers, Encino had the most oil production in the state, with 53.7% of the total oil produced in the Utica/Point Pleasant during the first quarter. It certainly looks like Encino has cracked the oil code in the Buckeye State!
More Production with Refracs. Frackers look to increase productivity with refracs, new tech. Marcellus Drilling News. Is shale energy beginning to peter out? We’re beginning to see stories in oil and gas publications about how the best locations to drill for shale oil and gas are gone, and the less desirable, less productive locations are now left. We don’t know if that’s true, but it seems people whose multi-billion-dollar businesses depend on it believe it–people like the CEO of Exxon Mobil, Darren Woods. The general attitude that we’re running out has led to two notable strategies to keep the good times rolling: (1) refracing existing wells, and (2) researching new technologies and techniques to get more oil and gas from existing and new wells.
Permian Sets NatGas Production Record. Permian sets natural gas production record. Midland Reporter-Telegram. The Energy Information Administration said this week gross natural gas production in the Permian reached a record high of 21 billion cubic feet per day in 2022, 14% above the 2021 average. The federal agency added in its Drilling Productivity Report that Permian natural gas production continued to grow in the first four months of this year, up 60 million cubic feet per day in June over June 2022 levels. The increase comes as Permian operators increase their crude oil production with a corresponding rise in the natural gas associated with that crude. “With energy demand at home and abroad at an all-time high, this milestone is a testament to the commitment of Texas producers to provide affordable and reliable energy to consumers across the globe,” Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, told the Reporter-Telegram by email.
Driller Wants to Drill OH’s Wolf Run State Park. Driller asks Ohio for rights to frack Wolf Run State Park. Cleveland. An oil and gas extraction company asked the state for rights to drill under about 2,000 acres of Wolf Run State Park in Noble County. State law shields the identity of the company making the request and other details of its offer. The request, technically known as a “nomination” asking the Oil and Gas Land Management Commission to free up the land for drilling, triggers a public comment period. Wolf Run is the second state park eyed by the oil and gas industry. Other companies previously asked to frack under Salt Fork State Park in Guernsey County, and two other designated wildlife areas in eastern Ohio. The requests mark the state’s first forays into leasing out its lands to oil and gas drillers after a 2011 law created what was a largely dormant program until a recent GOP-backed legal change effectively forced it into implementation.
NatGas Production in Permian. Record High in 2022. Natural gas production in the Permian Basin hit a record high in 2022. Oil Price. Natural gas production in the Permian Basin hit a record in 2022, the Energy Information Administration reported, with the total at 21 billion cubic feet daily. This represented a 14% increase on the total for 2021, the agency said, and an all-time high as well. Natural gas production in the basin continued to grow this year, too, exceeding the 21 billion cubic feet average for 2022. Almost all of the natural gas produced in the Permian is a by-product of oil production. As oil production rises, so does natural gas production. However, the EIA said earlier this week it expected production growth across the U.S. to slow down over the coming months, which suggests natural gas output growth will slow down, too.
Ovintiv Now the Biggest Player in the Permian. Denver oil company completes $5 billion in deals to boost Texas presence. Denver Business Journal. Denver-based Ovintiv is now the bigger player it wanted to be in Texas’ Permian Basin. The oil and gas company closed $5 billion worth of deals on Monday, selling its North Dakota oil production territory and acquiring about 1,050 well locations on largely undeveloped land next to Ovintiv’s existing operations in the Permian Basin. The company bought 65,000 acres of oil and gas leasehold interests in the Permian for $4.275 billion from Black Swan Oil & Gas, PetroLegacy Energy and Piedra Resources, portfolio companies of EnCap Investments.
Debt Deal Helps TX Energy Companies. Texas firms eager for faster projects. Dallas Morning News. Congress tucked into the debt limit-raising law a host of provisions to accelerate new energy projects, such as pipelines that could move cheap natural gas from West Texas to energy-thirsty consumers in California and around the world. Those changes were a selling point for some Texas Republicans who backed the debt ceiling compromise even as some conservative colleagues denounced the overall package as a fiscally irresponsible surrender to President Joe Biden. Steven Pruett, chairman of the Independent Petroleum Association of America, hopes the changes in the law could help alleviate backups in the Permian Basin. He pointed to recent periods when Californians have paid many times more for natural gas than the price in Texas because of constrained capacity to transport it west. “Because of the use of NEPA as a weapon against replacing and upgrading pipelines, it’s not happening,” Pruett said. “The problem is multiple agencies weigh in and we get stuck for years.”
DOE To Buy 6 Million Barrels for SPR. U.S. buys over 3 million barrels for oil stockpile, announces plan for 3 million more. Reuters. The U.S. Department of Energy said on Friday it awarded supply contracts to five companies to deliver 3.1 million barrels of crude oil to the Strategic Petroleum Reserve in August at an average price of $73 per barrel. The DOE had announced the purchase plan in May as a step to refill the emergency stockpile after a record release following Russia’s invasion of Ukraine last year. “These 3 million barrels are being purchased for an average price of about $73 per barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022, securing a good deal for taxpayers,” the DOE said in a press release.
U.S. Shale Slowing Down. U.S. shale is slowing down due to factors beyond its control. Forbes. The U.S. shale industry is slowing down, and a recovery during the rest of 2023 seems increasingly unlikely due to a variety of factors beyond anyone’s control. From its’ January 14 peak, the Enverus Daily Count of active North American drilling rigs has now fallen by 20%. Baker Hughes -0.9% said Friday its own weekly rig count has dropped six straight weeks. One week could be a blip; two straight might be a coincidence; but six straight weeks is definitely a trend. Given the state of other market factors, it’s a trend that seems unlikely to reverse itself during the second half of 2023, despite continuing forecasts of better times ahead from some analysts and agencies.
PA Permits June 5, to June 14, 2023
County Township E&P Companies
1. Sullivan Elkland Chesapeake
2. Sullivan Elkland Chesapeake
3. Sullivan Elkland Chesapeake
OH Permits June 3, to June 10, 2023
County Township E&P Companies
1. No New Permits
WV Permits June 5, to June 9, 2023
1. Brooke SWN
2. Brooke SWN
3. Monongalia Northeast Nat. Res
4. Monongalia Northeast Nat. Res
5. Monongalia Northeast Nat. Res
6. Monongalia Northeast Nat. Res