Facts & Rumors # 526

September 23, 2023

Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays

U.S. Oil Production Falling.  US oil output from top shale areas to fall for 3rd straight month in October, EIA says. Reuters. U.S. oil output from top shale-producing regions is on track to fall for a third month in a row in October to the lowest level since May 2023, the U.S. Energy Information Administration (EIA) said in its monthly drilling productivity report on Monday. U.S. oil output is expected to fall to 9.393 million barrels per day (bpd) in October from 9.433 million bpd in September, EIA data showed. A record 9.476 million bpd was hit in July. Oil Price also reports.

Permian Well Productivity Driving NatGas Production.  Higher Permian well productivity, crude prices drive U.S. marketed natural gas production growth. EIA. In our latest Short-Term Energy Outlook, we estimate U.S. marketed natural gas production in the Lower 48 states (L48) will grow by 5% (5.2 billion cubic feet per day [Bcf/d]) in 2023 and 2% (2.6 Bcf/d) in 2024. Our forecast reflects more oil and natural gas production in the Permian region in western Texas and eastern New Mexico, which currently accounts for a quarter of all marketed natural gas production in the L48. We forecast Permian region natural gas production will increase by 12% (2.3 Bcf/d) in 2023 and 8% (1.8 Bcf/d) in 2024. Improvement in Permian well-level productivity and higher crude oil prices in late 2023 and 2024 drive the growth in natural gas production in our forecast.

NatGas to Cove Point LNG Has Stopped.  Thanks, MDN. Feedgas flows from the Marcellus/Utica to the Cove Point LNG export facility located on the shore of Maryland fell to zero yesterday. It was the start of the facility’s annual maintenance outage. The question is, how long will Cove Point be out of commission for liquefying and exporting LNG? There are conflicting reports. Last year, the facility was closed from Oct. 1-27 — nearly a month! In most years, the closure lasts around three weeks. This time around, Reuters is reporting Cove Point will be down just a week, from Sept. 21-29. We don’t think that’s quite accurate.

No! Pipelines Are the Problem.  Pipelines are limiting U.S. natural gas production. Oil Price. In its latest biennial assessment delivered last week, the Potential Gas Committee (PGC) reported that U.S. natural gas supply has hit a record 3,978 trillion cubic feet, good for a 3.6% increase from the 2020 estimate with shale gas dominating supply at 61%. The country’s technically recoverable resources, however, fell slightly by 0.5% to 3,352 Tcf likely due to some volumes being shifted to other categories. The Atlantic region, home to the gas powerhouse Marcellus and Utica shale plays, harbors the lion’s share of supplies at 40% of estimated gas resources. More than 800 volunteer geoscientists and engineers contributed to PGC’s assessments.

Possible Win for FERC.  D.C. Circuit leans toward FERC in gas project brawl. E&E News. A federal appeals court Monday appeared unlikely to require the Federal Energy Regulatory Commission to revamp how it approves the timeline for building fossil fuel projects. In back-to-back oral arguments in two separate cases, the Sierra Club pressed for a three-judge panel to require more analysis from the commission before it approves deadline extensions for energy project construction. If the court rules in FERC’s favor, the agency wouldn’t have new requirements before advancing natural gas infrastructure that is running behind schedule, making it more likely that projects get finished. Specifically, the U.S. Court of Appeals for the District of Columbia Circuit seemed unconvinced that the commission had acted outside its discretion in assessing challenged certificate extensions for the 99-mile Northern Access natural gas pipeline from Pennsylvania to New York, and the third phase of Cheniere Energy Inc.’s Corpus Christi liquefied natural gas terminal in Texas.

EQT Does Deal with Commonwealth LNG.  Thanks, MDN.  Commonwealth LNG is developing a 9.3 MTPA (million tons per annum) liquefied natural gas (LNG) export terminal project located on the Calcasieu River in the Gulf of Mexico near Cameron, Louisiana. Commonwealth anticipates a final investment decision for the project in the first quarter of 2024, with the first cargo deliveries expected in 2027. According to an announcement yesterday, just over 10% of the gas that will get liquefied and exported will come from EQT Corporation’s Marcellus/Utica

Drilling in OH State Parks Delayed.  Fracking Ohio state parks, wildlife areas delayed as state board defers decision. Cleveland.com. The state on Monday delayed its decision on opening two state parks and two protected wildlife areas to oil and gas exploration, the final step before industry players can bid for leasing rights to minerals trapped underground. It marks a win, if temporary, for the dozens of protesters who attended the combative and sometime raucous hearing of the Ohio Oil and Gas Land Management Commission over the mineral rights to Salt Fork State Park, Wolf Run State Park, Valley Run Wildlife Area, and Zepernick Wildlife Area. The commission will gather again at a future meeting, not yet scheduled, to decide whether to open those areas to bidders. The decision came as protesters urged the state to reject the nominations and after Cleveland.com and The Plain Dealer and an environmental group uncovered scores of people who say they didn’t knowingly authorize pro-fracking letters submitted to the state in their name.

DUC’s Down in August.  The number of drilled, but uncompleted wells in August fell 10% from a year ago in four of the U.S.’s most prolific shale plays, just-released Energy Information Administration data reveals.

The 9.8% year-over-year drop came on the backs of 28+% falls in both the Eagle Ford and Permian shale plays, and despite double-digit increases in DUCs in both Appalachia (the Marcellus and Utica plays) and in the Bakken.

A total of 2,462 DUCs were recorded in the quartet of plays last month, down 267 wells from 2,729 DUCs one year ago. The latest total was down 33 wells reported for July 2023.

Appalachia took monthly honors with the largest year-over-year increase, up 193 wells, or 37%, to 714 from 521 one year ago. The 714 figure was down 10 wells from July 2023’s 724 total.

In the Bakken, 474 DUCs were recorded for August, up 49 wells from the year-ago total of 425. Last month’s total was down 14 wells from July’s total of 488.

The Permian Basin last month experienced the biggest drop in DUCs from a year ago. The massive shale play reported 830 wells for last month, down 331 DUCs from August 2022’s 1,161 wells. The latest Permian total was down just three wells from July’s 833 total, EIA data reveals.

In the Eagle Ford, the DUCs total for August was 444, down 178 wells from the year-ago total of 622, and down just six wells from July 2023’s 450 total.

South TX Permitting Roundup.  South Texas Drilling Permit Roundup: Lee County emerges as popular drilling site. San Antonio Business Journal. Magnolia Oil & Gas Operating LLC, known best for its Washington and Karnes counties wells, is hoping to hit pay dirt in Lee County. Magnolia Oil & Gas has filed applications for five new allocation wells in Lee County. Magnolia is seeking five wells 10 miles northeast of Giddings, each with a total depth of 12,000 feet upon completion. Three of the wells are being mapped. Total depth refers to the length of pipeline required for the horizontal and vertical sections of a well. Marathon Oil EF LLC, another active operator last week, filed for five new wells in Atascosa and Karnes counties. Three of Marathon’s wells will be located 9.1 miles northeast of Campbellton in Atascosa County. Of Marathon’s Karnes County wells, one will be located roughly 9.5 miles southwest of Karnes, and another will be located 9.5 miles southwest of Kenedy, with a total depth of 22,000 feet. The Karnes County wells will be allocation wells, according to Texas Railroad Commission data.

Report Shows Emissions Down.  New report shows oil, NatGas industry progress to reduce methane emissions. Pennsylvania Business Report. The Environmental Partnership (EP) issued a report last week on the U.S oil and natural gas industry’s actions to reduce methane emissions, improve detection methods, and share best practices across the industry. The fifth annual report found that the industry continues to achieve results across all performance programs, including replacing gas-driven pneumatic controllers with low- or zero-emitting devices, reducing leak occurrence rates, and driving flare intensity down by 2.4 percent. These reductions come even though oil and natural gas production increased by 5.6 percent and 4 percent, respectively, over the past year.

API Wants Biden to Finalize Methane Rule.  API urges Biden to finalize methane rule. World Oil. The American Petroleum Institute (API) called on the Biden administration to issue a final methane rule that achieves methane emissions reductions without sacrificing American energy production. In a letter to U.S. Environmental Protection Agency (EPA) Administrator Michael Regan, API urged EPA to align its complex methane regulations that apply to U.S. natural gas and oil operations and adopt a timeline for the final methane rule that accounts for the reality of supply chain delays for critical equipment needed in thousands of facilities in producing basins across the country. In a new study, companies identified supply chain delays and challenges in procuring the methane reduction equipment needed to comply with EPA’s draft regulation on the timeline EPA proposed. The study conducted by API, the American Exploration and Production Council (AXPC), the Interstate Natural Gas Association of America (INGAA), Independent Petroleum Association of America (IPAA), and GPA Midstream finds that the current backorder times for methane reduction equipment components range from 6 months to more than two years, and implementation of the proposed methane rule is expected to increase current backorder times by an additional 6 months or more. E&E News also reports.

Export Record.  US petroleum products exports set new record in first half of 2023. Center Square. U.S. petroleum products exports set a new record in the first half of 2023, according to newly released U.S. Energy Information Association data. U.S. exports of petroleum products grew 2% to nearly 6 million barrels per day (b/d) in the first half of 2023 (1H23) compared to the same period in 2022, according to the EIA. The increase in petroleum products exports in 1H23 was the greatest volume of first-half-of-the-year exports the EIA has ever reported since it began publishing its Petroleum Supply Monthly report in 1981… Ed Longanecker, with Texans for Natural Gas and the Texas Independent Producers and Royalty Owners Association, told The Center Square that “Texas energy – from our wells in West Texas to our ports along the Gulf of Mexico – enabled America to meet European gas needs in a time of crisis” last year. Texas energy provides energy security to the U.S. and its allies, he and others in the industry maintain. “Without American natural gas, Europe would have been at the mercy of aggressive foreign powers,” he said.

PA September 11, and September 21, 2023

County                                   Township                                           E&P Companies

1.    Beaver                                         Hanover                                             Range

2.    Beaver                                         Hanover                                             Range

3.    Beaver                                         Hanover                                             Range

4.    Beaver                                         Hanover                                             Range

5.    Bradford                                       Tuscarora                                          Chesapeake

6.    Bradford                                       Tuscarora                                          Chesapeake

7.    Bradford                                       Tuscarora                                          Chesapeake

8.    Bradford                                       Tuscarora                                          Chesapeake

9.    Elk                                                Jones                                                 Seneca

OH Permits September 10, to September 16, 2023

County                                   Township                                           E&P Companies

1.    Jefferson                                     Cross Creek                                      Ascent

WV Permits September 11, to September 15, 2023

1.    Doddridge                                                                                               Antero

2.    Doddridge                                                                                               Antero

3.    Doddridge                                                                                               Antero

4.    Doddridge                                                                                               Antero

5.    Doddridge                                                                                               Antero

6.    Doddridge                                                                                               Antero

7.    Marion                                                                                                      EQT

8.    Marion                                                                                                      EQT

9.    Marion                                                                                                      EQT

10. Marion                                                                                                      EQT

11. Marshall                                                                                                   SWN

12. Wetzel                                                                                                      EQT