Facts & Rumors # 531
October 28, 2023
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Exxon and Chevron Deals Boost Oil Production. Exxon, Chevron deals set to boost oil production, CCS. E&E News. Chevron’s announcement Monday that it is planning to purchase competitor Hess for $53 billion is underscoring confidence among oil majors that fossil fuels will remain the dominant energy source for a decade or more. The all-stock purchase is slated to be the fourth-largest oil production deal of all time. It follows another massive oil shake-up on Oct. 11, when Exxon Mobil announced that it intended to acquire Permian-production powerhouse Pioneer Natural Resources in a deal valued at about $60 billion. While the specifics of the two deals differ, they signal the trajectory of the industry, said Andrew Dittmar, a director with the Enverus energy intelligence group who specializes in mergers and acquisitions. “The common thread connecting these deals is (oil and gas) majors looking to refill their pipelines to maintain production against a declining asset base as they anticipate their legacy businesses staying profitable into the 2030s,” he said Monday.
TX O&G Another Production Record. TxOGA: State’s oil, gas production sets record for second month. Midland Reporter-Telegram. Texas crude and natural gas production continues at a record pace, according to the Texas Oil & Gas Association. TXOGA’s Chief Economist Dean Foreman said in the monthly economic analysis he prepares for the association, Texas oil production broke the record it set in August, rising to 5.9 million barrels per day. Texas natural gas marketed production also broke its record set in August, rising to 34.6 billion cubic feet per day of natural gas gross withdrawals.
More LNG Terminals Coming. Expansion of new liquefied natural gas export terminals on the Texas and Louisiana Gulf Coasts has energy experts hoping those very expensive plants will transform the American LNG industry into one that relieves the domestic oversupply of natural gas and pushes the price into long-term profitability. “Texas is a leading energy hub thanks to the abundant energy supplies and responsible oil and gas producers who are working hard to meet not only a rise in American demand but global demand as well,” said Texas Independent Producers & Royalty Owners President Ed Longanecker. “New LNG projects coming online mean a continued investment in the state, people and communities that make abundant, affordable energy possible.
NatGas Rig Count 24%. The number of operating U.S. natural gas rigs has declined 24% since start of 2023. Hellenic Shipping News. On October 20, the Baker Hughes Company reported 118 natural gas-directed rigs were active in the United States, a decrease of 38 rigs since the start of 2023. The decline in active drilling rigs coincides with lower natural gas prices for most of 2023, compared with relatively high natural gas prices for most of 2022. When natural gas prices are low, producers often decrease their drilling activity, reducing the number of active drilling rigs deployed. Producers may not respond immediately to decreases in natural gas prices; it typically takes four to six months for producers to respond to price changes. The extent to which producers respond to price changes is based on several factors, such as uncertainty around future prices, volatility in the market, price hedging, and current costs of materials, equipment, and labor.
North American LNG Set to Expand. LNG exports from North America are set to expand with new projects. EIA. Over the next five years, we expect North America’s liquefied natural gas (LNG) export capacity to expand by 12.9 billion cubic feet per day (Bcf/d) as Mexico and Canada place into service their first LNG export terminals and the United States adds to its 11.4 Bcf/d of existing LNG capacity. By the end of 2027, we estimate LNG export capacity will grow by 1.1 Bcf/d in Mexico, 2.1 Bcf/d in Canada, and 9.7 Bcf/d in the United States from a total of ten new projects across the three countries.
Longer Laterals; Less Drilling. Thanks, MDN. Range Resources Corporation, the very first company to drill a shale well targeting the Marcellus Shale layer in Pennsylvania (in 2004), issued its third quarter update yesterday. In prior guidance from earlier this year, Range said it would drill between 60-65 wells in 2023. However, with this latest update, that number was revised down to 51 new wells in this latest update. The reason for drilling fewer wells, according to the Range officials, is that the company is drilling longer wells, achieving the same amount of lateral feet with fewer holes in the ground. Even though fewer new wells are coming, the ones that are drilled produce more.
NatGas Storage Surplus Expanding. Analysts see U.S. gas storage surplus widening as mild autumn weather persists. S&P Global. Injections to US natural gas storage likely outpaced the historical average again in mid-October, even as cooler weather in the Northeast and central south fueled weekly gains in heating and power demand. In its upcoming Oct. 26 inventory report, the US Energy Information Administration is expected to announce an 81 Bcf build to US gas storage in the week prior, according to the latest survey of market analysts from S&P Global Commodity Insights. Responses to this week’s survey were mostly reported in a narrow range from about 70-85 Bcf, excluding just one high-side outlier estimate.
Halliburton Bullish. Continued demand growth seen for oil, gas services in 2024 and beyond: Halliburton CEO. S&P Global. Continued demand for oil and gas services and equipment is likely to grow in 2024 and beyond as upstream operators respond to increasing needs for energy security and a realization that conventional energy supplies will be needed longer than believed, the top executive of oilfield services provider Halliburton said Oct. 24. “Maintaining production while adding incremental supply requires meaningful long-term investment in both short- and long-cycle barrels to meet demand,” CEO Jeff Miller said during a third quarter earnings call. “Everything I see today strengthens my conviction in the long duration of this upcycle.”
Fracking Safer Than Ever. Op-Ed: Five years later, evidence of fracking’s safety is stronger than ever. Center Square. Five years ago, The Heartland Institute set out to correct some misperceptions about the hydraulic fracturing process (commonly known as “fracking”) that had gained traction in the opinions of a not-insignificant number of people across the country: It pollutes water! And the air! And causes cancer! And birth defects! And asthma! And earthquakes! All at once! Of course, none of these things, as we’ll show in a bit, are true, but the unscientific stories with their sensationalist headlines written and promoted by anti-fracking activists have done much damage.
Peak Oil Demand. Big Oil’s mega acquisitions raise questions about peak oil demand. Yahoo Finance. All industry observers seem to agree that the time was ripe for a consolidation wave in U.S. oil. The reasons for this perception included the record profits that everyone made last year, new acreage running out in the shale patch, and limited new discoveries internationally. According to the Financial Times, the two megamergers that Exxon and Chevron announced in the past couple of weeks have set off what its authors called “an arms race” to secure long-term oil and gas asset supply—at a time when some are predicting a peak for oil demand. “We live in the real world, and have to allocate capital to meet real world demands,” Chevron’s chief executive Mike Wirth recently told the FT in an interview, adding that demand for oil will continue to grow beyond 2030. NYT and US News also report.
Domestic Production ‘Critical.” Texas energy leaders: As world conflicts escalate, domestic production is ‘critical’. Center Square. Continued job growth in the Texas oil and natural gas industry has helped Texas lead the U.S. in job creation and break every job and employment category over the past two years, energy experts argue. Texas upstream employment last month totaled 210,700, an increase of 1,700 jobs from revised August employment numbers, according to recently released data. The total brings the number of additional or recovered jobs to nearly 54,000 since COVID-era lockdowns in 2020. Last month, Texas added 18,700 jobs since September 2022, a 9.7% increase. Since the COVID-low point of September 2020, the industry has added or recovered 53,700 Texas upstream jobs, averaging a growth of 1,492 jobs a month, the Texas Oil & Gas Association notes. Months with an increase in upstream oil and natural gas employment outnumbered months with a decrease by 31 to 5.
OPEC+ Sending Less Oil to U.S. OPEC+ members send less oil to U.S., adding to tight supply outlook. Reuters. U.S. waterborne imports of crude from OPEC+ members including Saudi Arabia have dropped steadily over the last year, further tightening supplies in the U.S. while supporting other markets including Europe, according to flows data and analysts. Going forward, the level of U.S. crude imports from OPEC and other exporters and U.S. shipments to Europe will probably have a more direct impact on global oil prices thanks to a change made earlier this year to the Brent crude benchmark.
ConocoPhillips – CrownRock Deal?? Exclusive: ConocoPhillips weighs CrownRock bid to challenge rivals. Reuters. ConocoPhillips is considering an offer for CrownRock LP, an energy producer in the west Texas area of the Permian basin, people familiar with the matter said, as consolidation in the sector picks up pace. Houston-based Conoco, the largest U.S. oil and gas producer after Exxon Mobil Corp and Chevron Corp, has expressed interest in participating in the sale process for privately held CrownRock, which is valued between $10 billion and $15 billion, the sources said.
CNX 3rd Qtr. Financials. Pittsburgh Airport. Thanks, MDN. Yesterday, CNX Resources issued its third quarter 2023 update. Even with a crash in the price of natural gas this year, CNX generated $21 million in net profit during 3Q23 versus losing $427 million in 3Q22. The company also managed to generate $19 million in free cash flow in 3Q23. Of particular interest for us is that of the 13 new wells brought online during the quarter, four of them were drilled under runways at Pittsburgh International Airport. CNX has a public-private partnership with the airport to drill wells on airport property. The original plan called for 45 wells, but as of last year, only 14 wells had been drilled (see CNX, Pittsburgh Airport Cut New Deal to Drill More Wells). By our count, these four new wells boost the total to 18 wells.
API Working with Ukrainian Oil to Bolster Energy Independence. API Signs New Agreement with Ukraine’s National Oil Company to Bolster its Energy Independence. Efforts API and Ukrnafta Sign MOU to Adopt API Standards, Minimizing Ukraine’s Reliance on Russia. The American Petroleum Institute (API) and Ukrnafta, Ukraine’s leading national oil company, today signed a Memorandum of Understanding (MOU) to promote the adoption of API natural gas and oil standards in Ukraine. The agreement affirms both parties’ commitment to enhancing Ukraine’s energy independence and its transition away from Russian standards, equipment and operations.
After the signature of the MOU between API and Ukraine’s national standards body, the State Enterprise “Ukrainian Scientific Center for Standardization, Certification and Quality Problems,” which focused on an information exchange and the promotion of API standards, this agreement with Ukrnafta goes further, supporting Ukraine’s shift away from Russian standards and toward API’s globally recognized international energy standards and best practices.
“As the world’s premier standards-setting organization for the natural gas and oil industry, API is honored to embark on this new cooperative relationship with Ukrnafta,” said Anchal Liddar, API Senior Vice President for Global Industry Services. “This alliance solidifies our shared vision of strengthening Ukraine’s energy infrastructure and independence based on our world-class standards.”
“The memorandum of understanding with API will allow us to significantly increase our efficiency and attract the best examples of world technologies to the development of the Ukrainian oil industry,” said Serhiy Koretsky, director of Ukrnafta PJSC. “This is one of the key transformation projects of the company in the coming years, which will ultimately allow Ukraine to achieve the desired energy independence. We are honored to work together with such a respected and influential organization as API.”
The MOU establishes a framework between API and Ukrnafta for the following:
- Promoting the adoption and harmonization of API standards across Ukraine’s oil and gas industry
- Involving Ukrainian experts on API standards committees
- Providing guidance, promoting awareness and facilitating information exchange on the usage and implementation of API standards and safety programs, such as API Energy Excellence®
- Collaborating on events and the joint organization of standards-related training programs and seminars
The framework outlined in the MOU supports Ukraine’s intent to reduce its reliance on Russian energy and supply chain and helps create a robust, resilient energy industry that is aligned with international best practices.
API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our approximately 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.
PA October 16, to October 26, 2023
County Township E&P Companies
1. Green Gilmore EQT
2. Green Gilmore EQT
3. Green Gilmore EQT
4. Susquehanna Auburn Chesapeake
5. Susquehanna Auburn Chesapeake
6. Susquehanna Auburn Chesapeake
7. Susquehanna Auburn Chesapeake
8. Washington Cecil Range
9. Washington North Bethlehem Rice
10. Washington North Bethlehem Rice
11. Wyoming Forkston SWN
12. Wyoming Forkston SWN
13. Wyoming Forkston SWN
14. Wyoming Forkston SWN
15. Wyoming Windham Chesapeake
16. Wyoming Windham Chesapeake
17. Wyoming Windham Chesapeake
OH October 15, to October 21, 2023
County Township E&P Companies
1. Harrison Cadiz Ascent
2. Harrison Cadiz Ascent
3. Harrison Cadiz Ascent
WV Permits October 16 to October 20, 2023
1. Marshall EQT
2. Marshall EQT
3. Marshall EQT
4. Marshall EQT
5. Marshall EQT
