Facts & Rumors # 532

November 4, 2023

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

Oil and NatGas Production Poised for a Decline.  U.S. shale oil, gas production poised for decline [gas in transition]. Natural Gas World. A recently completed study by US data analytics firm Enverus concluded that US shale oil and gas production is dropping “faster than expected.” Given its far-reaching implications, this attracted considerable attention. In effect, the study states that after doubling production during the past decade, the shale industry is unlikely to see any more surges in future. Enverus went further, stating that “shale’s future production growth is expected to be more difficult.” Dane Gregoris, managing director Enverus Intelligence Research (EIR), added that “the US shale industry has been massively successful, roughly doubling the production out of the average oil well over the last decade, but that trend has slowed in recent years.”

MVP Completed 1^st Qtr. 2024. Equitrans U.S. Mountain Valley NatGas pipe on track for Q1 completion. Natural Gas World. Equitrans Midstream remains on track to complete the Mountain Valley natural gas pipeline from West Virginia to Virginia in the first quarter of 2024 at an estimated cost of $7.2 billion, U.S. energy company Equitrans Midstream said on Tuesday. That is the same timeline and cost that the company reported in mid-October, which was a revision from a prior completion estimate of the end of 2023 and a cost of around $6.6 billion.

Enterprise Products Making Bullish Moves.  Enterprise Products doubles down on gas liquids with pipelines, processing plants. Reuters. Energy pipeline operator Enterprise Products Partners (EPD.N) will expand its natural gas liquids (NGLs) operations, adding a pipeline from Texas’ Permian Basin, new plants to process natural gas, and converting an oil pipeline in Texas to NGLs, officials said on Tuesday. The energy infrastructure provider has sharpened its focus on NGLs that are used to make plastics and gasoline on rising global demand and a boom in U.S. exports.

Chesapeake Continues LNG Push.  Thanks, MDN.  In March, Chesapeake Energy announced a 15-year deal to provide natural gas for LNG exports to Gunvor Singapore Pte. In an interview with S&P Global Commodity Insights at the time, Chesapeake CEO Nick Dell’Osso expressed the view that over the next several years, as much as 20% or 25% of U.S. production will flow to international markets. Approximately 7% of Chesapeake’s natural gas production is liquefied and exported as LNG. Chessy Executive Vice President Josh Viets aims to increase that to 20% by locating more deals like Gunvor. Viets has just scored another LNG deal.

PA and CNX Partner.  Pennsylvania partners with natural gas driller on air and water monitoring amid new regulatory push. Associated Press. The state of Pennsylvania will work with a major natural gas producer to collect in-depth data on air emissions and water quality at well sites, enhance public disclosure of drilling chemicals and expand buffer zones, the governor announced Thursday, touting the collaboration as the first of its kind. CNX Resources Corp., based in Canonsburg, will partner with the state Department of Environmental Protection on intensive environmental monitoring at two future well sites throughout all stages of the drilling and fracking process — a data-collection exercise that could be used to drive future policy changes, according to Gov. Josh Shapiro.

Drought Impacting Propane & LNG Exports.  Thanks, MDN.  In early October, we brought you the news that propane (C3H8) was the most-exported U.S. petroleum product in the first half of 2023, averaging 1.5 million barrels per day (b/d), continuing a trend that began in 2020 (see Propane #1 Most Exported U.S. Petroleum Product First Half 2023). U.S. propane exports have been driving increased U.S. petroleum product exports for the past four years. Part of the propane export success story is right here in the Marcellus/Utica. However, there is a problem with propane (and even LNG) exports. The Panama Canal, a key link between the U.S. and Japan where much of our propane is shipped, is facing the worst drought in the Canal’s 120-year history.

GA Needs Appalachian NatGas.  Georgia’s largest utility looks to natural gas as it says it needs to generate more electricity soon. Statesboro Herald. Georgia Power Co. says increased demand for electricity is coming fast, asking regulators Friday to let it secure more power generation ahead of schedule. But environmentalists are questioning a plan that would mostly rely on natural gas to generate new electricity and could keep some coal-fired plants running past previously projected shutdown dates. They say the largest unit of Atlanta-based Southern Co. needs to do more to cut climate-altering carbon dioxide emissions produced from burning coal and gas. Georgia Power said it wants to build or contract for at least 3,365 more megawatts of generating capacity.

TX Bitcoin Industry.  Bitcoin springs from gas wells. WSJ. Big swings in the price of natural gas whipsaw producers. Chris Alfano thinks the solution lies in something even more volatile: bitcoin. The 29-year-old recently led a group of oil-and-gas veterans through a field of pipelines and wells outside Fort Worth, Texas, passing two giant orange generators before reaching a gleaming white structure about the size of a tractor trailer. Alfano’s company, 360 Mining, mines bitcoin here, using power generated from natural gas produced by the wells. Alfano’s pitch to these prospective clients: They can earn $10 or more from burning a thousand cubic feet of gas to mine the cryptocurrency instead of selling it for $1.50 or less. “This is wildcatting on the bitcoin side,” he shouts over the generators’ roar.

Eagle Ford Permits.  South Texas Drilling Permit Roundup: Eagle Ford operators seek new wells in DeWitt County. Houston Business Journal. Three companies are pursuing new wells in DeWitt County, the most-active county for applications last week. They include Houston-based Burlington Resources Co., which plans to drill four 17,500-foot wells 3.7 miles southeast of Ecleto; BPX Operating Co., which plans to drill three 14,000-foot allocation wells 11.6 miles northwest of Yorktown; and Houston-based Verdun Oil & Gas LLC, which plans to drill four 12,500-foot allocation wells 7 miles southwest of Westhoff.

“MONEY BACK GUARANTEE” for PA Shale Drillers.  Thanks, MDN.  The Pennsylvania State Dept. of Environmental Protection (DEP) should prepare to cough up some of the money it receives from the steep charges it assesses for Chapter 102 Erosion and Sedimentation and Chapter 105 Water Obstructions and Encroachments permits. For YEARS, we’ve told you about these permits sometimes taking two, three, even six to eight months for approval — instead of the law-mandated 14 days. It got so bad that in the fall of 2019, PA State Sen. Gene Yaw introduced a bill to allow third-party reviews of these permits. One of Josh Shapiro’s pledges was to fix the permitting delay mess. In August, he promised a money-back guarantee. He made good on his promise yesterday.

Marathon 3^rd Qtr. Financials. Marathon Oil profit tops analysts’ estimates on higher production. Reuters. Marathon Oil on Wednesday posted a third quarter profit that fell 44% from a year ago as energy prices fell, but results beat Wall Street analysts’ forecasts on higher-than-expected oil and gas production. Net production for the quarter rose nearly 20% to 421,000 barrels of oil and gas per day (boepd) from a year ago and was up about 6% from the prior quarter. Prices for its crude oil were 13.6% below and gas prices were 70% below the year-ago quarter. But average realized prices for oil gained 11.6% and natural gas was 20% above the quarter ended June 30.

Surplus NatGas for Heating Season.  Heating season is starting with a surplus of natural-gas. WSJ. U.S. natural-gas inventories rose to 5.7% above the five-year average following what analysts expect to be the last weekly supply build before winter, when demand for the heating fuel is at its highest and stockpiles are burned down. The domestic supply data released Thursday by the Energy Information Administration pushed natural-gas futures for December delivery down to $3.472 per million British thermal units. That’s 42% lower than a year ago— when inventories were lower than normal—and about where producers and energy analysts expect them to trade this winter, which should mean cheaper heating bills than last year for millions of Americans.

Chesapeake 3^rd Qtr. Financials.  Thanks, MDN.  Chesapeake Energy Corporation, the country’s third largest publicly-traded natural gas producer, issued its third quarter 2023 update yesterday. The company reports a profit of $70 million in net income during 3Q23, down from $883 million in 3Q22. The drop was due to lower gas prices and less production. Second quarter net production was 3,495 MMcfe per day (or 3.5 Bcfe/d, 97% natural gas and 3% total liquids), down 15% from 4,108 MMcfe per day in 3Q22. The company used an average of nine rigs to drill 35 wells, down from 53 in the second quarter, and placed 34 wells on production, which includes 16 wells in the South Texas Rich Eagle Ford asset (which is in the process of being sold).

Gulfport 3^rd. Qtr. Financials.  Thanks, MND.  Gulfport Energy, the third-largest driller in the Ohio Utica Shale (by the number of wells drilled), emerged from bankruptcy in May 2021 with a new board and top management. In January of this year, the company appointed a new CEO, John Reinhart, the former President and CEO of M-U driller Montage Resources Corporation before Southwestern Energy gobbled up that company. Yesterday, Gulfport issued its third quarter 2023 update. The company made a whopping $608 million in net income during 3Q23 versus losing $18 million in 3Q22. Gulfport’s net income was orders of magnitude higher than Chesapeake Energy’s, which is a much larger company!

PA October 23, to November 2, 2023

County                                   Township                                           E&P Companies

1.    Butler                                            Middlesex                                          PennEnergy

2.    Sullivan                                        Cherry                                                Chesapeake

3.    Sullivan                                        Cherry                                                Chesapeake

4.    Sullivan                                        Cherry                                                Chesapeake

5.    Sullivan                                        Cherry                                                Chesapeake

6.    Sullivan                                        Cherry                                                Chesapeake

7.    Susquehanna                             Auburn                                               Coterra

8.    Susquehanna                             Auburn                                               Coterra

9.    Susquehanna                             Auburn                                               Coterra

10. Susquehanna                             Auburn                                               Coterra

11. Susquehanna                             Auburn                                               Coterra

12. Susquehanna                             Auburn                                               Coterra

13. Susquehanna                             Auburn                                               Coterra

14. Susquehanna                             Auburn                                               Coterra

15. Washington                                 Smith                                                  Range

16. Washington                                 West Bethlehem                               EQT

17. Washington                                 West Bethlehem                               EQT

18. Washington                                 West Bethlehem                               EQT

OH October 22, to October 28, 2023

County                                   Township                                           E&P Companies

1.    Harrison                                       Washington                                       Gulfport

2.    Harrison                                       Washington                                       Gulfport

WV Permits October 23 to October 27, 2023

1.    Marshall                                                                                                   EQT

2.    Marshall                                                                                                   EQT

3.    Marshall                                                                                                   EQT

4.    Marshall                                                                                                   EQT

5.    Marshall                                                                                                   Tug Hill

6.    Marshall                                                                                                   Tug Hill

7.    Marshall                                                                                                   Tug Hill

8.    Marshall                                                                                                   Tug Hill

9.    Wetzel                                                                                                      Antero