Facts & Rumors # 533

November 11, 2023

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

Williams Completing Purchase of Blue Racer (RUMOR).  I have heard that Williams is completing its purchase of Blue Racer.  Williams had owned a major share of Blue Racer.  It has begun to place Williams personnel at the Blue Racer locations.

Blue Racer Midstream’s gas gathering system, located in southeastern Ohio and the panhandle of West Virginia, primarily handles natural gas produced from the liquids-rich portions of the Utica Shale and the southwestern portion of the Marcellus Shale and currently consists of more than 700 miles of natural gas gathering, NGL, and condensate pipelines.

Blue Racer’s Natrium Complex is located in Marshall County, West Virginia and currently consists of four cryogenic natural gas processing plants, each of which has 200 MMcf/d of nameplate processing capacity. Additional facilities can be added within Blue Racer’s existing owned footprint as demand grows.

Blue Racer’s Berne Complex is located in Monroe County, Ohio, and currently consists of two cryogenic natural gas processing plants, each of which has 200 MMcf/d of nameplate processing capacity. Blue Racer’s Berne Complex can accommodate two additional processing facilities within the footprint.

Ergon Buys Enlink Midstream – Ohio River Valley.  Ergon, Inc. (Ergon) has purchased EnLink Midstream – Ohio River Valley Operations (EnLink – ORV), which will now operate as Ergon Midstream, LLC (Ergon Midstream). The transaction is effective as of today, November 1, 2023.

EnLink Midstream – ORV has provided crude and condensate midstream services to Ergon and has been integral in delivering a significant portion of our crude supply to our existing terminal network to optimize crude deliveries to Ergon’s Newell, West Virginia, refinery (Ergon – West Virginia, Inc.). This acquisition positions Ergon to continue expanding our midstream services to support and meet the needs of current and future customers in the Ohio River Valley and Appalachian Region.

Joel Pastorek, President of Ergon Midstream, said: “Ergon has been committed to serving the Ohio River Valley and Appalachian Region since 1997, and we have continuously expanded our midstream service offerings via crude purchasing, trucking, terminaling, barging and crude stabilization services. This acquisition expands our footprint and strategically aligns our companies while further demonstrating our commitment to the region.”

EOG Uses Permian Completion Design on Utica Test Wells. Thanks, MDN. In 2020, EOG Resources, one of the largest oil and gas drillers in the U.S. (with international operations in Trinidad and China), sold all of its Marcellus assets, which were located in Bradford County, PA, to Tilden Resources for $130 million. EOG left the M-U building, so to speak. But the company couldn’t stay away. Last November, we told you that EOG admitted to stealthily amassing 395,000 net acres in the Ohio Utica for very little money.   EOG Resources accumulated 395K Acres in Ohio Utica for under $500M. EOG calls its position the “Ohio Utica combo play” and considers it among its “emerging plays.” EOG concentrates on oil drilling in the Utica. As part of its third quarter update, EOG said it is seeing promising results from test wells in the Utica, and that going forward, the Utica programs for drilling budget.

TX NatGas Pipeline Capacity Being Developed for LNG Export.  More than 20 Bcf/d of natural gas pipeline capacity is being developed for new U.S. LNG export terminals. EIA. More than 20.0 billion cubic feet per day (Bcf/d) of natural gas pipeline capacity under the jurisdiction of the Federal Energy Regulatory Commission or the Railroad Commission of Texas is under construction, partly completed, or approved to deliver natural gas to five U.S. liquefied natural gas (LNG) export terminals that are under construction, according to our Natural Gas Pipeline Project Tracker. Each LNG terminal—Golden Pass, Plaquemines, Corpus Christi Stage III, Rio Grande, and Port Arthur—has one or more pipelines being developed to facilitate delivery of natural gas to the terminal for liquefaction and export. About 12.2 Bcf/d of pipeline capacity is currently under construction.

TX October Permit Report.  Texas regulator issued 700 original oil, gas drilling permits in October 2023. World Oil. The Railroad Commission of Texas issued a total of 700 original drilling permits in October 2023. The total includes 630 to drill new oil or gas wells, 7 to re-enter plugged wellbores and 50 for re-completions of existing wellbores. The breakdown of well types for total original drilling permits in October 2023 is: 127 oil, 49 gas, 482 oil and gas, 32 injection, four service, and six other permits. In October 2023, Commission staff processed 761 oil, 185 gas and 163 injection completions for new drills, re-entries and re-completions.

Earthquake Hits West Texas.  Another large earthquake shows seismic activity continues to increase in West Texas, experts say. Houston Chronicle. A 5.2 magnitude earthquake was recorded in West Texas early Wednesday near the border of Reeves and Culberson counties, according to the U.S. Geological Survey. The earthquake that struck around 4:30 a.m. Central northwest of Pecos is tied for the fourth strongest recorded in Texas, according to the Bureau of Economic Geology at the University of Texas at Austin, and could be felt as far away as El Paso and Roswell, New Mexico. The number and strength of earthquakes in West Texas has dramatically increased after years of hydraulic fracturing activity in the region. A routine practice of injecting the contaminated, salty water that comes up during the oil production process deep underground has been linked by scientists to the increase in seismic activity in oilfields.

Megadeals Impact on TX Employment.  Exxon and Chevron are kicking off an oil consolidation wave. What does it mean for Texas employment? San Antonio Express News. Recent megadeals struck by Chevron and Exxon Mobil have put pressure on others in the oil industry to catch the consolidation wave, potentially kicking off a groundswell of mergers and acquisitions that could have a profound impact on employment in Texas. It’s happened before. The state has been a dominant player in the oil industry for more than a century, exposing its workforce to many ups and downs over the past 100-plus years as the industry cycles through booms and busts. As in consolidation waves gone by, the latest mergers and acquisitions carry the promise of some job cuts in the short-term as companies look for redundancies but the possibility of long-term gains as the deals play a role in the transition to low-carbon sectors such as hydrogen and carbon capture, industry analysts and economists said.

Regulators Concerned about NatGas Outages.  Regulators call for natural gas supply protections after 2022 winter power outages. Reuters. U.S. energy regulators on Tuesday urged lawmakers to fill a regulatory blind spot to maintain reliable supply of natural gas during extreme cold weather that was highlighted by an inquiry into power outages during Winter Storm Elliott in December 2022. A report on the joint inquiry by the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corp (NERC) said that Elliott was the fifth winter event in 11 years where outages threatened the electric grid.

Coterra’s 3^rd Qtr. Financials.  CAPEX Cut.  Thanks, MDN.  Coterra Energy, formed in 2021 by the merger of Permian oil driller Cimarex Energy and Marcellus gas driller Cabot Oil & Gas, issued its third quarter 2023 update yesterday. The company made far less profit in 3Q23 than it did one year ago, in line with most other big Marcellus/Utica drillers. Coterra made $323 million in profit for 3Q23, versus $1.2 billion in 3Q22. Why the drop in profit? The crashing price of natural gas over the past year. Coterra received an average of $6.20/Mcf (before hedges) for its Marcellus gas in 3Q22, and $1.20/Mcf in 3Q23, a drop of 80%. Ouch. During a conference call with analysts, company CEO Tom Jorden firmed up and recommitted to a plan to free up around $200 million from Marcellus operations in 2024 and reallocate it to other plays (the Permian or the Anadarko) by continuing to run just two rigs and one frac crew in the Marcellus.

Henry Hub Winter NatGas. $3.40 Thanks, MDN.  Once a month, U.S. Energy Information Administration (EIA) analysts issue the agency’s Short-Term Energy Outlook (STEO), their best guess about where energy prices and production will go in the next 12 months. Last month, the report predicted new all-time highs for natural gas production in 2023. The latest monthly report, issued yesterday, revises those record-high predictions down just a smidge — essentially the same as last month. EIA projects that dry gas production will end up at 103.68 billion cubic feet per day (Bcf/d) in 2023 (down from 103.72) and rise to 105.12 Bcf/d in 2024 (down from 105.13). The current record high is 99.60 Bcf/d, set in 2022. We’re going to blow by that this year and next.

Megadeals Can Improve Climate Efforts.  Large oil and gas deals may improve industry’s climate efforts. S&P Global. In the wake of two US oil and gas megadeals in October, analysts said bigger just might be better in the battle against greenhouse gas emissions. Supermajors have the financial flexibility and the engineering skills to reduce the carbon intensity of their operations, but they run the risk of being stuck with oil and gas operations and infrastructure that might not be needed further out into a low-carbon future.

Fossil Fuels Expanding Despite Efforts to Halt Warming.  Nations that vowed to halt warming are expanding fossil fuels, report finds. NYT. In 2030, if current projections hold, the United States will drill for more oil and gas than at any point in its history. Russia and Saudi Arabia plan to do the same. They’re among the world’s fossil fuel giants that, together, are on course this decade to produce twice the amount of fossil fuels than a critical global warming threshold allows, according to a United Nations-backed report issued on Wednesday. The report, which looked at 20 major fossil fuel producing countries, underscores the wide gap between world leaders’ lofty promises to take stronger action on climate change and their nations’ actual production plans. (Note: WSJ also reports).

PA October 30, to November 9, 2023

County                                   Township                                           E&P Companies

1.    Allegheny                                    Frazier                                                Range

2.    Bradford                                       Terry                                                   Chesapeake

3.    Bradford                                       Terry                                                   Chesapeake

4.    Greene                                         Franklin                                              EQT

5.    Susquehanna                             Dimock                                               Coterra

6.    Susquehanna                             Dimock                                               Coterra

7.    Susquehanna                             Dimock                                               Coterra

8.    Susquehanna                             Dimock                                               Coterra

9.    Susquehanna                             Dimock                                               Coterra

10. Susquehanna                             Middletown                                        Coterra

11. Susquehanna                             Middletown                                        Coterra

12. Susquehanna                             Middletown                                        Coterra

13. Susquehanna                             Middletown                                        Coterra

14. Tioga                                            Covington                                          Repsol

15. Tioga                                            Covington                                          Repsol

16. Tioga                                            Covington                                          Repsol

17. Tioga                                            Covington                                          Repsol

18. Washington                                 Morris                                                 CNX

19. Washington                                 Morris                                                 CNX

20. Washington                                 Morris                                                 CNX

21. Washington                                 Morris                                                 CNX

22. Washington                                 Morris                                                 CNX

23. Washington                                 Morris                                                 CNX

24. Washington                                 North Franklin                                   Range

OH October 29, to November 4, 2023

County                                   Township                                           E&P Companies

1.    Belmont                                       Pultney                                               Ascent

2.    Belmont                                       Pultney                                               Ascent

3.    Belmont                                       Wayne                                                Gulfport

4.    Belmont                                       Wayne                                                Gulfport

5.    Belmont                                       Wayne                                                Gulfport

6.    Monroe                                        Center                                                SWN

7.    Tuscarawas                                Rush                                                   EAP Ohio

8.    Tuscarawas                                Rush                                                   EAP Ohio

9.    Tuscarawas                                Rush                                                   EAP Ohio

10. Tuscarawas                                Rush                                                   EAP Ohio

WV Permits October 30 to November 3, 2023

1.    Monongalia                                                                                             Northeast Nat Ergy.

2.    Tyler                                                                                                         Antero