Facts & Rumors # 535
December 9, 2023
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Yahoo Finance’s Top NatGas Producing Regions. The United States is rich in natural gas resources found in multiple key basins and regions. Firstly, the Marcellus Shale, spanning Pennsylvania and West Virginia and extending into New York, Ohio, and Maryland is a significant part of the Appalachian Basin and one of the largest natural gas fields in the US. Another important area is the Permian Basin, which stretches across Texas and New Mexico. Although primarily known for its oil production, this basin has experienced a surge in natural gas production due to new drilling techniques.
In the south-central United States, the Haynesville Shale, located in Louisiana and East Texas, has witnessed a resurgence in production. The Piceance Basin in Colorado’s Rocky Mountains, known for its substantial gas in tight sand formations, and the Anadarko Basin, spreading across Oklahoma, Texas, Kansas, and Colorado, are also notable for their gas reserves. Moreover, the Utica Shale, primarily beneath Ohio, Pennsylvania, and West Virginia, offers impressive future potential. Situated below the Marcellus, it is positioned to become a major source of gas in the US. Although comparatively underdeveloped, its vast, untapped reserves could play an essential role in shaping the country’s energy landscape.
Due to its rich regions, the US now produces the majority of the natural gas it consumes. The Energy Information Administration (EIA) reported that the country reached a record high in dry natural gas production in 2022, approximately 36.35 trillion cubic feet (Tcf). This equates to an average daily production of about 96.60 billion cubic feet.
In 2022, US dry natural gas production rose by approximately 1.82 Tcf compared to 2021. This increase was driven by growing demand, especially for exports, and the rising prices of natural gas. Furthermore, in 2022, five states—Texas, Pennsylvania, Louisiana, West Virginia, and Oklahoma—accounted for about 70.4% of the total national dry natural gas production, despite there being thirty-four natural gas-producing states in the US.
The monumental increase in natural gas production is primarily attributed to advanced drilling techniques, such as horizontal drilling (drilling sideways underground) and hydraulic fracturing (breaking rocks with high-pressure liquids). These techniques are particularly effective in certain types of underground rock layers, like shale deposits, where gas is trapped in very tight and small spaces. These new methods have made it easier to extract gas from these challenging areas.
It’s noteworthy that in 2022, the production of dry natural gas in the US exceeded its total consumption by about 13%. Although the US primarily relies on its own production for domestic needs, it still imports some natural gas.
Chevron to Spend $14 Billion in 2024. Chevron Plans to Spend $14 Billion on Oil and Natural Gas Production in 2024. Oil Price. Chevron will allocate $14 billion for upstream investments in 2024, the company said in a budget update that saw the total capex planned for 2024 at between $18.5 billion and $19.5 billion. That would be an 11% increase on 2023 spending, Reuters noted in a report on the news. Of the amount dedicated to upstream investment, Chevron plans to spend two-thirds on domestic projects. Of that sum, $6.5 billion will be spent on shale oil and gas, Chevron said. Almost all of that shale spending, or $5 billion, will go towards developments in the Permian.
NOG Expands Permian Presence and Enter Ohio Utica Shale with $170 Million Purchase. Northern Oil and Gas, Inc. (NOG) has entered into a definitive agreement with a private party to acquire non-operated interests across approximately 3,000 net acres located primarily in Lea and Eddy Counties, New Mexico.
NOG owns existing interests in approximately 90% of the leasehold. Current production is roughly 2,800 boed (2-stream, about 67% oil). NOG expects 2024 production to average around 2,500 boed (2-stream, about 67% oil), but expects significant future growth on the assets, with average production of more than 3,500 boed for 2025 through 2030. Capital expenditures on the assets are expected to be in the range of $25 – $30 million in 2024, with similar expected levels annually through 2027.
The acquired assets include 13 net producing wells, 1 net well in process and an estimated 26.3 net undeveloped locations, representing approximately 13.5 years of inventory at sustaining capital levels. The undeveloped assets are of extremely high quality, with an average pre-tax PV-10 breakeven of less than $45 per bbl. Mewbourne Oil is the largest operator, controlling approximately 80% of the assets.
Appalachian basin transaction. NOG has entered into a definitive agreement with a separate private party to acquire non-operated interests in Jefferson, Harrison, Belmont, and Monroe Counties, Ohio. The primary target zone is the Point Pleasant/Utica Shale.
Current production is approximately 23 MMcfd (about 3,800 boed, nearly 100% gas), and NOG expects average production in 2024 at slightly higher levels. NOG expects to incur approximately $14 million of capital expenditures on the assets in 2023, and $8 million of capital expenditures in 2024.
The acquired properties include approximately 0.8 net producing wells and 1.7 net wells-in-process. Substantially, all the assets are operated by Ascent Resources, one of the top Utica producers in Ohio.
“After closing, our Permian lands will approach roughly 40,000 net acres and definitively become our most active and largest basin in terms of activity and production,” commented Adam Dirlam, NOG’s President. “Our focus remains on low-breakeven, resilient inventory that works in nearly any price environment, and these assets deliver in spades. On the Appalachian front, we are acquiring assets in the core of the Utica under one of the most prolific operators, with a focus on near-term development. As we continue to build data in the area, there is significant potential for longer term expansion.”
NatGas Stronger Than Ever in America. Natural gas is now stronger than ever in the United States power sector. IEA. For the very first time, on 28 August 2023, the United States met more than of half of its electricity demand from natural gas. It encapsulated a summer during which gas-fired electricity generation grew dramatically. In just the past two years, its share of the power mix rose from 40 to 45 percent for the summer months of July and August. A confluence of factors, including a significant drop in the price of natural gas, coal plant retirements, low output from wind and hydropower, and high cooling demand in some regions caused the share of gas to increase. By contrast, the share of coal-fired generation declined from 23 to 17 percent over the same period.
“Uncle Joe” Just Cannot Recognize U.S. Oil Production. Biden struggles to embrace America’s quiet oil boom. Axios. Relative quiet from the White House and repeated GOP attacks on President Biden’s energy record are hiding record levels of American oil production. Why it matters: Don’t expect public victory laps from Biden as he navigates the tricky politics around energy and climate change. What’s happening: U.S. oil production, the world’s highest, is over 13.2 million barrels per day, nudging past levels seen just before COVID crushed demand and prices.
One More Blow to OPEC+. U.S. record-breaking oil output one more blow to OPEC. Oil Price. Record crude oil production in the United States is serving a fresh blow to oil bulls and OPEC, just as the cartel was trying to push benchmarks higher by adopting deeper production cuts. The EIA reported last week that average daily production in September had remained unchanged from August when it hit the record-high rate of 13.24 million barrels. This is happening despite cost inflation and lower international oil prices. And U.S. shale drillers have no plans to drill less.
O&G Wastewater Helps Power Plants. WVU research helps power plants recycle water using wastewater from oil and gas mining. WVU Today. Simulations from West Virginia University researchers demonstrate their use of two kinds of industrial wastewater to decontaminate each other has the potential to slash a power plant’s total water use. The researchers from the WVU Benjamin M. Statler College of Engineering and Mineral Resources modeled various scenarios for using “cooling tower blowdown” and “produced water” to treat each other. Cooling tower blowdown is wastewater produced by thermoelectric power plants, while produced water is created by hydraulic fracturing mining for oil and gas.
SW PA Getting Low NatGas Prices. Southwestern Pa. enjoying low natural gas prices after large drop from last year. TribLive.com. Historic levels of natural gas production are among factors leading to low prices in Southwestern Pennsylvania. There are signs natural gas prices could stay low moving into next year. Purchased gas prices for Pennsylvanians are down 9% to 65% compared to where they were last year, according to Pennsylvania’s Public Utility Commission. The two natural gas companies that service the Pittsburgh region — Peoples Natural Gas and Columbia Gas — are charging the lowest rates of any company the PUC tracks.
Associated NatGas Production Triples in 5 years in TX. Associated natural gas production has tripled since 2018 in top three Permian oil plays. EIA. Production of associated-dissolved natural gas, or associated natural gas, which is natural gas produced from predominantly oil wells, has nearly tripled since 2018 in the three top-producing tight oil plays in the Permian region. Associated natural gas from the Wolfcamp, Spraberry, and Bone Spring plays averaged a combined 13.7 billion cubic feet per day (Bcf/d) in the first seven months of 2023, up from an average of 4.7 Bcf/d in 2018, according to data from Enverus DrillingInfo. Associated natural gas production has grown due to increases in both crude oil production and the volume of natural gas per barrel of oil that a well produces, the gas-to-oil ratio (GOR), among the oil wells in these three plays.
SPR Refill Limited Despite Low Prices. US strategic oil reserve refill is limited despite low prices. Bloomberg. The Biden administration may not be able to take full advantage of the recent drop in oil prices as it seeks to refill its depleted crude oil reserve, the Energy Department’s No. 2 official said Monday. The Strategic Petroleum Reserve stands at its lowest level since the 1980s, but physical constraints and maintenance at the network of underground caverns along the Gulf Coast have been limiting the amount the Energy Department can purchase to about 3 million barrels a month, Deputy Energy Secretary David Turk said.
OH’s Columbiana County Oil Boom Going Strong. Columbiana County oil boom shows no signs of slowing. Youngstown Business Journal. Horizontal wells operating in Columbiana County during the third quarter have shattered oil production records in this tier of the Utica/Point Pleasant shale formation, according to data from the Ohio Department of Natural Resources. During the third quarter, the 138 producing wells in the county yielded a total of 352,354 barrels of oil during the period ended Sept. 30, according to ODNR. The previous record was 233,390 barrels produced during the first quarter of this year, data show.
OH Getting More Oil and NGL’s Gas giving way to oil, NGLs in Ohio’s Utica shale. Energy Intelligence. Operators in Ohio’s natural gas-rich Utica Shale are increasingly targeting the play’s volatile oil window, setting the stage for a dramatic shift in its production profile. “The Utica is on the cusp of an oil-focused resurgence,” Rob Brundrett, president of the Ohio Oil and Gas Association, told Hart Energy’s DUG Appalachia conference in Pittsburgh, Pennsylvania this week. The bulk of production from the Utica, which underlies the vast Marcellus Shale, is in eastern Ohio and a sliver of western Pennsylvania. Initial drilling in the early 2010s largely yielded dry gas, but as development has expanded, operators have begun tapping a wealth of crude and natural gas liquids (NGLs).
MVP Considering Options. Mountain Valley Pipeline owner is said to consider options. Bloomberg. Equitrans Midstream Corp. is in the early stages of exploring a potential sale, people familiar with the matter said, potentially adding to a flurry of pipeline deals in North America. The operator of natural gas pipelines across the country, including the controversial Mountain Valley Pipeline project, is working with an adviser as it weighs a range of strategic options, according to the people. Equitrans would likely attract interest from industry peers should it opt to launch a sales process in early 2024, the people said.
Toby Rice’s Plan for 2024. EQT CEO plans Unleash LNG 2.0 plan for next year. Pittsburgh Business Times. The CEO of the downtown-based natural gas company, the nation’s largest producer, said he’s more excited about the prospects for boosting LNG production and export than he was two years ago.
Congrats Northeast Natural Energy. Northeast Natural Energy received “industry-first” ESG grade for Marcellus shale natural gas production. World Oil. Northeast Natural Energy, a West Virginia-based Marcellus shale natural gas producer, has just become the first producer globally to receive an “A” letter grade from Equitable Origin (EO) for the ESG performance of its West Virginia assets. This was the result of a voluntary reverification audit conducted by Responsible Energy Solutions LLC in 2023. A pioneer in differentiated natural gas production, NNE became the first producer in the United States to certify an asset to EO’s independent voluntary standard for high-ESG performance at the site level in 2021.
Frac Sand Looks Good. 2024 frac sand supplies looking good. Odessa American. It takes a lot of sand and the question is, will there be enough for next year’s production and beyond? Texas Independent Producers & Royalty Owners President Ed Longanecker said Atlas Energy Solutions is the biggest Permian Basin producer with the largest sand reserves. “The Basin is uniquely positioned with quality sand reserves that are optimal for fracking horizontal wells, particularly in the Winkler Sand Trend between the Midland and Delaware basins,” Longanecker said from Austin. “These large dune deposits meet the majority of the demand of Permian Basin operators and that supply is supplemented by smaller and thinner localized sand deposits that are logistically positioned to service area operators.
PA November 13, to December 7, 2023
County Township E&P Companies
1. Allegheny Fawn Range
2. Armstrong North Buffalo PennEnergy
3. Bradford Herrick Chesapeake
4. Greene Gilmore EQT
5. Greene Gilmore EQT
6. Greene Gilmore EQT
7. Greene Gilmore EQT
8. Greene Gilmore EQT
9. Greene Gilmore EQT
10. Lycoming Upper Fairfield Inflection Energy
11. Lycoming Upper Fairfield Inflection Energy
12. Lycoming Upper Fairfield Inflection Energy
13. McKean Norwich Seneca
14. McKean Norwich Seneca
15. McKean Norwich Seneca
16. McKean Norwich Seneca
17. Potter Hector Greylock
18. Potter Hector Greylock
19. Sullivan Cherry Twp. Chesapeake
20. Susquehanna Great Bend SWN
21. Susquehanna Great Bend SWN
22. Tioga Middlebury Seneca
23. Washington Union EQT
OH November 19, to December 1, 2023
County Township E&P Companies
1. Columbiana Knox EAP OHIO
2. Columbiana Knox EAP OHIO
3. Columbiana Knox EAP OHIO
4. Columbiana Knox EAP OHIO
5. Guernsey Richland INR OHIO
6. Guernsey Richland INR OHIO
7. Guernsey Richland INR OHIO
8. Guernsey Washington Ascent
9. Guernsey Washington Ascent
10. Guernsey Washington Ascent
11. Guernsey Washington Ascent
12. Tuscarawas Perry EAP OHIO
13. Tuscarawas Perry EAP OHIO
14. Tuscarawas Perry EAP OHIO
15. Tuscarawas Perry EAP OHIO
WV Permits November 20, to December 1, 2023
1. Doddridge HG Energy
2. Harrison HG Energy
3. Marshall EQT
4. Marshall EQT
5. Marshall EQT
6. Marshall EQT
7. Marshall EQT
8. Tyler Antero
9. Wetzel EQT
