Facts & Rumors # 541
February 3, 2024
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Bloomberg’s “2024 Global Energy Predictions” According to Bloomberg Intelligence’s ‘2024 Global Energy Predictions’ report, US oil refining margins are set to contract sharply and OPEC+ production cuts should extend and deepen.
Oil prices will face 1H24 pressure, then rebound in 2H24, and US land-driller fleets can expect weak growth.
In gas, Bloomberg Intelligence sees Asia demand fueling global LNG trade (up 3.5%), European prices easing as demand wanes amid healthy supply prospects and the M&A energy wave in the US reaching the gas-prone Marcellus and Haynesville shale plays. As part of the energy transition, global solar installations look set to achieve new highs, OEMs derive higher wind turbine margins, and European energy majors record strong renewable-capacity additions.
Global solar installations to top 500 GW for first time
Solar power will likely remain the energy sector’s fastest-growing subsegment in 2024, with global installations poised to grow 20%-plus to more than 500 GW. China is positioned to keep its crown as the world’s largest market, yet the US and Europe may expand faster due to strong policy support, which could help to propel consensus for sales. First Solar, Meyer Burger and Sunnova, among the fastest-growing companies in Bloomberg Intelligence’s peer group, could see sales gains exceeding 30% in 2024, according to Bloomberg Intelligence’s scenario analysis. Global solar-capacity additions expanded more than 60% in 2023, and government proposals to reduce greenhouse-gas emissions to net zero by mid-century could boost annual solar-panel demand to more than 1000 GW within a decade vs about 400 GW last year.
More OPEC exits may be on horizon as cuts get extended, deepened
The bleak outlook for oil demand and rising non-OPEC supply suggests OPEC may be forced to extend output cuts – and potentially even deepen them – through the end of 2024. This could nudge some member nations to question the value of their membership and leave OPEC, as Angola did on 21 December 2023.
European gas may crack €30 price floor in 2024 as demand falters
A sustained decline in gas-fired output, paired with a weak economic recovery in Europe, supports Bloomberg Intelligence’s view for consensus-trailing 2024 average gas prices of €25 – 35/MWh (down 30% vs 2023). Elevated storage, which could exit March above Bloomberg Intelligence’s 45% forecast, has muted supply concerns from LNG trade disruptions in the Red Sea, with prices falling 7% year to date to €30 a MWh.
LNG trade projection contingent on Asia expansion
Global LNG trade could rise about 3.5% in 2024, based on Bloomberg Intelligence’s analysis, though there may be downside risk. Trade growth is limited by muted demand, elevated prices and restricted supply, while weather remains a crucial wild card. Weak industrial gas demand and high inventories in Europe could limit import gains in the region to low-single digits. Bloomberg Intelligence expects Asia to be the primary driver of modest LNG demand expansion, led by China amid the start of new contracts.
Will Hares, Bloomberg Intelligence Senior Industry Analyst – Energy, said: “Consolidation will remain crucial to gain scale in 2024. We see bigger oil and gas operators leveraging higher equity valuations – and deploying elevated free cash flow – to buy smaller peers. What’s more, natural gas-focused firms have been absent from M&A, yet we think deal activity may rise in gas-prone Marcellus and Haynesville with benchmarks well past the bottom and longer-dated strips in contango.
“Long-term energy-transition targets remain intact for European energy majors, which are led by ambitious renewable power-capacity ambitions. We think the group will increase their net installed renewable power capacity by at least 25% (or over 5 GW of their portfolios) in 2024. This is likely to remain heavily weighted to solar vs wind, particularly given the cost inflation and supply-chain constraints faced by offshore wind in the past year, which resulted in significant write downs and cancellation of US projects. We note the group’s pace of energy transition broadly slowed in 2023, characterized by an increase in near- to mid-term oil and gas capital spending driving a gentler decline in hydrocarbon production.”
Shell Financials. Oil giant Shell posts full-year profit beat, announces $3.5 billion share buyback. NBC New York. Shell reported adjusted earnings of $28.25 billion for the full-year 2023, a 29% drop compared to its highest-ever annual profit of $39.9 billion the year prior. The energy major announced a 4% increase in dividend per share for the fourth quarter and said a share buyback program of $3.5 billion will be carried out over the next three months. Shell CEO Wael Sawan said he was “pleased with the progress but with recognition that there is more to go.”
Exxon & Chevron Financials. Exxon, Chevron surpass forecasts as shale drilling lifts output. Bloomberg. Exxon Mobil Corp. and Chevron Corp. surpassed earnings forecasts as bigger-than-expected oil output from shale fields helped cushion the blow from weakening crude prices. Exxon rose more than 2% and Chevron climbed 1.9% in pre-market stock trading. Exxon’s outsized result also was aided by a $1.14 billion boost from unsettled derivatives and record fuel production at its refineries.
Williams to Build Southeast Pipeline. Pipeline giant plans major Southeast gas project. E&E News. Pipeline heavyweight Williams Cos. is expected to file initial paperwork soon with federal energy regulators on a large pipeline expansion project in the Southeast. The proposal — known as the Southeast Supply Enhancement project — aims to “provide reliable natural gas deliveries” to Virginia, the Carolinas, Georgia and Alabama, according to the company’s website. It would expand the existing capacity of the sprawling Transcontinental pipeline, which runs roughly 10,000 miles from Texas to New York. A timeline posted on Williams’ website says the company aims to “pre-file” with the Federal Energy Regulatory Commission in spring 2024, following initial public outreach that began in winter 2023. Then company could then file an application with FERC in the fall of this year.
Aramco Cuts Capacity. U.S. oilfield firms fall on demand concerns as Aramco cuts capacity target. Reuters. Shares of top oilfield services provider SLB (SLB.N), tumbled nearly 10% and weighed on the benchmark S&P 500 index on Tuesday while its U.S. rivals fell after Saudi Aramco’s (2222.SE), move to lower its maximum capacity target fanned demand worries. Aramco, the largest oil company in the world, will cut its planned maximum sustainable oil production capacity to 12 million barrels a day (bpd) after being ordered by Saudi Arabia’s government. The new target is one million bpd below a target announced in 2020.
Carbon Capture Coming to OH. Thanks, MDN. Carbon capture & storage coming to Ohio’s Wayne National Forest? Marcellus Drilling News. There are federal lands in the Marcellus/Utica. Did you know that? The Wayne National Forest (WNF) is a patchwork of public and private mineral rights that covers over a quarter million acres of Appalachian foothills of southeastern Ohio. For years, the Bureau of Land Management (BLM) blocked new permits and drilling in WNF. During the Trump administration, the BLM began to auction off federal leases and permits (see our stories about BLM auction in WNF here). However, a federal judge blocked drilling in WNF in 2021, after Biden had seized control of the White House (see Federal Judge Blocks Permits to Drill in OH’s Wayne Natl Forest). Although drilling in WNF is blocked, the Bidenistas are considering a rule change to allow the drilling of carbon dioxide wells in national parks, including WNF.
Manchin to Fight Biden’s LNG Plans. Senator Joe Manchin vows to investigate Biden’s LNG export license plan. Oil & Gas 360. Senator Joe Manchin blasted the Biden administration’s move to halt the approval of new licenses to export U.S. liquefied natural gas (LNG) and vowed to use his power as the chairman of the Senate Energy and Natural Resources Committee to investigate.
PA Senators Support Repealing LNG Ban. Democrats divided over Biden’s LNG export pause. E&E News. President Joe Biden’s decision to pause natural gas export approvals is becoming an increasingly thorny issue for Democrats on Capitol Hill, one that could divide the caucus as Republicans attempt to pass legislation overturning the controversial decision. Moderate Pennsylvania Democratic Sens. John Fetterman and Bob Casey released a joint statement Thursday threatening to lobby the White House to repeal the pause if it proves detrimental to their state’s natural gas industry.
FERC Continuing LNG Reviews. FERC set to continue LNG reviews despite Biden’s DOE pause. E&E News. Federal energy regulators are poised to carry out reviews of natural gas export terminals as usual following the Biden administration’s decision to pause Department of Energy approvals, observers said. Environmental advocates, federal policy watchers and a major liquefied natural gas company said they don’t believe DOE’s freeze on pending and future applications for LNG exports will impede the Federal Energy Regulatory Commission and its quasi-judicial role in the energy sector.
TX Production Surges. Texas’ oil and gas production surges even as federal government clamps down on environmental regulations. Texas Tribune. A report from the Texas Oil and Gas Association shows that the state’s energy industry is showing no signs of waning, boasting record levels of crude oil production as the federal government introduced further environmental regulations that industry leaders said are designed to hinder production. The latest version of the group’s annual report said that oil and gas companies paid $26.3 billion in state and local taxes in 2023, $1.5 billion more than last year, due in part to record fossil fuel extraction throughout the state. The report also said the oil and gas industry employed more than 480,000 Texans who make an average of $124,000 a year.
TX Oil Production Setting New Records. Texas now producing over 42% of nation’s oil: Record books rewritten as state provides industry leadership. Texas Insider. “American energy leadership starts in Texas – and our nation, our economy, and our world are better because of the unparalleled stewardship of Texas’ oil and natural gas companies,” said the Texas Oil & Gas Association’s president, Todd Staples, earlier today during a media briefing to release the TXOGA’s Annual Energy & Economic Impact Report. “2023 was such a blockbuster year, that the Texas Oil & Natural Gas Industry effectively rewrote its record book, clocking unmatched economic and energy achievements across the board.”
TX Drilling Roundup. South Texas Drilling Permit Roundup: Exxon Mobil subsidiary targets La Salle County. San Antonio Business Journal. ExxonMobil subsidiary XTO Energy Inc. was the most active company of the week, filing applications for eight new wells in La Salle County. Seven of XTO’s planned wells will be drilled as allocation wells 22.7 miles northeast of Cotulla and have total depths of 10,000 feet upon completion. Total depth refers to the length of pipeline for the horizontal and vertical sections of a well. The wells are being mapped. The remaining well, a 10,000-foot horizontal well located 22.2 miles northeast of Cotulla, has been approved by the Texas Railroad Commission. Two counties received the largest share of drilling permits this week: La Salle County and Webb County. Of the two, Webb County received the highest number of drilling permit applications, with 10 applications from three companies: SM Energy Company (NYSE: SM) Kimmeridge Texas Gas LLC and Ageron Energy LLC.
NatGas $1 Trillion in Spending. Spending on natural gas to top $1 trillion over the next decade. Oil Price. The oil and gas industry is expected to spend more than $1 trillion on natural gas supply, driven by demand for gas in Europe, climate campaign group Global Witness said on Monday in a new analysis of Rystad Energy data. The industry is set to invest $223 billion of the projected spending in the supply of natural gas for Europe by 2033, according to Global Witness’s analysis.
PA Permits January 22, to February 1, 2024
County Township E&P Companies
1. Allegheny Frazier Range
2. Butler Bruin Boro Laurel Mtn.
3. Greene Gray Rice
4. Westmoreland Penn Olympus
5. Westmoreland Sewickley Apex Energy
6. Westmoreland Sewickley Apex Energy
7. Westmoreland Sewickley Apex Energy
8. Westmoreland Sewickley Apex Energy
9. Westmoreland Sewickley Apex Energy
10. Westmoreland Sewickley Apex Energy
11. Westmoreland Upper Burrell Olympus
12. Westmoreland Upper Burrell Olympus
13. Westmoreland Upper Burrell Olympus
14. Westmoreland Upper Burrell Olympus
15. Westmoreland Upper Burrell Olympus
16. Westmoreland Upper Burrell Olympus
OH Permits January 21 to January 27, 2024
County Township E&P Companies
1. Belmont Wayne Gulfport
2. Belmont Wayne Gulfport
3. Guernsey Wills INR OH
4. Guernsey Wills INR OH
WV Permits January 22, 2024 to January 26, 2024
1. Marshall SWN
2. Marshall SWN
3. Marshall SWN
4. Marshall SWN
5. Ohio SWN
6. Tyler Antero
7. Tyler Antero
8. Tyler Antero
9. Wetzel EQT