Facts & Rumors # 551
May 4, 2024
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
Exxon – Pioneer Deal Approved! FTC will approve Exxon’s $60 billion merger with Pioneer. Forbes. The Federal Trade Commission is set to approve ExxonMobil’s $60 billion takeover of Pioneer Natural Resources, according to multiple outlets, though the deal can reportedly only close if former Pioneer CEO Scott Sheffield, who faces allegations of engaging in activity to raise gas prices, is barred from the combined company’s board of directors. The deal is set to close after an agreement was reached between Exxon and antitrust regulators to keep Sheffield off the board of directors, The Wall Street Journal reported, adding the FTC will allege Sheffield engaged in collusive activity with the Organization of the Petroleum Exporting Countries that could have raised the price of gas for Americans. Dallas Morning News also reports. Politico also reports.
Significant Investments Coming to Non-Permian Shale Plays. Non-Permian shale plays to attract “significant” investments soon. World Oil. After the biggest first quarter for global upstream dealmaking in five years, the industry could see another $150 billion of merger and acquisition (M&A) deals in the remainder of 2024. With global M&A deal value crossing the $64 billion mark already this year, it represents the strongest first-quarter performance since 2019 and a 145% increase on the first quarter of 2023, fueled primarily by consolidation in the U.S. shale patch. The Permian basin has dominated recent dealmaking, but other shale plays look set to attract significant investments soon, with about $41 billion of non-Permian opportunities on the market.
FERC Beats NEPA!!! FERC wins NEPA lawsuit over gas project. E&E News. A federal appeals court has struck down an effort to expand the environmental review for upgrades to a pipeline network that feeds into a liquefied natural gas export terminal in southeastern Louisiana. Tuesday’s decision by the U.S. Court of Appeals for the District of Columbia Circuit is a blow for green groups that claimed federal energy regulators should look more holistically at the environmental effects of the Evangeline Pass expansion project, alongside potential harms from the Plaquemines LNG terminal and other projects providing gas to the facility.
Exxon and ProPetro Partner on Electric Fracking. ProPetro and ExxonMobil partner up on long-term electric fracturing deal. Journal of Petroleum Technology. ProPetro Services has signed a 3-year contract to provide two electric hydraulic fracturing fleets to ExxonMobil in the Permian Basin. The agreement, set to begin in the first half of the year, also covers wireline and pump down services, which are offered through ProPetro’s Silvertip Completion Services subsidiary, acquired in 2022 for $148 million. “This step is a significant moment for us, showcasing our collaboration with a leading global energy provider to deliver innovative, cost-effective, and more environmentally friendly energy service solutions through our multiyear agreement,” said Sam Sledge, CEO of ProPetro.
Permin Leads In O&G Mergers in 2024. Permian Basin leads more than $50 million in oil and gas mergers so far in 2024. Carlsbad Current-Argus. This year got off to a strong start for mergers and acquisitions in the fossil fuel sectors, with the Permian Basin leading the nation’s more than $50 billion in industry business deals during the first quarter of 2024. A report from Enverus estimated the Permian in West Texas and southeast New Mexico accounted for 60% of Q1 2024 mergers and acquisitions (M&A) so far this year, which could put the U.S. on pace to exceed last year’s overall record of $192 billion in deals.
NatGas Power Plant Coming to WV. Thanks, MDN. In September 2022, Competitive Power Ventures (CPV) announced that it had selected West Virginia for an 1,800-megawatt (later upgraded to 2,060 MW), combined-cycle natural gas power station that also uses carbon capture and storage. At that time, CPV was not prepared to announce where the massive new power plant would be built — but later confirmed that the project, called the Shay Energy Center, would be located in Doddridge County. In January of this year, we questioned why there has been no word on the status of this important project (see WV Still Waiting to Build State’s First Big Gas-Fired Power Plant). We are delighted to report the WV Public Service Commission (PSC) approved the Shay Energy Center on Monday. Let the bulldozers start!
Flaring is back in TX. Texas operators turn to flaring amid weak gas prices. Reuters. Operators drilling for oil in Texas are scrambling to dispose of excess natural gas amid a supply glut and weak prices, prompting a sharp rise in flaring requests. The Railroad Commission of Texas (RRC), which regulates the state’s oil and natural gas industry, last week approved 21 exemption requests from operators, mostly in the Permian and Eagle Ford shale fields, to flare, more than four times the level it approved this time last year. Flaring, the burning of unwanted gas, has come under greater regulatory scrutiny in recent as environmental groups and climate activists seek to clamp down on the practice that releases greenhouse gases.
Swelling & Buckling in TX. In America’s biggest oil field, the ground is swelling and buckling. WSJ. In a desolate stretch of desert spanning West Texas and New Mexico, drillers are pumping more crude than Kuwait. The oil production is so frenzied that huge swaths of land are literally sinking and heaving. The land has subsided by as much as 11 inches since 2015 in a prime portion of the Permian Basin, as drillers extract huge amounts of oil and water, according to a Wall Street Journal analysis of satellite data. In other areas where drillers dispose of wastewater in underground wells, the land has lifted by as much as 5 inches over the same period. The constant extraction and injection of liquids has wrought complex geologic changes, which are raising concerns among local communities long supportive of oil and gas.
Record LNG and LPG Exports Jan – April. Thanks, MDN. According to S&P Global and its crack statistics unit, U.S. liquefied natural gas (LNG) and liquefied petroleum gas (LPG, mostly propane) exports both hit new all-time record highs for the period of Jan. 1 through April 29 this year. And that’s despite the fact that the Freeport LNG export facility has experienced a major outage since January. And speaking of the problem-plagued Freeport facility, one of its three trains, Train 3, received around 830 MMcf of natural gas yesterday. Meaning it’s back online. Finally. Up down, up down, up down. Now, up again.
PA Pitching NatGas to Europe. Pennsylvania’s pitch to Europe: ‘We’re open for energy business’. Pittsburgh Post-Gazette. A week before a fire engulfed the Borsen, Copenhagen’s historic stock exchange building whose copper spire was formed from the intertwining tails of four dragons, Tom Murphy sat inside the building’s grand hall and pitched Pennsylvania. As senior managing director of strategic energy initiatives at Team Pennsylvania, the state’s public-private economic development affiliate, Mr. Murphy was invited to represent the Keystone State during a trade mission to Europe. It was organized by the U.S. Department of Energy and its message was simple: The U.S. government is handing out billions of dollars for the energy transition. All are welcome to partake.
Gulfport Moving to Oil in OH. Gulfport plans liquids-rich program after ‘strong’ Ohio oil tests. Hart Energy. Appalachia gas producer Gulfport Energy continues to report “strong oil production” from a two-well Hendershot pad drilled in eastern Ohio last year. Gulfport plans to develop additional liquids-rich opportunities this year as natural gas prices hover near record lows.
Chesapeake 1st Qtr. Financials. Thanks, MDN. Chesapeake Energy issued its first quarter 2024 update yesterday. The ongoing low price of natural gas and Chesapeake’s previously announced curtailment of ~25% of its production caused the company to miss Wall Street estimates (of $87 million) for first-quarter profit. Chessy made $26 million in net income during 1Q24 versus making $1.4 billion in 1Q23. Ouch. Chesapeake’s net production in the first quarter was approximately 3.20 Bcfe/d (100% natural gas), utilizing an average of nine rigs to drill 28 wells and place 29 wells on production while building an inventory of 24 drilled but uncompleted (DUCs) wells and 22 deferred turn in lines (TILs).
Antero Makes Midstream Purchase. Antero Midstream has bought gathering and compression assets in the Marcellus Shale from Summit Midstream Partners in a bolt-on acquisition for $70 million.
The transaction closed on May 1, with an effective date of April 1, Antero said on Thursday.
This is Antero’s third strategic bolt-on purchase in the region in the last two years, Chairman and Chief Executive Officer Paul Rady said. The compression and high-pressure gathering assets in the deal are already interconnected with Antero Midstream’s low pressure gathering system. As a result, Antero Midstream now gathers and compresses substantially all of Antero Resources’ production, Rady said.
The deal will be more than 5% accretive to free cash flow after dividends through 2027, the company said.
Also on Thursday, Antero raised its guidance for net income 10% to $415 million to $455 million for 2024.
Mexico Needs U.S. NatGas. Mexico imports of U.S. natural gas surge as domestic production sputters – spotlight. NGI. North American natural gas futures worked their way above $2.00/MMBtu this week amid tighter U.S. production and storage levels. Mexico imports, meanwhile, of U.S. natural gas have started to hit their stride in the lead-up to summer.
AI Data Centers Slow Shift to Renewables. WSJ The cutting edge of technology is driving the power grid back to the 19th century.
An explosion of so-called hyperscale data centers in places such as Northern Virginia has upended plans by electric utilities to cut the use of fossil fuels. In some areas, that means burning coal for longer than planned.
These giant data centers will provide computing power needed for artificial intelligence. They are setting off a four-way battle among electric utilities trying to keep the lights on, tech companies that like to tout their climate credentials, consumers angry at rising electricity prices and regulators overseeing investments in the grid and trying to turn it green.
Ground zero for the fight is Northern Virginia’s “Data Center Alley.” About 70% of global internet traffic passes through the area’s data centers. A spider web of power lines connecting data centers to the grid crisscross neighborhoods and parks. More are coming.
Amazon Web Services, Amazon.com’s cloud-computing business, invested $52 billion in Virginia from 2011 to 2021 and plans to invest a further $35 billion by 2040. Loudoun County, Va., has nearly 37 million square feet of data-center space and 42 million square feet more has been proposed.
Northern Virginia’s title of global data-center king goes back decades to the earliest iterations of what became the internet. The infrastructure built then helped draw dot-com and telecom giants such as AOL, Yahoo and WorldCom. Miles of fiber-optic cable were installed, forming the backbone of the area’s data-center infrastructure.
Data centers tend to cluster together in places that have established networks and access to a plentiful energy supply. The rise of ChatGPT and similar large-language AI models, which require huge amounts of computing power, turbocharged data-center demand.
Many new data centers coming to Northern Virginia are known as hyperscale, or facilities that are far larger than previous generations of data centers. The big ones use as much power as the city of Seattle.
Utilities want more fossil fuels to meet demand
For many utilities, the solution to rising demand is to keep coal-fired power plants burning for longer and add natural-gas power plants to balance big expansions of renewables.
Utilities in Georgia and North Carolina are adding fossil-fuel power or considering delaying the shutdown of coal-fired plants to meet the demands of data centers and other industries. Duke Energy DUK -0.44%decrease; red down pointing triangle
told regulators it needs three new gas-fired power plants in the Carolinas. Otherwise it says it will have to keep coal plants open.
AI Fueling a Data Center Boom. Can the Power Grid Keep Up?
Data center development is booming across the U.S. thanks to AI. Some industry analysts estimate global capacity to double by 2030. But it faces a big obstacle: getting enough power. Graphic: Ryan Trefes, JLL
Dominion Chief Executive Robert Blue said the utility expects its peak load to increase at least 5% each year for the next 15 years. “We’re going to continue to be a big builder of renewables. We’re building a big offshore wind farm. We’re building a lot of solar. We’re adding a lot of storage,” Blue said. “But we also recognize that we’re going to need some more natural gas in order to keep the lights on.”
One of the great successes of the U.S. energy transition has been the steady elimination of coal power. About 10 gigawatts of coal power have been retired each year for a decade. That number will fall to about 6 gigawatts a year through 2030 because of higher demand, according to S&P Global Commodity Insights.
A cluster of data centers in Northern Virginia’s ’Data Center Alley.’
Tech companies want to be green
Big tech companies such as Alphabet, Microsoft and Amazon are among the biggest users of data centers. They have also committed to net-zero emissions worldwide in the coming decades.
Some are pushing back against the use of fossil fuels. Microsoft criticized Georgia Power’s proposed gas expansion, saying the plans undervalue renewable energy’s ability to meet demand. Tech companies have warned that utilities could lose customers if they burn more fossil fuels. Georgia Power said its portfolio protects reliability, supports economic development and includes renewables and battery storage.
“No data center wants to be tied to the need for new fossil resources, that’s the problem,” said Brian Janous, former vice president of energy at Microsoft. “You can’t throw this much [data-center] capacity at the system and not have some degree of fossil resources to support it.” Earlier this year, Janous helped launch Cloverleaf Infrastructure, which is helping large electricity consumers find power.
Consumers don’t want more data centers or more fossil fuels
While data centers can be a boon for local governments, providing jobs and reliable tax revenue, residents complain about the constant buzzing that emanates from the hulking structures and the power lines that crisscross their neighborhoods.
Raj Chintala, an information-technology employee in Loudoun County, said he used to enjoy watching the sunrise from the back porch of his home in the Northern Virginia suburbs just outside Washington, D.C. But a few years ago, a data center began to rise just feet beyond his backyard. “Now it’s much darker,” he said.
Raj Chintala’s view is now obstructed by an Amazon data center just behind his property line.
One recent $54.3 million proposal by Dominion would extend a transmission line 1.8 miles and build a substation to serve a planned Amazon data-center campus. Amazon said it has enabled 19 solar farms in Virginia and is the world’s largest corporate buyer of renewable energy.
Data-center grid investments, paid for by all customers, are called unfair by community groups. Elena Schlossberg, grassroots coordinator for the Coalition to Protect Prince William County, compared it to splitting a restaurant bill. “They’re ordering the $200 bottle of red wine…and you’re getting a Caesar salad,” Schlossberg said.
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Dominion also wants to build a 1,000-megawatt natural-gas plant, for times of high-power demand, in Chesterfield County, where a coal plant closed last year. The utility is still removing millions of cubic yards of coal ash from storage ponds at the site.
Nicole Martin, president of the Chesterfield chapter of the NAACP, said the predominantly Black neighborhood had a fossil-fuel plant for nearly 80 years. “We’re supposed to endure the health risks and the environmental risk when this power plant, this energy, is not even being used for us,” Martin said.
Dominion says the plant is critically important for reliability. Grid investments, plus the new projects, would raise average utility bills for customers from around $133 a month to $174 over 15 years, the company projects. New transmission lines often attract other users, with data centers ultimately bearing more of the cost of such upgrades, the company said.
Wind and solar can’t serve data-center demand around the clock, so growth will need to be supplemented by natural-gas-fired power generation, said Arshad Mansoor, chief executive of the nonprofit Electric Power Research Institute.
“You can be an idealist,” Mansoor said. “But if you’re a realist, you’ll add a ton of solar and you can balance that with gas.” The only other option to new gas plants is delaying coal and nuclear-plant retirements, he said.
PA Permits April 22, to May 2, 2024
County Township E&P Companies
1. Armstrong Valley Snyder Bros.
2. Armstrong Valley Snyder Bros.
3. Armstrong Valley Snyder Bros.
4. Armstrong Valley Snyder Bros.
5. Armstrong Valley Snyder Bros.
6. Armstrong Valley Snyder Bros.
7. Armstrong Valley Snyder Bros.
8. Armstrong Valley Snyder Bros.
9. Bradford Terry Chesapeake
10. Bradford Terry Chesapeake
11. Bradford Terry Chesapeake
12. Bradford Terry Chesapeake
13. Bradford Terry Chesapeake
14. Greene Whitely Rice Drilling
15. Greene Whitely Rice Drilling
16. Greene Whitely Rice Drilling
17. Greene Whitely Rice Drilling
OH Permits April 21, to April 27 2024
County Township E&P Companies
1. Harrison Franklin EAP OHIO
2. Harrison Franklin EAP OHIO
3. Harrison Franklin EAP OHIO
4. Harrison Franklin EAP OHIO
WV Permits April 24, to April 28, 2024
1. Brooke SWN
2. Brooke SWN
3. Wetzel Antero
4. Wetzel Antero
5. Wetzel Antero
6. Wetzel Antero
7. Wetzel Antero
8. Wetzel Antero
