Facts & Rumors # 562
August 3, 2024
WV NatGas Production Up Since MVP Opened. Natural gas production in West Virginia has stepped up notably since long-term contracts on the new Mountain Valley Pipeline started July 1, while spreads between Appalachian Basin gas hubs and the new Transco station 165 price have narrowed toward the end of the month.
MVP was placed into service June 14 and offered interruptible and short-term firm capacity for the rest of that month before long-term firm capacity obligations began July 1. Flows on the pipeline into its terminus at the Cherrystone interconnect with Transco averaged around 500 MMcf/d June 15-30 and picked up to almost 1 Bcf/d in July, Commodity Insights data showed.
The extra flows have coincided with a sharp uptick in regional production, particularly in the West Virginia side of the Marcellus Shale. Production in the state jumped to a record 9.2 Bcf/d in July, up from 8.4 Bcf/d in June, Commodity Insights data showed.
Total Appalachian production rose to 35.1 Bcf/d in July, up from just 33.7 Bcf/d in May but still below the monthly peak of 36.2 Bcf/d in December 2023.
Although the pipeline has capacity of 2 Bcf/d, Commodity Insights analysts estimate it has only lifted the Northeast production ceiling by around 700 MMcf/d for now because of capacity constraints at Transco station 165. The Southside Reliability Enhancement project, which has started construction, could boost the ceiling by another 160 MMcf/d, but the pipeline could realize its full potential when Transco’s 1.6 Bcf/d Southeast Supply Enhancement project starts service, currently targeted for November 2027. The project is currently in the prefiling process with FERC and has already received some pushback from environmental groups.
EQT, the new operator of MVP after it completed the acquisition of Equitrans Midstream, plans to expand capacity to 2.5 Bcf/d. “We’re excited to pursue that expansion as soon as possible,” CFO Jeremy Knop told investors July 24. EQT would make sure “it was timed to come online with that expansion project on Transco to take all the gas,” Knop said.
Prices
Cash prices at Appalachian hubs Eastern Gas South and Texas Eastern M-2 picked up towards $2/MMBtu in June after MVP started up, but have retreated back below $1.50/MMBtu in July.
Texas Eastern M-2 held an average discount of 47 cents/MMBtu to the new Transco station 165 price for July 1-31 flows, but it fell to 20 cents/MMBtu July 25-31, Platts data showed. Platts is part of Commodity Insights.
Manchin Permitting Bill Making Progress. Senate committee approves permitting, grid package. E&E News. The Senate Energy and Natural Resources Committee approved broad permitting and grid development legislation 15-4 Wednesday morning. Chair Joe Manchin (I-W.Va.) exuded joy after the bill passed. It could become the capstone of the retiring senator’s congressional career. “We’ve never had this before — having a markup with this kind of support,” Manchin told reporters after the vote. “This has been a tremendous day for all of us.” Manchin has for nearly two years worked on the legislation with ranking member John Barrasso (R-Wyo.) after previous permitting and grid legislation failed in 2022.
If this bill passes, it will mean that once a project has received its permits there cannot be any legal challenges.
Chesapeake Ready to Cut Production. As NatGas drops below $2, Chesapeake is prepared to curtail volumes again. Hart Energy. The prompt-month natural gas price dipped below $2/MMBtu in the midst of No. 2 U.S. gas producer Chesapeake Energy’s second-quarter earnings call July 30. The dive was from as much as $3.20 on June 11 for delivery Sept. 1, according to CME Group data.
Binging on Ultra-Cheap NatGas. U.S. power producers binge on ultra-cheap gas. Reuters. U.S. electricity generators consumed a record amount of gas in the first four months of the year as prices slumped to the lowest level in real terms for more than half a century. Ultra-low prices encouraged more power production from some of the least-efficient single-cycle gas and steam turbines at the expense of coal.
U.S. Shale Producers to Boost Output. U.S. shale producers to boost output despite pledging restraint. Bloomberg. Some leading US shale producers are planning to pump more oil this year than originally projected, a sign national supply could exceed the modest growth expectations many companies had pledged.
NatGas Dominant Source of Electricity. Natural gas becomes the dominant source of electricity in the U.S. Oil Price. The lowest U.S. natural gas prices in decades have incentivized a record-high gas consumption for power generation amid growing electricity demand. Even the less efficient steam turbines and single-cycle gas power plants, typically operating at peak demand periods, were fired up as the U.S. benchmark gas price hit multi-decade lows amid high inventories and a milder winter.
Summer Heat Can’t Snap NatGas Slump. WSJ. One of the hottest summers on record has been no match for America’s natural-gas glut. Abundant supply of the power-generation fuel has recently pushed down prices below $2 per million British thermal units. Aside from the 2020 Covid-lockdown crash across markets, natural gas hasn’t been so cheap during the heat of the summer since the 1990s.
Permian Quakes May Be Traced to Oil Fields. 103 earthquakes in 8 days may be traced to oil fields. Austin American Statesman. From the first large quake of magnitude 4.9, Scurry County has experienced a total of 103 earthquakes, including 12 of magnitude three or more, said Justin Rubinstein, a geophysicist with the U.S. Geological Survey in Menlo Park, California.
Texas shuts 2 wells after earthquakes rock Permian oil region. E&E News. Texas’ oil and gas regulator has idled two wells that send saltwater deep into the ground after a rash of earthquakes struck the Permian Basin this month. The state Railroad Commission suspended permits for the disposal wells, which are operated by Gunn Oil and Sojourner Drilling, agency spokesperson Patty Ramon said Tuesday. Disposal wells are used to discard water that’s brought to the surface during oil and gas production.
Chevron Moving to TX. Chevron taking its headquarters to Texas. Forbes. U.S. oil and gas giant Chevron announced Friday it will relocate its corporate headquarters from its long-time location in San Ramon, California to Houston, Texas in the coming months. In a release, the company said chairman and CEO Mike Wirth and vice-chairman Mark Nelson will relocate to Houston by the end of this year, with remaining headquarters employees to make a gradual migration over the next five years.
APA Increasing Permian Activity. APA ratchets up Permian activity to stoke U.S. oil growth. Hart Energy. APA Corp. expects to boost U.S. oil production by 8% between now and the fourth quarter as the company grows its Permian Basin production at a “strong clip,” CEO John J. Christmann IV said during the company’s second quarter earnings call on Aug. 1.
TX Pipeline Congestions Hurts Oil Exports. Texas pipeline congestion could throttle U.S. oil exports at critical time. Oil Price. Texas crude oil pipelines are nearing capacity, with major pipelines between the Permian Basin and the Port of Corpus Christi currently more than 90% full. Potential export constraints could arise as US crude production continues to hit record highs, affecting global energy markets and trading partners reliant on US energy. Some alternative routes and pipeline expansions are being considered to alleviate congestion and ensure the smooth flow of crude oil to export hubs.
AI Data Centers Could Bring Problems to TX. Power-hungry data centers are gobbling up Texas amid AI boom. BNN Bloomberg. One business may finally be getting too big for Texas: data centers, those whirring warehouses packed with the electricity-sucking computer servers that power the modern internet and the development of artificial intelligence. Up until now, the business-friendly state has welcomed their growth, which has been a boon for land values and property taxes. Texas offers vast tracts of land and a broad supply of cheap energy sources, including wind and solar. But the boom in data centers threatens to gobble up quite a bit of both.
Oxy Makes Asset Sale to Permian Resources. Oxy strikes $818M asset sale with Permian Resources. Axios. Occidental Petroleum plans to sell certain Delaware Basin assets in Texas and New Mexico to Permian Resources for about $818 million. Why it matters: This is part of Occidental’s to-do list to fund its $12 billion takeover of CrownRock.
DT Midstream Talks of Gathering System in Tioga County, PA. DT Midstream (DTM), headquartered in Detroit, owns major assets in the Marcellus/Utica region and other regions like the Haynesville. DTM issued its second quarter 2024 update yesterday. Of keen interest to us was any talk of the company’s Phase III expansion to the Appalachian Gathering System and an expansion in the Tioga County gathering system.
U.S. Sending Less NatGas to Europe. The US is sending less natural gas to Europe, complicating Europe’s plans to cut off Russian gas. Business Insider. In July, the difference between the amount of LNG the US and Russia shipped to Europe contracted to its lowest since late 2021, according to a Bloomberg analysis of preliminary ship-tracking data published on Tuesday. At the end of July, Europe imported 1.5 million metric tons of LNG from the US, just slightly more than the 1.3 million tons the region imported from Russia. Europe’s monthly imports of Russian liquefied natural gas have been holding relatively steady, in the 850,000 to 1.6 million metric ton range, since the invasion of Ukraine, per Bloomberg records.
U.S. Oil Demand Set Seasonal Record in May, EIA data shows. Reuters. U.S. oil demand rose to a seasonal record in May as American cars guzzled the most gasoline since before the pandemic, data from the U.S. Energy Information Administration (EIA) showed on Wednesday. Total crude oil and petroleum product supplied, the EIA’s proxy for demand, rose by 792,000 barrels per day (bpd) month-over-month to 20.80 million bpd in May, the data showed. That is the highest monthly figure since August, and a record high for the month of May.
PA Permits July 22, to August 1, 2024
County Township E&P Companies
1. Elk Fox Seneca
2. Greene Gray Rice
OH Permits July 21, to July 28, 2024
County Township E&P Companies
1. Noble Brookfield EOG
2. Noble Brookfield EOG
3. Noble Brookfield EOG
4. Noble Brookfield EOG
WV Permits July 15, to July 19, 2024
1. NO NEW PERMITS
