Happy New Year everyone!  We hope your Christmas was excellent and that the coming year will be better than the last one.

Dec 20, 2016: The U.S. dollar has hit a 14 year high.  This affects the oil and gas industry because oil is purchased in U.S. dollars.  When it’s strong, the conversion rate for other currencies is unfavorable.  That means other countries don’t have as much purchasing power.  One of two things has to happen, either other countries don’t buy as much oil, or the price of oil drops to make it possible for other countries to buy the oil they need.  A third option is for the other countries to pony up more of their currency to buy the oil they need, but that will eventually drive demand down.

With some political stability in place, Libya is increasing oil production.  This was expected by those agreeing to cut production in the last OPEC deal, however, it’s a much bigger increase than expected.  This doesn’t seem to have affected the market much, as prices are still at over $53/bbl.

WVU has finished a study on the noise pollution produced by fracking.  It says that the noise levels produced can increase sleep disturbance, cardiovascular disease, and annoyance.  Seriously, annoyance.  The article over at WVU’s web site goes into it a little bit, and it’s interesting.

Jan 3, 2017: We saw natural gas prices get up over $3.90/MMbtu before the New Year break, but today they are down at $3.30.   Essentially, the market hit a high point that was unsustainable, and is on its way back down.  January weather is not expected to be as cold as it was expected to be a week or two ago, and oil drilling is picking up, so there is plenty of gas.

There are a number of articles out there trying to predict the future of oil and gas, specifically for 2017.  While it’s extremely difficult to predict what’s going to happen with any degree of certainty, lots of people still try to do it.  So far, it seems that most everyone agrees that oil prices won’t rise much, and will likely fall at some point this year.  Natural gas prices will probably remain above $3.00/MMbtu, but are unlikely to go above $4.00. So, not a bad year, but not a good year either.  The real problem for West Virginia mineral and royalty owners is the same one we’ve seen for years.  We don’t have enough pipeline capacity to move the gas out of the area.  If there were more pipelines, we would see increasing bonus amounts and royalties.  I think all my clients would be happy with that.