Today, gas prices are at $2.68/MMBtu, which we absolutely would not have predicted two weeks ago. Oil prices jumped over the weekend when a military strike on Saudi oil production took a bunch of it offline, but prices have dropped back below $60/bbl already.

West Virginia is creating a task force to bring downstream oil and gas industries to West Virginia. Downstream means after the gas has come out of the ground. We have all the upstream jobs we need here, and they’re pretty hard to keep beyond a certain point because when oil and gas drilling slows down the jobs disappear. But downstream jobs would be more consistent; cracker plants, energy plants, and others, just can’t shut down and restart when the economy slows down. This should be a good thing for West Virginia. We’ll see how it goes. It wouldn’t be the first good news we’ve seen for WV that just kind of….fizzled.

Whew! Talk about contrarian thinking. Pretty much everybody thinks that the price of gas is going to be down (think below $2.50/MMBtu) for a long time still. But an article over at OilPrice.com by Dwayne Purvis makes the argument that while we can produce a heck of a lot of gas awfully quickly, demand is outgrowing production, production is slowing down, and storage hasn’t grown enough to keep up with demand. That’s a brave argument to make, but it’s worth taking a close look at. We wouldn’t mind too much if he was right, because the increase in activity in West Virginia would be good for our business.

Cunningham Energy occasionally makes the news with a new move to develop oil from formations that previously made West Virginia mineral owners very rich. Cunningham uses horizontal fracking in formations like the Big Injun, the Weir, and the Berea to recover oil that is not otherwise economic to develop. It’s a pretty good plan and we’re frankly a bit surprised that other companies haven’t glommed on to the idea yet. Cunningham has moved into Gilmer and Roane Counties, having acquired 12,000 acres worth of already producing property under the Rock Creek oilfield and the Tanner oilfield. Keep your eyes on these guys.

Southwestern Energy is just about the only company working in the northern panhandle of West Virginia right now, mainly because SWN bought up all of Chesapeake’s holdings up there, and CHK had bought leases on pretty much everything up there at one point. The northern panhandle is a little different as most of it is more densely populated than the rest of the state. Residents of the area are complaining about noise and other nuisances of the drilling and fracking process. SWN and the county are gathering info and making decisions. Gotta love how quickly government works. Unfortunately, the county probably doesn’t have much it can do to force SWN to do anything. Noise ordinances aren’t usually written with this kind of thing in mind, and drilling permits are done through the state. Maybe there’s a construction permit that can be amended or modified, but getting oil and gas companies to play nice and be good neighbors after you’ve signed an oil and gas lease is usually a losing battle.

China is the largest growth market for natural gas right now. Chinese growth is expected to slow some, and the US-China trade war has decreased the amount of gas the US exports there, but that will end sometime and the numbers will go up. Interesting fact from the article, China’s gas import demand is second only to…Japan. Think on that for a second.

Oil and gas producers are constantly working to be more efficient. They are producing more gas with fewer rigs. Trying to gauge the health of the industry by the number of operating rigs is not as accurate as it used to be.

Toby Rice, the new CEO of EQT, is working to get on my good side. Well, he doesn’t know me from Adam, but he’s making moves that make me and West Virginia mineral and royalty owners happy. The latest move is to dismiss a lawsuit that challenged one of the West Virginia legislature’s new laws. That law made it so that producers could not deduct post-production costs from certain old leases. It was good law for mineral and royalty owners. Thanks, Toby, for removing this legal challenge.

Some producers are using flared gas to run frack pumps. It’s called electric fracking or e-fracking because the natural gas turns an electric generator which turns the water pumps. Excellent use of an otherwise waste product.

Saudi Arabia has a new Energy Minister, and oil prices bumped up because of it.

One fellow thinks that the price of oil is going to go up in the near future because US production is set to go down a bit. It’s an interesting argument, extrapolating from data that shows that US production has leveled off in the last few months.

Mexico buys a hedge on its oil production each year to protect its budget from serious fluctuations in oil prices. This year it sounds like they’re hedging at $49/bbl, down from $55/bbl last year.

EQT is going to layoff 200 of its 850 workers in the next week. Ouch.

And on Friday we have news that EQT has, in deed, laid off 196 workers.

Probably everybody heard, but here it is anyways. Houthi rebels blew up part of Saudi Arabia’s oil production. It took about 5% of the world’s oil supply offline. The Saudis said they would have production almost entirely restored by Monday, and they pretty much did. Oil prices today (Tuesdays) have dropped almost as precipitously as they jumped.

Natural gas production has broken records again in August in spite of low natural gas prices. The more interesting take on this, though, is that we still haven’t gotten back to our five year average in gas storage. That means demand is growing as well. I think we’ll see gas storage levels drop like crazy again this winter, if the winter is at all bad.

Speaking of demand, Longview Power operates a 710 MW coal-fired power plant just north of Morgantown, WV on the Monongahela River. They have announced that they are going to build a 1,200 MW gas-fired power plant at the same location.