Natural gas prices are $3.61/MMBtu, which is a healthy price. They got up as high as $3.79/MMBtu. Drilling rigs are at 484, a jump of 23 since last month. With the price of both oil and natural gas going up, it’s likely that this number will rise sharply soon. Natural gas storage levels for July are at 2,629 Bcf, a little under the five year average, and quite a bit under last year’s number.
Whoa! The big news comes right at the top this month! The Biden administration’s moratorium on oil and gas drilling permits has been overruled by a federal judge! Well, “overruled” is a little strong here. An injunction has been issued which delays enforcement of the moratorium until the lawsuit challenging it has wound its way through the courts. That’s a little different from being overturned, but it’s a sign that the lawsuit at least has some merit. You can only get an injunction if there’s some chance that the lawsuit would have success.
Based off headlines found around the news world, one would think that renewables have been making significant progress in producing larger and larger portions of the world’s energy. A recent study shows that’s not the case. In 2009, fossil fuels produced 80.3% of the world’s energy. In 2019 they produced 80.2%. That .01% is a big number, but the proportion is what’s most important.
On the other hand, oil and gas companies have severely cut back their exploration budgets. This could have powerful effects in the near term, such as much higher energy prices and yet another boom in the oil and gas sector. And here I was thinking the boom/bust cycle might be over. Not to put too much stock in an oilprice.com article–I haven’t often agreed with what I read there–but the numbers are hard to argue against.
The rumblings across the oil and gas industry are that supply is not keeping up with demand, which is forcing the price of natural gas up. That’s great news for our clients, as royalty checks should start going up.
Oil prices have also been going up. The rumor is that OPEC+ will start producing more oil. That rumor immediately drove the price of oil down.
The number of frack crews dropped precipitously during the pandemic, but they’re on the rise again. With 235 crews working, we’re just keeping production numbers level.
RBNEnergy does a good review of how wind power is ramping up in the U.S.
Just like that, RBNEnergy puts out another interesting article. This one details how carbon dioxide (you know, the main greenhouse gas) can be used for enhanced recovery of oil (getting more oil out of the ground than usual). You ever hear about carbon sequestration? This is carbon sequestration with an economic purpose.
Well, isn’t this interesting? There’s a pretty long article on Seeking Alpha which makes the argument that we’re in a long bull run on oil and gas stocks. For those who don’t invest, that means that oil and gas companies are a good value, which means that oil and gas prices are likely to stay up because that’s what makes an oil and gas company valuable. My how the times have changed, and quickly, too. That’s the oil and gas industry for you, though.
This is great news for any of our clients who are royalty owners. The price that buyers will pay for gas coming out of our area is going up. So not only is the price of natural gas in general going up, the price that West Virginia producers get is going up, too. That should show up as an increase on the bottom line of your royalty checks!
An “operational event” happened at the Mobley plant in West Virginia, shutting down production from the area. Basically, there’s no natural gas flowing out of West Virginia right now. This will probably affect royalty checks negatively.
A pipeline from a deep water drilling rig in the Gulf of Mexico ruptured and caught fire, resulting in video that looks like something you would see in a movie.
OPEC+ can’t seem to agree on anything right now, which seems to mean that nobody is going to start pumping/selling more oil, which means oil prices are going up.
Natural gas is flowing away from West Virginia again, now that the “operational event” (a leak) was fixed.
OPEC+ has now reached an agreement to increase oil production. This will probably help keep oil prices stable, which will keep prices at the gas pump from rising any higher than they already are.