Natural gas prices are $7.19. That’s down from a high of $9.32, and lower than last month. I expect that next month will see continued high prices. Drilling rigs are at 733, up 19 from last month, and still a gradual increase. Storage is at 1,999 Bcfs, up 97 Bcfs from last month. Numbers are below the five year average, but trending slightly up from it.
Diversified Energy has become a large player in the oil and gas industry by buying up old shallow wells and either putting them back into production or plugging them. They’ve acquired a plugging company with two plugging crews and expect to add another plugging crew by the end of the year, making a total of nine.
A study by Rystad Energy predicts (I know, I know) that by 2027 employment numbers in the oil and gas industry will have returned to the same level they were pre-pandemic. That’s interesting in itself, but more telling is how hard the industry was hit by the pandemic. 20% of workers were laid off. That’s tough. No wonder production numbers took a hit. Production isn’t directly correlated to employees, but that’s going to leave a mark.
The wastewater from fracking contains lithium, which is pretty important for making batteries. A researcher named Kyung Jae Lee, with the University of Houston, is working to extract the lithium from the wastewater and use it for making batteries.
Some landowners are suing to have the new West Virginia forced pooling legislation set aside. We wish them the best of luck.
Here’s some analysis of why oil and gasoline prices are so high. It’s not looking like prices at the pump are going to go down any time soon.
Dick Glick has been nominated for another term as FERC chairman. This is bad news for the ACP. He’s not a fan of pipelines.
Finland has signed a deal to import LNG from a company called Excelerate Energy. At the same time, Russia has cut off Finland. In the grand scheme of things, this isn’t a big deal because Russia only provided about 5% of Finland’s natural gas, but the symbolism is important.
Encino Energy just signed a lease for 7,300 acres of land just across the Ohio River from Marshall and Wetzel Counties. The bonus was $5,500/acre and the royalties are 20%. Ohio property hasn’t been as interesting to drillers lately, so this is a good deal for the Muskingum Watershed Conservancy District. Our clients should keep these prices in mind when they’re negotiating for themselves.
The Wall Street Journal points out that oil executives are now given bonuses for making a profit. Previously, they were given bonuses for producing large quantities of oil and natural gas. This is likely the major reason why production is not booming right now.
Saudi Arabia could produce more oil, and probably do it pretty quickly. Well, relatively speaking. But they’re not likely to. An article over at oilprice.com goes into why.
Nucor Steel is building a new plant in Mason County, West Virginia. One big reason is the abundance of relatively cheap natural gas.
One reason our prices at the pump are so high is that during COVID some marginally profitable refineries became unprofitable. The Biden Administration is looking into the possibility of opening some back up.
Lease deals in Ohio are getting better. Nobody has written this article for West Virginia yet. Deals have been getting better here since last fall.
Natural gas production has hit new highs, but still prices climb.
The Mountain Valley Pipeline has requested a new panel of judges for its next hearing in front of the 4th Circuit Court. Previous hearings have all been in front of the same three judges, which is a little suspect because the panels are supposed to be chosen at random.
The Freeport LNG plant had an explosion and fire that will put it out of operations for three weeks. Thankfully, no one was killed or injured.
There’s always an opposite point of view to consider, so here’s an article published by Forbes that analyzes the oil market and discusses how prices could go down.
Libyan oil production is being disrupted even more. The numbers aren’t ridiculously large, but they’re big enough to affect prices.
Oil deals are made in U.S. dollars. Other countries have to buy or use dollars, not their own currency. When the dollar strengthens in relation to their own currency, that makes buying oil more expensive for them. Right now, the dollar is strengthening and oil prices are going up. Usually, when the dollar strengthens the price of oil goes down because of decreased purchasing. That’s not happening right now.
If you want to read more than you ever thought you wanted to about the Appalachian region supply/demand balance, RBNEnergy has an article for you.