The price of natural gas today is about $2.69/MMBtu.

Oil and gas news has again been a bit slow. Mainly it’s more of the same.

EQT is cutting its capital expenditures for 2020, and even the last quarter of 2019. Cutting them a lot. This means less drilling and less taking of leases.

West Virginia tax revenues are below what was initially projected, in part because of a lack of demand for gas and in part because the pipeline construction (ACP and MVP) got shut down.

Rig counts continue to fall. At some point this means underproduction, but for the time being we have plenty of gas. The important fact to figure out is when the reduction in rigs will result in too little gas. Somebody who can figure that out accurately can make a lot of money in the stock market.

This Forbes article focuses on oil, but the economic forces are true for gas producers as well. Everybody is slowing drilling. Everybody is saying they will produce the same. Eventually they will have to increase drilling as wells simply run out of gas. When? Who knows.

The Atlantic Coast Pipeline people think they’ll be building again in summer of 2020.

Disney Cruise Lines has ordered three LNG powered cruise ships. This will probably do more to reduce pollution than the Cash for Clunkers program did. Cruise ships are ridiculously dirty.

Cunningham Energy here in West Virginia is doing alright for itself. One of its well pads had produced (over its lifetime) 100,000 barrels of oil and 91 million cubic feet of wet gas. That doesn’t seem all that exciting until you realize that the wells they are drilling are about a tenth the cost of a Marcellus shale well. The ROI is pretty good.

A review of several weather sites says that 2019-2020 winter weather is expected to bring average temperatures or above average temperatures, but plenty of storms. Of course, there’s always a site or two that say it’s going to be colder than usual, and a site or two that say it’s going to be warmer than usual. Guess we’ll see, but it seems unlikely that we’ll have anything other than normal winter temperatures.

CNX is using e-fracking (using natural gas to power electric generators which provide the energy to push the fracking fluid into the formation), and went all e-fracking on a well pad in Green County, PA in May. It’s cheaper for the company, quieter by a lot, and produces fewer emissions.

Big news! Arsenal has filed for bankruptcy, again! They filed back in February of this year, zipped through the process in 10 days, and now are at it again. It seems this is more about restructuring debt than anything, as all the major investors are onboard.

It’s been a bit of a slow couple weeks for oil and gas news. When the most exciting thing to report is 3rd quarter earnings reports, you know it’s slow. Granted, you do get a rough idea of where the experts think the industry is going, but it’s just not…much.

Natural gas prices today are $2.60/MMBtu. They had gone over $2.70/MMBtu a day or two ago. It’s a bit of a surprise as gas storage has gone over the five year average, but I’ve stopped trying to predict the movements of the natural gas price. That way madness lies.

Prices for natural gas coming out of the Marcellus/Utica region have dropped farther than the price at the Henry Hub. It seems that’s primarily because of the TETCO pipeline exploding and being shut down, constricting the flow of gas from the Marcellus/Utica region to the Henry Hub, as well as the Cove Point LNG plant shutting down for maintenance.

Exxon-Mobile is looking for another site for a cracker plant. Seems like going to the Parkersburg, WV location that was already going to be used as a cracker plant is a no-brainer, but there must be some other factors that we’re not aware of driving the decision.

EnergyFuse.com summarizes the various oil production outages around the world and notes that fears of a global recession as well as lower demand have countered the usual upward movement in price these would cause.

The Mountain Valley Pipeline has been ordered to stop construction pending additional regulatory research into some endangered species.

A trash hauling company, Republic Services, is adding to its CNG fleet.

Not being a financier, I’m not sure whether Range selling another 0.5% overriding royalty (total of 3.5% sold to date) is a good thing or a bad thing. The article states that the cash will be used for share buyback, so maybe it’s a good thing. But selling off future income at (presumably) a significant discount seems awfully short-sighted.

Burning natural gas has saved consumers a huge amount of money over the last ten years.

Yet another company is being accused of underpaying royalties. I’m beginning to think that there are two kinds of royalty owners, those who have been underpaid and those who are being underpaid.

Every once in a while we’ll take a look at one of the quarterly reports from a company that’s active in West Virginia. This one is from Southwestern Energy, a/k/a SWN. While they’re geared towards investors, there can be interesting nuggets for royalty and mineral owners at times. In general, SWN is producing more, and using a lot less money. Spoiler: that’s true for all the other producers, too.

Also in regards to SWN, they do a pretty good job of taking care of the water they use.

The amount of LNG exports has doubled, again.

Antero is one of the more important oil and gas companies in West Virginia. Their 3rd quarter report sheds light on why they closed the water treatment plant and how they expect next year to go.

Natural gas prices are at $2.28/MMBtu today. They spent a couple good weeks up at about $2.50/MMBtu. It seems that we stored more gas than expected.

The third largest storage facility in North America (in Alberta, Canada) is at its lowest level in twenty years. That would typically drive prices up some, but it doesn’t seem to be doing so. Read the first of two articles about it over at RBN Energy.

Gas production is hitting new highs and setting new records. More interesting though are the last two paragraphs of the article which say that DUCs (Drilled but UnCompleted wells) have gone down a lot.

West Virginia’s DEP approved a coal-to-liquids plant that would combine natural gas and coal to create diesel, gasoline, and other fuels. It’s the first full sized coal-to-liquids plant in the United States. Importantly for West Virginia, it’s turning some of our natural gas into a more refined product, increasing its value before it’s sent out of state.

The US is producing more natural gas than it needs right now, and companies have been building facilities to ship it overseas. Unfortunately, it seems that “overseas” also has a lot of natural gas, and probably will for the near future. Thanks to horizontal fracking, the world of the near future is going to have plenty of natural gas. Good for consumers, not so good for your friendly neighborhood oil and gas attorney.

On that same line of thought, England uses a lot of American natural gas because they banned horizontal fracking a while back.

The attack on Saudi oil production affected their light crude the most. When the U.S. imposed a tariff on oil to China, that’s the same grade of oil that it affected. So now China is forced to buy U.S. oil with a tariff.

FERC has approved another LNG facility. It’s in Jacksonville, FL, and will send LNGs to the Caribbean. It’s kind of small compared to some of the others that have been built recently, but every little bit counts.

The oil and gas investment community has changed the way it thinks about price forecasting. The attacks on Saudi infrastructure have added an element of uncertainty to things. If Saudi infrastructure can be hit, anything else could be.

Trying to figure out how this oil and gas law business will do in the next couple years we’ve run across this handy page over at the Energy Information Agency. It says what we’ve been expecting, for the most part. It looks like natural gas prices are going to stay about the same for quite some time. We are unlikely to see prices above $3.00, or anything below $2.00 (at least for long). Production can outpace demand; the only thing slowing producers down will probably be a lack of capital. Hopefully we don’t have a new crop of investment bankers come in and decide they can make money in oil and gas because when oil and gas companies get money they drill and produce, driving supply up and prices down.

The National Review makes the argument that we can have either more fracking or more war.

West Virginia benefits from the taxes paid by natural gas producers. WVONGA put together a report showing how much property tax (not severance tax) was paid just by natural gas producers this year.

Some people would like to build an NGL storage facility on the Ohio River. The NETL has created a report supporting it.

India’s gas company, Petronet, has agreed in principle to invest $7.5 billion into Tellurian’s Driftwood LNG terminal in Louisiana. India plans to get 5 MM tons of LNG per year from the plant.

IHS Markit is predicting an average natural gas price below $2.00/MMBtu next year.

West Virginia is the seventh largest producer of natural gas in the US. This Rigzone article goes into some detail about what that means.

Here’s a news report including video footage of the new cracker plant going up in PA.

Japan is going to invest $10 billion into diversifying the source of its LNG. Presumably this means it will take more from the US.

Antero Resources puts a good chunk of change into upgrading and maintaining the small country roads it uses. Even so, there are places they’re not getting to. Good on ya, but lets get the rest taken care of, too.

Antero’s water treatment facility in Doddridge County has been closed. It seems low gas prices have made it a financial burden on the company.

And there’s yet another LNG plant being built in Louisiana. That makes three for anybody who’s not counting.

So it’s September 3, but it was Labor Day and the office was closed tight all weekend. Everybody enjoyed themselves and didn’t think about posting this on the 1st. We’re getting back into the swing of posting things so look forward to another in a couple weeks. Enjoy the wrap up of oil and gas news from the last month!

Libya’s Sharara oil field is back online. Add 300,000 barrels per day back into the equation. Until some rebel faction decides to take it back off again.

Oil demand has gone down for three fiscal quarters. This hasn’t happened since 2014. Oil prices were pretty bad at that point.

An ethane storage facility will start construction in the first quarter of 2020. That will go a long ways towards keeping some of the value of the natural gas that we produce in the area, even if it’s not actually in the state.

This Reuters article discusses the rising demand for natural gas and the falling price of the same. All driven by an amazing increase in production capability. While this is good for consumers, it’s bad for West Virginia mineral owners and your friendly neighborhood oil and gas lawyer.

SWN is taking its rig count in the Appalachian Basin from six to two.

The Mountain Valley Pipeline folks seem to be misunderstanding the definition of the word emergency. Also, they have put someone’s house at risk. Come on, guys. Get it together.

The Atlantic Coast Pipeline was planning to get working again here in August or September. However, a federal judge vacated some permits that the pipeline needs in order to get to work. ACP plans to re-file the permits and hopes to get back to work sometime in the November to March tree-cutting window.

Some folks are sitting in trees on the MVP right of way, and they’ve been there for almost a year. We remember reading and posting briefly about them back then. Didn’t realize just how long they would stay there. It’s kind of impressive, really.

Russia is probably happy with oil at $40/bbl, Saudi Arabia probably wants it at $80. So long, OPEC+?

We’ve been wondering how Marcellus Shale drillers planned to stay in business if gas prices stayed as low as they currently are. EQT’s new CEO, Toby Rice, plans to use “combo development“, which is “large-scale, sequential, highly choreographed drilling and hydraulic fracturing.” The article is behind a paywall.

If you wanted to know more than you ever cared about moving propane to Mexico by train, here’s the article for you. And it’s only Part One.

EQT’s new CEO, Toby Rice (see above) did a town hall meeting in Bridgeport, WV on Monday, August 19,2019. He’s talking as if EQT will be a kinder, gentler company. While that’s all well and good coming from the CEO, it’s going to take a while for that attitude to trickle down through the bureaucracy. It’s the same principle that makes the federal government stay pretty much the same in spite of the changes in power between the Ds and the Rs. I’ll really believe EQT has changed when they start approving a gross proceeds clause in their leases without us having to get into a knock down, drag out fight over it every single time.

If you’d like to know some of the basics about where the gas that’s being produced here in West Virginia is going, this is the article for you.

If you’re wondering why natural gas prices are really low, it’s pretty simple. We produce more gas than we use.

CNX is one of two companies developing the Marcellus Shale in Monongalia County, WV. They have been hyper-focused on just filling out some units that they already hold most of the leases for. Looks like they might be slowing things down. Last week they laid of 50 people, and this week they’ve laid off another 20. Word is that they’re going to lay off about 1/3 of their employees; they’re at about 15% right now.

On a more positive note, shale oil companies have posted an actual profit for the first time that we know about.

A new LNG plant is opening up in Louisiana. Marcellus Shale gas will flow to the plant, be turned into liquefied natural gas, and shipped abroad. Demand for gas will go up, and prices will (hopefully) start to go back up. One plant isn’t going to make a huge difference of course, but more are coming online in the future.

Speaking of gas prices, this year’s slide into oblivion has been pretty bad. Prices haven’t been above $2.75/MMBtu since about February in spite of lower than normal storage levels. The main reason is that gas production has been able to ramp up to keep up with and even exceed demand, making storage levels moot.

Libya is still struggling with civil war. “Someone” turned off a valve to the Sharara oil field which produces about 290,000 barrels per day, dropping Libya’s production below 1,000,000 barrels per day.

The Texas Eastern Transmission pipeline exploded in Kentucky, killing one and injuring five people. It’s a 30-inch pipe, and one of the major pipeline running from here to Texas. It’s disrupted natural gas supplies and prices have jumped a bit as a result.

Antero is planning to keep costs flat next year, but will drill longer laterals and increase land expenditures just a bit.

The Atlantic Coast Pipeline is looking down the barrel at yet another legal hurdle.

One thing that the FERC looks at when deciding whether to approve a major pipeline project is the need for the project. An independent analysis has called into question the need for the MVP. Whether this analysis was truly independent is, of course, in question. But the original analysis for need was done by the MVP so that was hardly an independent analysis itself.

On the other hand, Roanoke Gas says that the MVP is critical to them not running out of gas.

Since we’re talking about pipelines, West Virginia’s Attorney General has filed a brief with the U. S. Supreme Court opposing the Fourth Circuit Court’s decision to halt work on the Atlantic Coast Pipeline.

There’s a bill in Congress that will improve national pipeline safety. This is a good thing.

We have too much gas. That’s the reason natural gas prices are so low. Lots of gas being produced from the Marcellus Shale, and lots of natural gas being produced with the oil from the Permian Basin are the main culprits. For the next couple of years there will be major natural gas project completions, such as LNG plants and cracker plants, which will drive some demand. But between 2021 and 2023 there are no new major projects slated for completion. That could make 2021 to 2023 a period of time when natural gas prices get really low and put a lot of drillers out of work.

It’s very disappointing to West Virginia that the proposed cracker plant will definitely not be built, at least by Braskem. The land is being marketed, purportedly with a focus on other companies that might be interested in building a cracker plant.

U. S. oil production growth is declining slightly and, according to a Forbes article, it will continue to decline. It doesn’t really give a reason why, though, so who knows.

Rig counts overall are down, but in West Virginia they’re up year over year.

On Saturday, January 26, a well drilled to the Utica formation, about 14,000 feet deep, communicated with several shallow wells, the deepest of which was drilled to about 3,000 feet. This is bad.

The well, drilled by CNX, and called the Shaw 1G, was being fracked. Pressure dropped suddenly and the workers stopped the fracking process. They discovered something blocking the wellbore. There doesn’t appear to be any information about where exactly the blockage is. That could be important because the blockage could indicate a failure in the casing. If there’s a failure in the vertical portion of the casing, that would explain why this well is communicating with much shallower wells. The casing failed and fracking fluid pushed out into the formation or formations that the shallow wells are producing from.

If, instead, there’s a failure in the horizontal portion of the casing, that means that fracking fluid propagated up through 11,000 feet of rock. The Marcellus Shale lies at around 5,000 to 7,000 feet deep in most areas of West Virginia That would mean that the fractures created through the fracking process in a Marcellus Shale well could potentially reach the surface and could certainly find their way into water wells.

The likelihood that the fractures pushed up through 11,000 feet of rock is low. Fracking has been going on for long enough now that it’s hard to believe that under normal circumstances this kind of thing would happen. There just aren’t any reports of it happening. There have been reports of water wells being ruined and of shallow wells being stimulated by fracking, however. Maybe this happens more often than we think, we just don’t realize what’s going on.

Update: The Pittsburgh Post-Gazette is reporting that there are now nine wells impacted by the problem. Interestingly, none of them are in line with the horizontal path of the well. It runs southeast, and the nine wells are to the north, west, and east. Additionally, the other Marcellus Shale wells in the area are not affected. This almost certainly means that the casing in the vertical portion of the well failed and allowed pressure to flow into a formation that all nine of the affected wells are producing from.