Category Archives: Economic Improvement

Low Energy Prices are Good for Most Everyone

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christmas-bonus

The steep drop in energy prices is a really good thing for most everybody, but a bad thing for mineral owners and those few poor lawyers who make their living helping mineral owners.  We won’t cry over it, we’ll just work a little harder and a little smarter, just like all the drillers are.

Down in New Jersey, residential and small commercial customers are getting a rate reduction in their natural gas bill, and a credit back on their statements.  How cool is that?!  When’s the last time anybody was happy to see their gas bill?

The really awesome thing is, it’s mostly due to unprecedented output of natural gas in the Marcellus and Utica shale areas.  We’re proud to be a small part of that.  The other factor has been the increased production from Saudi Arabia as it tries to keep its share of the oil market and drive American oil developers into bankruptcy.  Everyone can see the direct effect on prices at the gas pump.

The great news is that low energy prices are going to heat our economy back up.  We think that one of the reasons the fed raised interest rates for the first time in years is because they see the economy taking off, in part to low energy prices.  Low energy prices make manufacturing and petrochemical industries in the United States more competitive.  It also makes it easier for transportation companies to make ends meet.  It also makes it easier to take that Great American Road Trip, and more interesting to buy big gas guzzlers.  It also puts a few more dollars into the wallets of every consumer.  All of the above will translate into jobs and greater energy demands.  It’s going to take a while, but low energy prices are going to help improve our economy, which will drive demand for energy back up, which will drive the price of energy back up.

The disappointing part of low energy prices is that it will drive down the demand for renewable energy sources.  I’m no tree hugging environmentalist, but I still think renewables are cool and would like to see that industry take off.

In the meantime, we hope that people will take a look at gas prices and decide to go visit both sets of grandmas this Christmas, and turn the heat up a bit.

West Virginia has an Energy Export Problem

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Power Plant

This article from The Intelligencer out of Wheeling, WV says that West Virginia has a lot of gas in the ground.  While that’s not necessarily news, the estimated amount going up is.

It’s exciting that there’s that much gas in the ground, but West Virginia really needs to do more with the gas.  Right now we export most of it.  We would like to see West Virginia put more of it to use here.  The cracker plant in Parkersburg, WV and the gas-fired energy plants in Harrison County and the northern panhandle are the direction we need to go.  Exporting raw materials is OK, but refining and improving it so that we can keep more of the value in state will be better.  We exported coal for decades, and now we have a lot of coal mines and a lot of coal miners who are out of work.  If we can do more with the raw product we can keep more of the money here and develop more infrastructure so we don’t feel the hurt so badly when the economy tanks and changes.

How to Use Natural Gas: Methanol

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methanol-plant

One recent study, reported on by Marcellus Drilling News, suggests that building methanol plants would be an excellent use for the prolific natural gas production taking place in the Appalachian region.  The plants are comparatively quick to build, don’t need infrastructure such as pipelines, and use lots of natural gas to produce methanol, which is widely used.

The low price of natural gas is a concern.  Per BTU, it’s quite a lot cheaper than oil.  Finding ways to put natural gas to use should be a high priority for anyone interested in this region.  Building methanol plants sounds like one excellent solution.

ASCENT Project to be Re-Evaluated, Again

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Cracker Plant

Odebrecht has been talking with major players in the state about the cracker plant that’s been planned for Parkersburg, West Virginia.  The current news is that the plant will be changed.  Our guess is that the plant will be made smaller, perhaps with an eye to expansion when oil prices rise again someday.  Here’s to hoping that they do get around to building it.  That plant would be great for our economy.

West Virginia Oil and Gas Severance Tax Distribution

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Tax MoneyThe Intelligencer out of Wheeling, WV published an article that tells us how much severance tax the oil and gas companies paid to the State of West Virginia in 2014 and how that tax is allocated to the different counties.  There’s some pretty good detail in the article.  It also points out that Wetzel County has gone from being listed as a depressed county to, well, no longer being listed as such.  We suspect that no longer being a “depressed county” really only means that the county government is able to provide all of or most of the services that a county government is expected to provide.  It probably doesn’t mean that every citizen of the county is now rolling in the dough, so to speak.  Still, going from depressed to not depressed is always good.

West Virginia Oil and Gas Severance Taxes

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Dollar SignThere’s good news and bad news on this front.  The good news is that severance taxes doubled from 2013 to 2014.  The bad news is that not much of it is going back to the local governments.  In Pennsylvania, 60% of the severance tax goes to the county of origin, and 40% goes to the State government.  In West Virginia, 90% goes to the State, and 10% goes back to the counties, with 3/4 allocated to the county of origin, and 1/4 allocated to all other counties.

I haven’t spent the time figuring out what the State uses the money for, but I doubt much of it is earmarked for repairing roads, plugging old wells, mitigating nuisances like dust and noise, or cleaning up after those oil and gas companies that don’t clean up after themselves.  It seems to me a larger portion of that money should be going back to the county of origin.

Drilling Rig Count Stable, or Pretty Close To It

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A Reuters article states that there will probably not be a rebound in demand for drilling rigs in the near future.  This is due to a large number of wells that have been drilled but not fracked or completed, and a large number of wells that could be refracked.  Natural Gas Intel has an article saying pretty much the same thing, but looking at it from a different direction.

Looks like the roughnecks who still have their jobs have a pretty decent chance of finishing out the year with a job.