Category Archives: Natural Gas Prices

Ford is Again Producing a CNG F-150

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Natural gas powered cars aren’t exactly popular right now, what with the lack of CNG fueling stations and all.  Even in the parts of the United States where there is a higher than average density of CNG fueling stations (what’s up with Oklahoma?!), you’re going to have to think ahead a bit more about when you fill up.  Here’s the CNG Now! website where you can find public CNG stations.  You’ll see that there just aren’t that many of them.  Part of the reason for that is that very little CNG is used to fuel vehicles.  The Alternative Fuels Data Center states that 0.1 percent of all natural gas is used to run vehicles.

However, they are becoming more common.

With that in mind, Ford has stepped up it’s game and is again offering a variant of the F-150 that will run on CNG.  It also runs on some other things, but we’re not terribly concerned with that here.  It would be great if more vehicles ran on natural gas.  Natural gas burns cleaner than gasoline and we have loads of the stuff in the ground.  If you’re in a position to buy a CNG vehicle, we encourage you to do so.

Chesapeake “Loses” 1.1 Billion Barrels of Oil

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magic-money-e1362106767971The drop in oil and natural gas prices doesn’t just affect the price of gas at the pump or your monthly utility bill.  It also hits energy companies awfully hard, and not in ways you might expect.  In this case, over a billion barrels of oil are going to just disappear off of Chesapeake’s books.  That’s billion with a B.  That’s disappear as in no longer exist.

How does that happen?

Oil and gas companies are allowed to give a value to their wells even before drilling them and producing gas from them.  They do that to get loans from banks. There’s a formula provided by the SEC (not the football conference) that they use to determine that value.  The formula includes the price of oil or the price of gas, depending on which the company is expecting to produce.  When the price goes down, the value of the undrilled wells goes down.  It has more to do with what’s economically producible than anything, so a lot of properties that were marginally economic are no longer considered economic, and so have no value.  Poof, $1.1 billion dollars in value just disappears.

Oil and gas is just crazy.

Baby It’s Cold Outside…..No It’s Not

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huh_450Just a couple of weeks ago, Burleson LLP, a Houston law firm with Pittsburgh offices specializing in oil and gas shut it’s doors.  It was a sign that things were getting bad in the oil and gas industry.

This week, Frost Brown Todd, also an energy company, announced that it is opening an office in Pittsburgh and hiring 10 of the 30 lawyer that lost their jobs when Burleson shut down.

So, is it bad, or is it good?

We’ve seen an increase in the number of people calling the office about oil and gas leases in the last few months, with a drop off in the last week or two.  The amount that oil and gas companies are willing to offer for lease bonuses and royalties has just started to drop a little.  The price of oil and the price of natural gas continue to decline.  Sometime next year some pipeline projects are going to be completed, with more to come in 2017 and 2018.  There are natural gas energy plants being built in West Virginia, Ohio, and Pennsylvania.  There are cracker plants being built in Ohio and Pennsylvania, and the one planned for Wood County, WV may not be on life support any more.  This winter, while expected to be snowy, is not expected to be cold.  Russia is getting in a fight with Turkey, but the rest of the Middle East is pretty much business as usual with the Saudis still producing as much oil as they want with no signs they will cut back.

So, it’s bad, and it’s good.

We’ve given up predicting where oil and gas prices are going, and where the oil and gas industry is going.  There’s always good news and there’s always bad news.  The more important question is, do you have a lease or a modification or a right of way agreement in hand that needs to be dealt with?  If so, give us a call.  We’re here to help.

The Future of Natural Gas Prices in West Virginia

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Power Plant

Here is an article in the Wheeling Intelligencer that explains why natural gas prices will go up in the next few years.  I’m sorry it’s behind a paywall, but I think they’ll give you a couple free articles before you have to pay.  If you want to keep up with oil and gas in West Virginia, the Intellgencer is the best publication for that at present.

There are also a bunch of pipelines going in, which we don’t have time to get into today.

Which brings us to an apology.  We apologize for not posting more articles lately.  There’s quite a bit going on at the office right now, and we’ll have a post up later this week announcing one of those things.

The Appalachian Gas Oversupply: Over Soon?

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The biggest problem for gas developers, and consequently royalty owners, here in West Virginia has been the lack of pipeline infrastructure to transport the gas to market.  The Marcellus shale development has been so fast that it was impossible for pipeline companies to keep up.  Either that or they just didn’t think ahead far enough.  Either way, midway through 2015 we need pipelines in a bad way.  Hope is on the horizon, however.

This article over at SeekingAlpha is practically a list of pipelines and completion dates.  Conspicuously absent are the Mountain Valley Pipeline and the Atlantic Coast Pipeline, but those won’t even start construction until next year.

The article points out that pipelines are about to start coming online, and that will drive the cost of transportation down.  As the cost of transportation goes down, the profit to producers is going to go up.

West Virginia mineral owners can expect to see an uptick in production, so their royalty checks should get bigger.  Those who aren’t leased can expect to see leasing start back up, too.

The next few years will see increased transportation capacity, so mineral ownership should only get better and better from here on out.

Utica in West Virginia: More Details

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WVMetroNews has an article by Sunshine Wiles which points out a few things about the Marcellus Shale.  It points out that the Utica is much deeper than the Marcellus, and that we in West Virginia have “some of the lowest energy costs in the country”.

One of the reasons that energy cost is so low is that West Virginia mineral owners tend to sell cheap.  Hold on to your minerals, don’t lease for a couple thousand bucks an acre and a royalty of 12.5% (which is 1/8), and write your legislator about forced pooling to make sure they vote against forced pooling.

Stonewall Gas Gathering Pipeline Project

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Gas Pipeline PipesThe Stonewall Gas Gathering Pipeline has been in the works for a while, and if you drive around certain parts of West Virginia you’ll see stacks of big green pipe sitting just off the highway.  For some time, trucks have been bringing pipes in.  Just today I saw trucks taking pipes away.  I’m assuming that means that they are starting to lay pipe in the ground.

This article from last week says that the pipeline should be completed by the end of this year.  It will take gas away from the Doddridge and Harrison county areas and put it into an interstate pipeline down in Braxton County.  Hopefully this will ease some of the congestion we’ve got around these parts, and hopefully the cost to transport gas out of here will ease up some.  If it does, some royalty owners will be looking at bigger checks.

New CNG Station Opens in Washinton County, PA

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CNG StationExcellent news!  A company called Energy from US opened a new compressed natural gas station in Bentleyville, PA.  It’s open to the public, so it’s not just for fleet vehicles and the like.

We’d like to see a lot more of this kind of infrastructure being built.  Natural gas is cheaper than gasoline, cleaner that gasoline, and comes out of the ground ’round these parts.  The more people use compressed natural gas to fuel their cars, the more the price of natural gas will go up, and the more royalties we’ll get paid.