It has been a while since we’ve posted on this website. A lot has happened, of course. You know about coronavirus and probably are aware that it has been bad for the natural gas industry. The effects seem to be tapering off just a little bit at this point.

What you don’t know is that we’ve been working to start an estate planning law practice. Oil and gas has just been so slow lately that we’re having to do something else to make ends meet. If you’re in West Virginia and would like to take a look at a will or a power of attorney, or if you are the guardian/parent of young kids, pop on over to wvestateplan.com and then give us a call. We’re awfully excited to be providing this service for our people!

In the meantime, oil and gas is still there.

Gas prices are $2.32/MMBtu (nice!) and rig counts are at 244 and still creeping down.

Now, for the really high points of the last few months.

The demand for natural gas in the U.S. went up last year, but only by about 3%. Production went up by 10%, hence lower prices.

COVID-19 has affected everything, including natural gas prices. It’s not a direct affect, though. The demand for energy, overall, has gone down. That drives down the price of oil. That drives down the production of oil. That drives down the supply of natural gas that is produced from oil wells. That reduces the supply of natural gas, which actually increases the price of natural gas. Of course, overall demand is down so the price of natural gas has gone down. It hasn’t gone down as much as oil has gone down, though, because of the inverse relationship between oil and natural gas. The result has been that natural gas prices hit a low of $1.52/MMBtu, but did not stay there.

There has been a plan to build a gas-fired power plant in West Virginia’s northern panhandle, in Brooke County, for years. Back in June, the Brooke County Commission passed a resolution in support of the plan. Apparently, that was a necessary step in the process.

The Atlantic Coast Pipeline won its appeal to the U.S. Supreme Court, which meant that the ACP could finally be built. Then a couple weeks later, Dominion cancelled the project entirely. Then, they sold all of their pipelines to Berkshire Hathaway, a/k/a Warren Buffett. Talk about mixed messages.

Antero Resoures sold some of its royalty rights to another company, a financial move which could mean a lot, or could just be business as usual. Then they did it again.

The Times West Virginian ran a pretty comprehensive article about how the natural gas industry in West Virginia has responded to the coronavirus.

One of the financial backers for the PTT Global Chemical cracker plant pulled out. That’s a hard blow, but not insurmountable. Clearly, as PTT turned around and signed a deal with Mountaineer NGL Storage to use their gas storage.

When banks aren’t loaning money to oil and gas producers, you know the industry is having hard times. Banks are currently selling off their previous loans to producers.

In a good sign that economic activity is picking back up after COVID-19, gas delivery to LNG exports and domestic consumption drove the price of natural gas futures up $.30 in one day.

And that’s that. We’ll probably post one of these once a month for the near future as we ramp up our estate planning offerings. Thanks to everyone who mentioned that they missed seeing these, it’s always gratifying to know that your work makes a difference to someone.

The price of natural gas is $1.75/MMBtu (as low as $1.64 at one point), and rig counts are 790. Things haven’t changed much in the last two weeks. Even storage levels are still just above the five year average, as they have been for months. We seem to have hit bottom.

Oil prices are stabilizing. Investors seem to think that the effect of coronavirus on oil demand has now been built in to the price of oil and it doesn’t need to change any more. Of course, if coronavirus starts to affect a lot more people, that could change.

Antero is working to cut its costs and increase production — same old, same old. They mention a 10% reduction in General and Administrative Costs, which is from a layoff in 2019 and natural attrition of employees quitting for various reasons. Doesn’t look to us like another layoff coming. This year is probably going to end with no growth from any of the drilling companies, few leases taken relative to the past, and fewer acres drilled. Our clients will be getting less money from royalties and from lease bonuses. If that’s what you’re relying on to get you through the year, you’d better find another source of income.

This article makes the argument that natural gas prices are going to remain down for the foreseeable future.

Interestingly, the West Virginia Senate passed a bill that will encourage the development of solar power in the state. The bill moves on to the House next.

Production is decreasing. This is the first time that has happened in…..well, a long time. It’s not anything to get too excited about. Production will increase the second prices stay up a bit, so prices will never skyrocket. Good for consumers, bad for royalty owners.

The West Virginia legislature is pushing a bill that would create tax credits for companies that store or transfer natural gas. It’s aimed at cracker plants and large storage facilities. It would be financially beneficial to have those plants here rather than the Gulf Coast.

Chevron sold off its assets in the Marcellus shale area, and now it’s firing its employees.

Producers have been bringing DUCs online as that’s a cheaper way of getting some gas to market than drilling a new well. The supply of DUCs is going down, though. At some point they’ll have gone through most or all of the DUCs. What happens then?

A 24-inch gas pipeline ruptured in Mississippi, injuring 46 and forcing 300 to evacuate.

Gas prices are at $1.84/MMBtu, and rig counts are the same as they were last week.

EQT is going to sell an overriding royalty, hoping to raise $1 billion.

At least one person thinks that fracking has led to fewer recessions.

Gas prices are not expected to get above $4/MMBtu until 2050. 2050! I’m not surprised. Unless there’s some kind of long, big, sudden emergency, the supply of gas is going to outpace demand.

John Hess, CEO of major oil corporation Hess Corporation, says that fracking in America is going to slow down in the next few years. Basically, he thinks we’re just about tapped out of new shale to drill.

Coronavirus is a black swan event, and will cut back on oil demand. Exactly how much is really unknown at this time as the virus’ spread and consequent affect on everything is still unknown.

EQT is in trouble, but not so much that they couldn’t declare a dividend for their stocks. It’s just 3 cents, but hey, it’s something. Guess they shouldn’t be cutting back on how much they pay people for their leases.

An article at Seeking Alpha dives deep into how capital expenditures in oil and gas are dying off and concludes that natural gas prices are going to go up again soon. The one thing he doesn’t talk about is how much more efficient drillers have become in the last few years. Gas prices are going to stay down for a while.

West Virginia’s legislature is trying to criminalize trespassing on critical infrastructure facilities (pipelines). Seriously? Why should pipelines get special consideration? We already have trespass laws on the books.

Gas prices today are $2.13/MMBtu. Still down, but down farther than I expect them to stay for long. Rig counts went back up in mid-December, but back down at the end of the month. The long-term trend is down. Gas production is trending down, too. Read on for more details about the oil and gas industry. Much longer and gas prices have to go up because supply will go down.

If you’d like to take a pretty detailed look at current natural gas supply and demand, this article from RBN Energy is the one to read.

In an article about how West Virginia’s coffers have suffered from the slowdown in gas production and the lowering of gas prices, there’s some analysis about gas production.

Chesapeake is looking at hard times coming up. If I were a betting man, I’d put some money into CHK stock, though. I’ve never seen them lose in the long run. Note: I don’t invest in oil and gas companies, and I’m not an investment adviser; do your own homework (but take a look at CHK).

Mountain Valley Pipeline has cancelled a contract with one of its construction subcontractors. Interesting. It may not mean anything, or it may mean a lot. There’s just not enough information to be sure.

Back in September the U.S. exported more oil than it imported. For the first time in 46 years.

Natural gas did more to reduce greenhouse gases last year than renewables did.

Someone did an analysis of the Atlantic Coast Pipeline’s current situation.

Production growth in the oil sector will fall next year, according to prognosticators. The same will be true for natural gas. It can’t continue on this path for long. I give it about six more months like this before the price of gas and oil starts to climb. That’s a very seat of the pants guess, of course.

Explore the changing relationship between oil prices and natural gas prices.

West Virginia’s Attorney General is pushing for the Supreme Court to overturn the ruling that stopped construction on the Atlantic Coast Pipeline.

Antero Resources has put up some of its assets for sale. They plan to get about $1,000,000,000.00 for it. Yep, $1 billion. Just a little sale. No big deal. Nobody’s wondering what’s going on.

Chevron is also selling assets. All of them. It seems like a good time to buy assets in the Marcellus/Utica play. It’s going to take somebody who really knows what they’re doing, though. Times are tough in the natural gas patch.

Southwestern is cutting back on production growth next year. It’s still going to grow, but less than it did last year. This is what is going to happen for most producers, and eventually there won’t be enough gas flowing and the price will go up. That situation will not last long, though. It’s really easy to produce new gas from new wells, almost on demand.

The Mountain Valley Pipeline has settled a lawsuit for $2.15 million dollars.

Elba Island shipped its first Natural Gas Liquids cargo.

Marcus Hook isn’t able to take as much of the NGLs produced from the Marcellus/Utica play as producers would like. Seems they’re looking at expansion, though.

A well in Marshall County exploded. There were no injuries and Tug Hill was able to shut down the well remotely, which put out the fire. As far as gas production disasters go, this was a good one.

Production is beginning to lag a bit. The Appalachian region is expected to reduce production by 74 MMBtus per day in January, according to this EIA report. Everything else seems to be trending down as well, except in the Permian Basin. We’re getting close to the bottom. It’s hard to say how close, though.

Researchers at the University of Kentucky are studying the Rogersville Shale.

Arsenal has completed its second bankruptcy of 2019.

People are still sitting in trees on the Mountain Valley Pipeline construction right of way.

A compressor station in Ohio County caught fire the day before Christmas. Nobody was injured and the fire was put out in about 30 minutes. Again, a best case scenario for an oil and gas disaster.

Today the price of gas is about $2.33/MMBtu. That’s down a good bit from two weeks ago. Odd that it should go down so much as gas storage is right at the five year average, but that’s the way it is.

RBNEnergy analyzes the demand for natural gas and how that’s affecting prices.

And the rig count continues to fall.

Here’s an argument that the trade war between the U. S. and China is the largest factor in the price of oil.

Preliminary reports say that the North Carolina governor, Roy Cooper, improperly influenced the permitting process for the Atlantic Coast Pipeline. Stay tuned, as it seems there’s more info coming.

The last “old” EQT leadership team member has resigned, saying he’ll be taking a spot at an undisclosed company.

One fellow over at Seeking Alpha thinks that spring of 2020 will see oil prices in the $35-40/bbl price range. It’s not a long read, and I’m not convinced that the amount of oil he says will be coming online in the next couple years will make a difference in the next few months, but see what you think.

The Keytsone XL pipeline has sprung a leak, affecting about 4.8 acres. Sure hope the ACP and MVP are a little more reliable than this. Oil leaks don’t typically explode. High pressure gas does.

Harold Hamm of Continental Resources explains a little bit of why we have an oversupply and a few other things he thinks are important.

People still want a cracker plant in West Virginia.

The EIA is predicting lower natural gas prices for most regions of the United States next year.

The price of gas is staying down, but the world is demanding more and more of it.

Everything is going electric, which means that the demand for natural gas is going up. While it would be great (I really mean that) for wind, solar, and tide to provide that electricity, the tech is just not mature enough to do so yet.

So, we’re publishing a late for this period. We’ve had some personal things to take care of that limited the time we could spend on this. Hope you’ll forgive.

Gas prices were at $2.29/MMBtu on October 1.

China’s gas demand is growing leaps and bounds. Analysts doubt it will be able to produce enough to keep up with growth. That gas has to come from somewhere.

India and China are trying to put together an agreement to work together when buying oil. India is also trying to get South Korea and Japan involved.

FERC has approved Elba Island’s first LNG train. There are nine more to come in the next year or so.

Holy Moley! The United Stage Geological Survey (USGS) has released a new estimate for recoverable natural gas from the Utica and Marcellus shale formations. Just for perspective, the estimate for about 15 years ago was about 2 trillion cubic feet of gas. Then it went up to 84 trillion, then 97 trillion. Now ….. drum roll ….. 214 trillion! That’s a lot of gas. I mean, the USGS is a conservative organization and is probably making calculations based off current natural gas prices, so this shows that producers are figuring out how to get more gas out of the rock. We’re not running out of natural gas any time soon.

Here’s an article that briefly goes into how U.S. LNG is competing with foreign LNG.

The drone attack on Saudi oil refining did not have a strong impact on oil prices, but the long-term implications towards stability are surprising.

There’s some talk of extending I-68 to run west of Morgantown. That’s some rugged country out there. I’d be curious to see where the route would go.

OPEC would like to have all of the oil producing countries in the world join with it.

A nice, concise article from RBN Energy describes how the fundamentals of natural gas are affecting the price of natural gas.

Every once in a while something bad happens in the oil patch. Honestly, we probably don’t hear about most of them. This one made headlines. There’s a gas well up in PA that caught fire. Local firefighters were able to put it out in about four hours.

Virginia has forced the Mountain Valley Pipeline to pay a $2.15 million dollar fine and submit to additional oversight during construction.

In related news, some permits the MVP needs have been pulled.

Research has turned up a new method for determining how much gas is in a formation and possibly which formations may produce gas. It’s cheaper and better, so companies will likely adopt it pretty quickly.

Gas prices ended at about $2.32/MMBtu on October 15, 2019. This post is published on October 20, so I haven’t scraped the exact data on the date.

Today, gas prices are at $2.68/MMBtu, which we absolutely would not have predicted two weeks ago. Oil prices jumped over the weekend when a military strike on Saudi oil production took a bunch of it offline, but prices have dropped back below $60/bbl already.

West Virginia is creating a task force to bring downstream oil and gas industries to West Virginia. Downstream means after the gas has come out of the ground. We have all the upstream jobs we need here, and they’re pretty hard to keep beyond a certain point because when oil and gas drilling slows down the jobs disappear. But downstream jobs would be more consistent; cracker plants, energy plants, and others, just can’t shut down and restart when the economy slows down. This should be a good thing for West Virginia. We’ll see how it goes. It wouldn’t be the first good news we’ve seen for WV that just kind of….fizzled.

Whew! Talk about contrarian thinking. Pretty much everybody thinks that the price of gas is going to be down (think below $2.50/MMBtu) for a long time still. But an article over at OilPrice.com by Dwayne Purvis makes the argument that while we can produce a heck of a lot of gas awfully quickly, demand is outgrowing production, production is slowing down, and storage hasn’t grown enough to keep up with demand. That’s a brave argument to make, but it’s worth taking a close look at. We wouldn’t mind too much if he was right, because the increase in activity in West Virginia would be good for our business.

Cunningham Energy occasionally makes the news with a new move to develop oil from formations that previously made West Virginia mineral owners very rich. Cunningham uses horizontal fracking in formations like the Big Injun, the Weir, and the Berea to recover oil that is not otherwise economic to develop. It’s a pretty good plan and we’re frankly a bit surprised that other companies haven’t glommed on to the idea yet. Cunningham has moved into Gilmer and Roane Counties, having acquired 12,000 acres worth of already producing property under the Rock Creek oilfield and the Tanner oilfield. Keep your eyes on these guys.

Southwestern Energy is just about the only company working in the northern panhandle of West Virginia right now, mainly because SWN bought up all of Chesapeake’s holdings up there, and CHK had bought leases on pretty much everything up there at one point. The northern panhandle is a little different as most of it is more densely populated than the rest of the state. Residents of the area are complaining about noise and other nuisances of the drilling and fracking process. SWN and the county are gathering info and making decisions. Gotta love how quickly government works. Unfortunately, the county probably doesn’t have much it can do to force SWN to do anything. Noise ordinances aren’t usually written with this kind of thing in mind, and drilling permits are done through the state. Maybe there’s a construction permit that can be amended or modified, but getting oil and gas companies to play nice and be good neighbors after you’ve signed an oil and gas lease is usually a losing battle.

China is the largest growth market for natural gas right now. Chinese growth is expected to slow some, and the US-China trade war has decreased the amount of gas the US exports there, but that will end sometime and the numbers will go up. Interesting fact from the article, China’s gas import demand is second only to…Japan. Think on that for a second.

Oil and gas producers are constantly working to be more efficient. They are producing more gas with fewer rigs. Trying to gauge the health of the industry by the number of operating rigs is not as accurate as it used to be.

Toby Rice, the new CEO of EQT, is working to get on my good side. Well, he doesn’t know me from Adam, but he’s making moves that make me and West Virginia mineral and royalty owners happy. The latest move is to dismiss a lawsuit that challenged one of the West Virginia legislature’s new laws. That law made it so that producers could not deduct post-production costs from certain old leases. It was good law for mineral and royalty owners. Thanks, Toby, for removing this legal challenge.

Some producers are using flared gas to run frack pumps. It’s called electric fracking or e-fracking because the natural gas turns an electric generator which turns the water pumps. Excellent use of an otherwise waste product.

Saudi Arabia has a new Energy Minister, and oil prices bumped up because of it.

One fellow thinks that the price of oil is going to go up in the near future because US production is set to go down a bit. It’s an interesting argument, extrapolating from data that shows that US production has leveled off in the last few months.

Mexico buys a hedge on its oil production each year to protect its budget from serious fluctuations in oil prices. This year it sounds like they’re hedging at $49/bbl, down from $55/bbl last year.

EQT is going to layoff 200 of its 850 workers in the next week. Ouch.

And on Friday we have news that EQT has, in deed, laid off 196 workers.

Probably everybody heard, but here it is anyways. Houthi rebels blew up part of Saudi Arabia’s oil production. It took about 5% of the world’s oil supply offline. The Saudis said they would have production almost entirely restored by Monday, and they pretty much did. Oil prices today (Tuesdays) have dropped almost as precipitously as they jumped.

Natural gas production has broken records again in August in spite of low natural gas prices. The more interesting take on this, though, is that we still haven’t gotten back to our five year average in gas storage. That means demand is growing as well. I think we’ll see gas storage levels drop like crazy again this winter, if the winter is at all bad.

Speaking of demand, Longview Power operates a 710 MW coal-fired power plant just north of Morgantown, WV on the Monongahela River. They have announced that they are going to build a 1,200 MW gas-fired power plant at the same location.

An interesting analysis of the current state of oil and gas by Financial Times.  Essentially, lots of people thought that oil prices would stay lower for longer, and the recent jump up over $70/bbl has encouraged a lot of people to think that lower for longer is over.  The article argues that the price of oil will drop again when OPEC starts to open up the spigots again, and explains why they will again in the near future.  It’s that explanation that is worth the read.

Also in the news today, Saudi Arabia has increased oil output by 162,000 barrels per day in May.  That puts them within 28,000 bbl/day of their agreed cap.  With oil prices over $70/bbl, and the oversupply just about gone, it makes sense for them to start producing a little more.

There’s a rumor out there that the Parkersburg cracker plant is back on.  The article was in the Pittsburgh Business Times which requires a subscription.

With new pipelines coming online in the Marcellus/Utica region, one would expect that total production from the region would increase.  It hasn’t.  The Mountain Valley Pipeline and the Atlantic Coast Pipeline might not end up running at anywhere close to full capacity when they are completed because producers are apparently not drilling enough wells to fill what we already have.

I ran across this article from about 2014 that gave a quick overview of most of the big players in the West Virginia Marcellus/Utica area at the time. It’s fascinating to read what people were saying just four years ago and think about what has happened since.

Mountain Valley Pipeline has been issued another violation notice in regards to environmental standards.

This article from Forbes suggests that oil prices will stay up for the next six months.  The arguments is that demand has grown, Saudi Arabia won’t increase production, Iran won’t be allowed to increase production by the U.S., the rest of OPEC can’t increase production and may even decrease production, and the U.S. can’t increase production quite fast enough.  It’s an interesting thought for sure.

This article, also from Forbes, goes into a little more detail as to why U.S. producers can’t increase production fast enough.

Kallanish Energy summarized the Energy Information Administration’s “Short-Term Energy Outlook”.  Energy production from gas will go up about 2% in the next two years, from coal will go down about 2%, from renewables will go up about 1%, and from nuclear will go down 1%.  They’re not big changes, but they fit the overall trend of the last few years.

Another article from Kallanish Energy discusses where the money for a natural gas liquids storage hub in the Marcellus/Utica region will come from, and what it takes to get that money.

A lot has happened over the last few months, with oil prices rising and gas prices falling.  Some highlights follow.

West Virginia has entered into a Memorandum of Understanding with China Energy, the first step in creating a government/business relationship.  The goal of the relationship will be to develop natural gas downstream facilities in West Virginia.  This is great news for West Virginia.

Oil prices climbed above $60/bbl and pretty much stayed there, thanks to OPEC and Russia extending their policy of keeping production limited.

Cotenancy has passed the West Virginia legislature.  The highlights of the legislation are that if 75% of the owners of a given tract sign a lease, the other 25% can be forced into a lease at the best terms that the other owners signed up at.  There are more details and we’ll get to that in another post another day.

Renewables are not pushing oil, gas, and coal out of the marketplace.  The data and the article are from last year, but the trends are long-term so the article is still worth reading.

Tree-sitters have effectively pushed back the timeline for the Mountain Valley Pipeline to be built.  It will be interesting to see how long this tree-sitting continues.

It’s August 18, 2017.  Gas prices are at about $2.90/MMBtu, and oil prices are at about $47/bbl.

Earlier this week a Libyan oil terminal was closed by local protesters.  If the protest is lengthy, it could affect oil prices.

Hurricane Harvey has wreaked havoc in south Texas, including Houston, one of the oil and gas capitols of the world.  Destruction has shut down refineries and raw production, with the net effect on the oil and gas industry still undetermined.  While one would think that the price of oil would rise considerably, it has not.  Fracking should be able to provide the raw materials, and there has been a glut of gasoline for most of this year.  The price of gasoline has gone up some, and will probably continue to do so.  But the price of oil seems like it will remain steady.  It could even go down some if it takes a long time to get the refineries back online.

Libya never ceases to produce news about oil and gas.  This time the Libyan navy seized a tanker because they suspect the tanker was smuggling oil.

Nuclear energy is on the decline, with yet another nuclear power plant being put to rest.

I just happened to speak with a lawyer from Dallas today.  He said that some of the gas stations in Dallas have run out of gas.  That should only be a temporary problem, as the U.S. has had a glut of gasoline for most of the year.  We got a little low just before August, but that encouraged European suppliers to send plenty our way.  Of course, the trick is getting it from the Northeast to Houston.

It’s likely that we are at the beginning of a new oil “supercycle”.  This article in Arab News discusses the last two, the possible new one, and makes some suggestions for how OPEC should apprach the new supercycle reality.

Here’s your daily dose of contrarian thinking.  Everybody thinks that electric vehicles are going to be oil and gas killers in the near future, but someone did a back-of-the-napkin calculation and the numbers show that ten years from now EVs are going to only need about 0.76 Bcf/d of natural gas to produce the electricity necessary to power them.  To put that number into perspective, two new pipelines proposed for this area, the Mountain Valley Pipeline and the Atlantic Coast Pipeline, will each move 1.5 Bcf/d, and the under-construction Rover Pipeline will move 3.25 Bcf/d.  The U.S. currently burns a little over 72 Bcf/d, and is expected to burn a little over 75 Bcf/d in 2018.  So under 1 Bcf/d is not that much in the grand scheme of things.  Of course, demand for EVs could really take off, or it could not.  Guess we’ll see.

Probably the best summary of how the oil and gas industry has been affected by Hurricane Harvey can be found in this article at RBN Energy.

Libya’s crude production has dropped 30% because militants have blocked pipelines.

September 1, 2017: Oil prices are at about $47/bbl and gas prices are at just over $3/MMBtu.  Also, the price of gasoline here in Buckhannon has gone from $2.29 to $2.55/gallon since Hurricane Harvey hit, an increase of 26 cents.