Shale Gas

Pennsylvania gas output remains focused in northeastern, southwestern corners

9 Dec 2017   Shale Gas

Pennsylvania natural gas production continues to be concentrated in counties in the northeastern and southwestern corners of the state, according to a report by the state’s Independent Fiscal Office. Four counties — Susquehanna and Bradford, in the dry gas northeastern region, and Washington and Greene in the liquids-rich southwestern region — comprised two-thirds of statewide production in the first three quarters of 2017, the IFO report said. Susquehanna in the northeastern corner of the Commonwealth was the leading gas producer, with output of 966.1 Bcf through September, comprising almost one quarter of the total gas production in the state. Coming in at second place with production of 679.2 Bcf, about 17% of the state’s total, was Washington County. Bradford County, one county to the east of Susquehanna, came in as the No. 3 producer, with production through September of 583.3 representing almost 14% of the state’s production. Rounding out […]

Appalachian Basin Produces More Natural Gas Than Any OPEC Country

7 Dec 2017   Shale Gas

This week in one of their daily Today In Energy columns, the Energy Information Administration highlighted the tremendous growth of natural gas production in the Appalachian Basin:

Shale gas production in the Appalachia region has increased rapidly since 2012, driving an overall increase in U.S. natural gas production. According to EIA’s Drilling Productivity Report, natural gas production in the Appalachia region—namely the Marcellus and Utica shale plays—has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. Overall Appalachian natural gas production grew from 7.8 Bcf/d in 2012 to 22.1 Bcf/d in 2016 and was 23.8 Bcf/d in 2017, based on EIA data through October 2017.

This 200% increase in Appalachian natural gas production since 2012 has had significant implications in the U.S. market. It has driven down costs for consumers, is fueling a renaissance in the chemical manufacturing industry, and has helped push coal-fired power plants out of business.

Growing Gas Glut Threatens West Texas Oil Boom

21 Nov 2017   Shale Gas

Natural gas is gushing out of West Texas, a byproduct of frenzied drilling for oil . That is a problem for energy producers, who are running out of places to send it all. Pipelines running from the region’s Permian Basin to the Gulf Coast’s chemical plants, cities and export terminals are essentially full. Drillers in the Rockies and Canada already supply markets in the north and west. There is plenty of room on pipelines running south to Mexico, which has emerged as a major market for U.S. producers, but there is a catch: much of the gas distribution infrastructure and power plants there that would buy the fuel haven’t been built yet. The growing gas glut is already weighing on regional prices. Natural gas prices at the Waha trading hub in West Texas have fallen to much as 57 […]

If Mexico Goes MIA, Permian Gas Could Flame Out

25 Oct 2017   Mexico, Shale Gas

Three pipelines connecting the Permian Basin to Mexico came online with total capacity of 3 billion cubic feet per day or bcfd early 2017, but flows have been at a paltry 0.2 bcfd, says Bernstein analyst Jean Ann Salisbury . The firm expected 1.5 bcfd. She thinks that delays in Mexico build-outs “will most negatively impact Permian producers.” Salisbury wrote: We continue to assume that the Mexico demand will come in time to keep shut ins from happening, but do forecast Permian differentials rising above $1/mmbtu by mid 2018, set by the 60c-$1.1/mbtu max interruptible rate to the Midcontinent area, which we think itself could trade up to 40 cents below Henry Hub as the Marcellus pushes westward. This is 40c worse than the Waha forward strip, which we believe is pricing in the best case scenario on Mexico and new pipelines. Best case […]

2 Red Flags For The World’s Top Shale Play

21 Oct 2017   Shale Gas

A lot of activity the past few days in Pennsylvania: home of the Marcellus shale, arguably the world’s best-performing unconventional natural gas and liquids play right now. And it looks like things could get more complicated for drillers here going forward. Partly on the financial front. With a special committee of the Pennsylvania House passing a bill Wednesday to impose a new tax on natgas production in the state. Under the legislation, producers would be charged 2 cents tax on every mcf of gas produced — when prices are below $3/mcf. With that rate escalating to as much as 3.5 cents per mcf if the gas price exceeds $5.99/mcf. The bill comes after much debate about a new shale tax aimed at Marcellus production. And the proposed rates were significantly reduced during discussions amongst legislators drafting the new rules. Still the new bill would impose a notable jump in […]

Growing impact of shale gas on petrochemicals industry

20 Oct 2017   Shale Gas

The US exported close to 3 million barrels of ethane in H1 2017, a rise of 83% year-on-year. A majority of these exports were headed to Europe with volumes also headed to Canada, Brazil and India. Ethane from shale gas goes into making ethylene and then subsequently into the polymer polyethylene.  Besides extracting ethane and exporting it, the US has built up large ethylene and PE capacities. About 4 million mt of PE will be surplus in the US during 2017 and this figure will touch 6 million mt in 2018. Starting at the end of 2017, and early 2018, we expect a high volumes of American PE to begin getting imported into Europe.

The U.S. Shale Play To Watch In 2018

20 Oct 2017   Shale Gas

The original shale gas play, the one that kicked off the shale drilling bonanza a decade ago but then went into decline, is getting a new lease on life. The Haynesville Shale, which straddles the Texas-Louisiana border, has seen a resurgence in natural gas production, after years of neglect. The Haynesville Shale is one of the founding fathers of the modern shale drilling boom. A decade ago, fracking unleashed a wave of natural gas production as hundreds of rigs piled into northwestern Louisiana. But the surge in production pushed down prices, which had been high and relatively volatile for years. The crash in prices meant that shale drillers moved on to greener pastures, and most of them began looking for oil rather than gas because crude fetched $70 to $80 per barrel. By then, the Marcellus Shale was just beginning to ramp up, boasting rock-bottom costs of production. The […]

An Old Fracking Hot Spot Makes a Comeback

17 Oct 2017   Shale Gas

The giant natural-gas field, once one of fracking’s hottest spots, is making a comeback after being sidelined. Gas production from the Haynesville has risen more than 20% so far this year, to more than 7 billion cubic feet a day from less than 6 billion in January, according to the U.S. Energy Department. The number of rigs active in northern Louisiana parishes and the Texas portion of the field has more than tripled in the past year to 44, according to oil field services company Baker Hughes Inc. “The Haynesville is where it began ,” said Frank Patterson, Chesapeake Energy’s vice president of exploration and production. The company has been learning how to get more out of the ground by drilling and fracking longer wells, Mr. Patterson told investors earlier this month. […]

China’s recoverable shale gas reserves fell by 6 percent in 2016: ministry

23 Sep 2017   China, Shale Gas

China’s technologically recoverable shale gas reserves dropped by 6 percent in 2016, the country’s Ministry of Land and Resources said on Saturday, with no new finds of the unconventional resource recorded last year. Reserves stood at 122.41 billion cubic meters at the end of 2016, down from 130.18 Bcm a year earlier, according to a report released by the ministry. Shale gas was the only one of 22 major minerals listed to add zero newly discovered reserves in 2016, although potash was assigned a negative figure, indicating that some previous reserves were written off. The numbers suggest China’s efforts to replicate the North American shale gas revolution and reduce a hefty reliance on energy imports are running out of steam. Almost all of the country’s shale output comes from Sinopec’s Fuling project near Chonqing. Sinopec said in March it plans to boost Fuling’s annual production capacity […]

US Haynesville gas production hits 4-year high – Natural Gas

16 Sep 2017   Shale Gas

Natural gas producers in the US Southeast are beginning to yield dividends from a bid to reverse declining production in one of the region’s seemingly forgotten shale plays. Recent data from the Haynesville of Arkansas, Louisiana and Texas show production there at its highest since mid-2013. As output continues to rebound from a record low in August 2016, production from the Haynesville is already up by nearly 15%, Platts Analytics data shows.  That spectacular turnaround comes amid a rapid expansion in drilling activity which has rivaled that of even the Utica or the Marcellus. In just 12 months, rig count in the Haynesville has more than tripled.

Leaseholders’ renewed devotion to the play comes in spite of relatively weak internal rates of return or IRRs there, which have averaged just 11% over the last year. Those returns have paled in comparison to Appalachian plays where IRRs averaged roughly 14%, in both the Utica and the Marcellus, according to data from Platts Well Economics Analyzer.  But with export demand from the Gulf Coast and Texas expected to grow by nearly 7.5 Bcf/d through 2020, a bid to grow production in the Haynesville could be longer-term play by producers seeking access to neighboring markets that are soon likely to trade at a premium.

Agency votes to begin effort to ban fracking, horizontal drilling in US basin

14 Sep 2017   Shale Gas, USA

A joint federal-state commission on Wednesday voted to move ahead with a rulemaking that would prohibit horizontal drilling and hydraulic fracturing across a large swath of eastern Pennsylvania, as well as the states of New York, Delaware and New Jersey. In a meeting of the board of the Delaware Basin River Commission, commissioners voted to publish for public comment a set of revised draft regulations for drilling operations within the river basin, which includes portions of the Marcellus Shale. The vote was 3-1-1, with representatives of Delaware, New York and Pennsylvania voting yes, the Army Corps of Engineers, the federal government’s representative voting no, and the New Jersey representative abstaining, Kate Schmidt, a spokeswoman for the DRBC, said. Since the vote was a procedural resolution, no public hearing on it was required prior to commission consideration, Schmidt said. About 25 people spoke during the meeting’s open public comment session, […]

Cuomo’s Fracking Opposition Hurts New York

4 Sep 2017   Shale Gas

Governor Andrew Cuomo in New York, January 18. The economic fallout from Gov. Andrew Cuomo’s rejection of the Constitution pipeline should serve as a warning to other states that want to go down the same path as New York (“ Cuomo’s Natural Gas Blockade ,” Review & Outlook, Aug. 24). Radical “keep it in the ground” protesters have their sights on the Mountain Valley and Atlantic Coast pipelines currently under review along the East Coast that will connect millions of American workers, families and businesses to more affordable and cleaner energy. Halting these projects would have a ripple effect across the energy supply chain, denying good-paying jobs to men and women producing steel, equipment and supplies used in pipeline projects across the country. The energy supply chain is interconnected, which means that a steel mill worker’s job in Pennsylvania may depend on a pipeline being built in North Carolina […]

Cuomo’s Natural Gas Blockade

24 Aug 2017   Shale Gas, USA

Progressives once hailed natural gas as a “transition fuel” to renewables like solar and wind, but now they are waging a campaign to “keep it in the ground.” New York is ground zero. First, Mr. Cuomo banned hydraulic fracturing (i.e., fracking), and now he’s blocking natural gas pumped in other states from reaching Northeast markets.  The Empire State’s southern tier overlays the rich Marcellus and Utica Shale formations, among the most productive drilling regions in the country. Shale fracking has been an economic boon for Appalachia—and could have lifted upstate New York. Since 2010 natural gas production has surged 520% in West Virginia, 920% in Pennsylvania and 1880% in Ohio. (See chart nearby).  Mr. Cuomo’s predecessor David Paterson imposed a moratorium on fracking in 2010. After winning re-election in 2014, Mr. Cuomo started laying the ground for a White House bid and made the ban permanent. Between 2010 and 2015, New York’s natural gas production plunged by half—which has translated into fewer jobs as well as less royalties for landowners and revenue for local governments.  Last year the Governor compounded the economic damage by blocking the 120-mile Constitution pipeline transporting natural gas from Pennsylvania to upstate New York and New England. Although the Federal Energy Regulatory Commission (FERC) approved the pipeline in 2014, Mr. Cuomo’s Department of Environmental Conservation conducted a separate review and denied a water-quality permit putatively because the developers hadn’t provided sufficient information.  Constitution’s developers challenged the denial in federal court. While the Clean Water Act lets states perform their own environmental reviews, New York appears to have abused its discretion. Last week the Second Circuit Court of Appeals deferred to state regulators while leaving a door open for the pipeline companies to challenge the timeliness of the state review in the D.C. Circuit Court of Appeals.

Wrong-Way Gas Bet Fueled Goldman’s Second-Quarter Swoon

18 Aug 2017   Shale Gas

Construction of the 713-mile Rover pipeline ran into trouble this spring. Goldman Sachs Group Inc. GS -1.86% lost more than $100 million in a wrong-way bet on regional natural-gas prices this spring, a setback that played a large role in the New York bank’s subpar second-quarter trading performance. Goldman wagered that gas prices in the Marcellus Shale in Ohio and Pennsylvania would rise with the construction of new pipelines to carry gas out of the region, said people familiar with the matter. Instead, prices there fell sharply in May and June as a key pipeline ran into problems . Goldman said in July that the quarter ended June 30 was the worst ever for its commodities unit, which has been one of the firm’s most consistent profit centers and a training ground for many of its top executives, including Chief Executive Lloyd Blankfein. The setback extended a broader trading […]

America’s Shale Natural Gas Production Is Taking Off – Sort Of

16 Aug 2017   Shale Gas, USA

America’s shale gas production is about to surge 12 percent. Sort of. The Energy Department issued a report Monday estimating that the nation’s prolific shale formations will yield 59.4 billion cubic feet a day in September, a massive jump from the roughly 53 billion projected for August. The difference: The agency began including the more than 6 billion cubic feet a day of gas flowing out of the Anadarko basin of Oklahoma and Texas. The addition of the Anadarko is testament to the flood of gas flowing out of shale formations known better for their oil riches. Almost half of the country’s shale gas is now being produced in crude plays, pulled out of oil wells as a byproduct. These supplies, known as associated gas, threaten to quash any meaningful recovery in an already-glutted market. “This is again telling us why we are in a perpetual bear […]

Gas Everywhere but No Way to Ship It

21 Jul 2017   Shale Gas

Accidents happen, but these were expensive ones by any measure. Energy Transfer Partners had hoped to have the first phase of its massive Rover pipeline up and running by now, transporting natural gas from America’s most prolific natural gas basins to other parts of the country. Rushing to complete construction in a tight regulatory window, the company allegedly spilled drilling fluid into a protected wetland and then…

US Shale Gas Booming Despite Global Glut

7 Jul 2017   Shale Gas, USA

The United States has led the pack in the shale revolution, profiting more than any other nation . The U.S. enjoys the benefit of having the majority of its wells located domestically, thanks to vast natural shale formations, allowing the nation to keep all profits for themselves without any negotiations or diplomatic gymnastics. Due to the up rise of fracking and other technological advances, the production of natural gas and shale oil in the U.S. had been increasing steadily for years. Last year marked a sharp decline as a gas glut led to a dramatic plunge in pricing. But now, just as shale gas prices are finally rebounding from last year’s all-time-lows, the United States’ two biggest shale gas deposits are producing record amounts of fuel , threatening to push gas prices back down. As the Appalachian Marcellus shale basin and the Texas-based Permian basin rush to conquer a […]

The Shale Gas Revolution Is A Media Myth

6 Jul 2017   Shale Gas

The marginal cost of shale gas production is $4/mmBtu despite popular but incorrect narratives that it is lower. The average spot price of gas has been $3.77 since shale gas became the sustaining factor in U.S. supply (2009-2017). Medium-term prices should logically average about $4/mmBtu. A crucial consideration going forward, however, will be the availability of capital. Credit markets have been willing to support unprofitable shale gas drilling since the 2008 Financial Collapse. If that support continues, medium-term prices for gas may be lower, perhaps in the $3.25/mmBtu range. The average spot price for the last 7 months has been $3.13. Gas supply models over the last 50 years have been consistently wrong. Over that period, experts all agreed that existing conditions of abundance or scarcity would define the foreseeable future. That led to billions of dollars of wasted investment on LNG import facilities. Today, most experts assume that […]

Higher US natural gas prices positive for production gains in ’17, ’18: EIA

7 Jun 2017   Prices, Shale Gas

While projections for higher natural gas prices are expected to reduce gas’ share in the generation mix, the subsequent increase in cash flow to gas producers is seen boosting gas production, reversing last year’s drop in output, the first annual decline the industry had seen in 11 years, the US Energy Information Administration said Tuesday in its monthly outlook. The agency, in its June Short-Term Energy Outlook, put second-quarter Henry Hub natural gas spot prices at $3.14/MMBtu, down 2 cents from its May estimate. The Q3 forecast dipped 1 cent from the prior month to $3.20/MMBtu. The agency put gas prices for full-year 2017 at an average $3.16/MMBtu, a 1-cent drop from the prior month’s estimate, and forecast 2018 prices to average $3.41/MMBtu, lowering its estimate from May by 2 cents. By comparison, prices averaged $2.51/MMBtu in 2016. “The amount of US electricity supplies from natural-gas fired generation is […]

Natural gas has displaced coal in the Northeast’s generation mix over the past 10 years

12 May 2017   Climate, Coal, Shale Gas

Source: U.S. Energy Information Administration, Power Plant Operations Report The generation fuel mix of electricity in the Northeast Census division of the United States has shifted dramatically over the past 10 years. In the nine Northeast states, natural gas nearly doubled its share of the region’s total generation to 41% in 2016, up from 23% in 2006. Coal-fired generation fell from 31% to 11% of generation over the same period. Nuclear-powered generation as a share of total generation remained relatively constant near 34%. Despite more than doubling over the same period, the share of nonhydro renewables remains relatively small. Overall, total generation in the region declined by 3% between 2006 and 2016. Increased access to low-cost natural gas from the Marcellus Shale and other regional shale plays has driven the switch away from coal in the Northeast United States. Environmental policies at the federal and regional level, such as […]

Range Recalls ‘Incredibly Creative Solution’ for Marcellus/Utica ‘Problem’

27 Apr 2017   Shale Gas

‘Dragon-class’ and VLEC vessels facilitate transoceanic trade of surplus US ethane. On March 9, 1776, the Scottish economist Adam Smith published his influential book The Wealth of Nations , which has left an indelible mark on international trade ever since. Interestingly, exactly 240 years later a pioneering liquefied natural gas (LNG) carrier departed a Philadelphia-area terminal bound for Europe and opened a new chapter in the global gas business. Laden with more than 27,000 cubic meters of ethane, the Ineos Intrepid – a new class of LNG vessel – embarked on a nearly 4,000-mile voyage across the Atlantic Ocean to Ineos’ ethane cracker in Rafnes, Norway. As Ineos noted at the time , never before had shale gas produced in the United States been shipped to Europe. Previously ethane had only been transported in small vessels on short routes, according to ship designer Evergas . The Ineos Intrepid is […]

Ohio and Pennsylvania increased natural gas production more than other states in 2016

26 Apr 2017   Shale Gas

After reaching a record high of 79 billion cubic feet per day (Bcf/d) in 2015, U.S. marketed natural gas production fell to 77 Bcf/d in 2016, the first annual decline since 2005. Texas, the state with the most natural gas production, fell by 2.5 Bcf/d, while Ohio and Pennsylvania each increased by about 1.2 Bcf/d. EIA measures natural gas production in three different ways. Gross withdrawals are the full volume of compounds extracted at the wellhead, which includes all natural gas plant liquids and nonhydrocarbon gases after oil, lease condensate, and water have been removed. Marketed natural gas production excludes natural gas used for repressuring the well, vented and flared gas, and any nonhydrocarbon gases. Dry natural gas production is marketed production minus natural gas plant liquids. Source: U.S. Energy Information Administration, Natural Gas Monthly Note: Natural gas production in 2016 […]

Massive Natural Gas Deposit Discovered In The Gulf Coast Basin

22 Apr 2017   Shale Gas, USA

Technological advancements have just pushed the boundaries of recoverable oil and gas in the U.S. further, according to an announcement by the U.S. Geological Survey. The agency reported that two formations in the Gulf Coast Basin may contain as much as 304.4 trillion cubic feet of natural gas plus 1.9 billion barrels of natural gas liquids, making the area the largest untapped continuous gas deposit in the country. The two formations—Haynesville and Bossier—also contain some 4 billion barrels of crude, according to mean estimates, the USGS also said in a press release. (Click to enlarge) Most of the newly recoverable gas is in the Haynesville formation, which contains around 195.8 trillion cubic feet. It also holds 900 million barrels of natural gas liquids and some 1.1 billion barrels of oil. The rest is in the Bossier formation. The USGS has been reassessing a lot of oil and gas deposits […]

EIA expects natural gas to be largest source of U.S. electricity generation this summer

Short-Term Energy Outlook (STEO) expects that electricity generation fueled by natural gas this summer (June, July, and August) will be lower than last summer, but it will continue to exceed that of any other fuel, including coal-fired generation, for the third summer in a row. The projected share of total U.S. generation for natural gas is expected to average 34%, which is down from 37% last summer but still exceeds coal’s generation share of 32%. Based on data from the National Oceanic and Atmospheric Administration (NOAA), EIA estimates that average U.S. population-weighted cooling degree days in the summer of 2016 reached the highest level on record. NOAA projections for this summer indicate cooling degree days will be 11% lower than last year. These milder expected temperatures lead to forecast U.S. summer electricity generation of 1.16 billion […]

New U.S. pipelines to drive natural gas boom as exports surge

13 Apr 2017   Pipelines, Shale Gas

U.S. energy firms are scrambling to finish a slew of pipelines that will unleash rich reserves of shale gas in Pennsylvania, West Virginia and Ohio as the nation prepares to become one of the world’s top natural gas exporters. The pipelines are expected to boost output from shale fields in the three states by giving producers access to new domestic and international markets. Those states could supply about a third of all U.S. natural gas once the pipeline expansion is complete, up from about 25 percent now, according to projections from the U.S. Energy Information Administration (EIA). The network will bring cheaper fuel supplies for power generation and industry being built in the eastern half of Canada and the United States, especially along the U.S. Gulf Coast. It would also transport the huge volumes needed to feed facilities that chill the gas to liquid so it can be shipped […]

Is Natural Gas In The Midst Of A Boom-Bust Cycle?

5 Apr 2017   LNG, Shale Gas

After six decades of relying on outside sources, the United States is poised to become a consistent net exporter of natural gas . The shale boom and the rush to embrace LNG has fueled the shift, one that will have significant consequences for natural gas prices around the world. In 2016, total U.S. natural gas imports reached 3 trillion cubic feet, the bulk of which came via pipeline from Canada. Month to month, natural gas imports hovered around 250 billion cf, according to data from the EIA . Exports, however, have been shooting up from less than 60 million cf in 2006 to 269 million in January 2017. The ratio of imports to exports has been falling for years, and 2017 will be the year that exports officially exceed imports for the first time since 1957. That date is significant, as it was the year the United States imposed […]

Gas Giants Share OPEC’s Shale Pain as U.S. Supply Flows East

4 Apr 2017   Shale Gas

OPEC isn’t the only decades-old energy hegemony being turned on its head by U.S. shale. Liquefied natural gas sellers from Qatar to Malaysia that dominated gas sales to Asia for years are facing the prospect of rising American exports. While less than 30 U.S. cargoes have landed in Asia, their effect was felt even before they arrived. LNG trade in 2016 jumped the most in five years, contract lengths were sliced in half in the past decade, and spot prices slumped more than 60 percent in the past three years. That means the global LNG titans gathering in Tokyo this week for Gastech are in the midst of the biggest shakeup since the industry was founded in the 1960s. Just as American crude is increasingly making its way to Asia, the world’s biggest oil market, the burgeoning armada of gas cargoes from the U.S. and elsewhere are poking holes […]

U.S. lower 48 natgas output down for second straight month: EIA

1 Apr 2017   Shale Gas, USA

U.S. natural gas output in the lower 48 states declined for a second month in a row to 78.3 billion cubic feet per day (bcfd) in January, the U.S. Energy Information Administration (EIA) said on Friday in its monthly 914 production report. That compared with 78.7 bcfd in December. Production peaked at 82.6 bcfd in February 2016. Output declined in two of the three biggest producing states in the lower 48, Texas and Oklahoma, but held at a record high in Pennsylvania. In Texas, the country’s largest gas-producing state, output declined for a ninth month in a row, down 0.2 percent to 20.6 bcfd in January from December. That was the state’s lowest level of monthly output since February 2011. Production in Oklahoma declined for a fifth month in a row, down 0.8 percent to 6.4 bcfd in January, its lowest monthly output since June 2014. In Pennsylvania, output […]

Is Haynesville About To Make A Comeback?

31 Mar 2017   Shale Gas

Back in early 2011, the Haynesville shale play in east Texas, northwest Louisiana, and southwest Arkansas surpassed the Barnett Shale in Texas as the highest-producing shale gas play in the U.S., according to reported pipeline flows. Since 2013, however, Haynesville production has been falling amid low gas prices, and the shale play has been outrun by the lower-cost Marcellus and Utica basins in the Northeast. The Haynesville may have been down, but it is not yet out. Recent production forecasts and Haynesville’s geographical proximity to the Sabine Pass LNG terminal and other planned LNG export facilities, as well as its proximity to planned additional pipeline capacity to Mexico, may help Haynesville come back to life again. The uncertainty and downside, as always, are the price of natural gas and concerns that a glut would keep prices low, at least in the short to medium term. But many producers have […]

Shale Gas Is Back With This $2 Billion Acquisition

24 Dec 2016   Shale Gas

A nearly $2 billion natural gas deal could signal a sign that companies are interested in gas drilling again after a long downturn. Gulfport Energy announced plans to issue new shares in order to finance a $1.85 billion acquisition of acreage in Oklahoma’s SCOOP basin. The SCOOP has emerged as arguably the next most exciting shale play, with acreage still largely undeveloped. The Marcellus and Utica Shales in Pennsylvania and Ohio have been home to the bulk of the shale gas revolution, although Oklahoma has seen years of shale gas drilling as well. Now with the Marcellus having been poked with tens of thousands of wells, natural gas drillers are moving on to greener pastures. The rig count outside of the handful of major shale basins is now at its highest level in almost a year. Adding fuel to the fire is the recent rise in natural gas prices, […]

Chesapeake says it’s ready for recovery after big divestments

21 Dec 2016   Shale Gas, USA

Struggling shale company Chesapeake Energy said Tuesday it was anticipating a recovery next year after releasing a good portion of its non-core gas assets. The company said it sold another portion of its holdings in the Haynesville shale basin in Louisiana to rival Covey Park energy LLC for about $465 million. Doug Lawler, the company’s CEO, said total sales of Haynesville acreage so far have totaled almost $1 billion. “We will continue to pursue opportunities to strengthen our balance sheet in 2017,” he said in a statement . The company, which has headquarters in Oklahoma, in early February retained the services of longtime counsel Kirkland & Ellis to help manage debt and strengthen its balance sheet , targeting a 57 percent reduction in spending from 2015. In August, the company left the Barnett shale basin in Texas and earlier this month sold off […]

U.S. natural gas production resilient to market changes in 2015, but has fallen in 2016

17 Dec 2016   Shale Gas

U.S. dry natural gas production continued to increase in 2015, reaching 74.1 billion cubic feet per day (Bcf/d). This record-high level was a 4.5% (3.2 Bcf/d) increase over 2014, according to EIA’s Natural Gas Annual , which provides final production data for 2015. The increase in 2015 production levels marked the tenth straight annual increase, with the most recent increase occurring despite natural gas prices at the Louisiana Henry Hub declining more than 40% from an average of $4.55 per million British thermal unit (MMBtu) in 2014 to $2.62/MMBtu in 2015. Source: U.S. Energy Information Administration Production gains were highest in Pennsylvania, Ohio, and West Virginia, due in large part to production from the Marcellus and Utica/Point Pleasant shales. These three states accounted for most of the total increase in 2015. Although annual production in 2015 grew, monthly U.S. natural gas […]

$2 Billion Gulfport Buy Shows Drillers Thirsting for Next Play

16 Dec 2016   Shale Gas, USA

America’s shale gas drillers are back to looking for the next big play. On Wednesday, Gulfport Energy Corp. struck a deal to buy acreage in an oil and natural gas field in Oklahoma known as Scoop for $1.85 billion, marking its first foray in a region that Newfield Exploration Co. has devoted most of its capital budget to and Devon Energy Corp. invested almost $2 billion in late last year. Gulfport Chief Executive Officer Michael Moore described the acreage as a “sizeable and scalable footprint in a new operating area.” The deal underscores renewed interest among drillers in exploring emerging plays outside the heart of the U.S. shale gas boom — the Marcellus formation of the Appalachian Basin. The number of rigs drilling outside major basins has rebounded to the highest levels since February […]

Chesapeake Energy Drills Deeper for Profit

16 Dec 2016   Shale Gas

Chesapeake Energy is drilling a massive well in the Haynesville shale outside Shreveport, La., Doug Lawler watched a drilling rig’s high-pressure pumps rumble as workers bored in to a massive natural-gas well, part of a new drilling campaign the Chesapeake Energy Corp. chief executive calls “Prop-a-geddon.” Named for the sand that drillers use to prop open hydraulically fractured rocks, Prop-a-geddon is an experiment to create supersize oil and gas wells that the company estimates can extract fossil fuels for roughly 75% less than typical wells, thanks to potentially greater economies of scale. This well, in the Haynesville Shale formation around Shreveport, La., went 2 miles deep and another 2 miles horizontally, and used 51 million pounds of sand, which the company believes is a world record. Typical wells in this area extend about 5,000 feet, or less than a mile. “It’s the biggest job in the […]

Pennsylvania levels $3.5 million fine against gas driller

8 Dec 2016   Shale Gas

 Pennsylvania environmental regulators have fined a natural-gas driller more than $3.5 million for violations at 10 well sites and six pipeline locations. The Department of Environmental Protection said Wednesday that subsidiaries of Rice Energy Inc. operated an unpermitted wastewater impoundment that leaked, improperly constructed wells, violated rules for erosion and sediment control, failed to obtain permits and committed other infractions. Regulators say the violations took place over several years at sites in Washington and Greene counties, in western Pennsylvania. Canonsburg-based Rice has already paid the fines. DEP has entered into several agreements with Rice and says the company has either fixed or is scheduled to fix the problems at its wells and pipelines. A Rice Energy spokeswoman did not immediately return a call for comment.

NREL sees natural gas, renewables gaining US market share

18 Nov 2016   Renewables, Shale Gas

Natural gas-fired and renewable resources are expected to enjoy growing generation mix shares over the next three decades, driven by low-cost gas and renewable energy cost declines and performance improvements, according to analysis by the US Department of Energy’s National Renewable Energy Laboratory. The report released Wednesday — the 2016 Standard Scenarios: A US Electricity Sector Outlook — aims to identify a range of possible futures for the US electricity sector. The emergence of low-cost gas has driven major changes in the power sector, with the annual average capacity factor for combined-cycle generators jumping from 35% in 2005 to over 56% in 2015 at the expense of coal-fired generation, the report said. NREL expects gas prices to remain generally low. “Despite increases in commodity prices, including natural gas prices, in mid-2016, the outlook for continued low-priced natural gas looks firm, given the currently high levels of underground storage and […]

Judge issues temporary stay of some Pennsylvania drilling rules

11 Nov 2016   Shale Gas

In a ruling in a lawsuit brought by the Marcellus Shale Coalition, a Pennsylvania judge on Tuesday ordered the temporary stay of several key provisions of a set of natural gas drilling regulations recently promulgated by the state’s Department of Environmental Protection. In an order handed down in the Commonwealth Court of Pennsylvania, Judge Kevin Brobson issued a preliminary injunction blocking the state from enforcing provisions of the rules pertaining to public resources, well permit reviews, wastewater impoundment and site restoration. However, the ruling denied the MSC’s request for an injunction to block other provisions of the regulations pertaining to onsite processing, the remediation of spills and waste reporting. The MSC filed the suit in October to block the implementation of seven provisions of Chapter 78a of the Pennsylvania Code. The rules, which regulate many aspects of unconventional gas drilling, took effect October 8. Article Continues below… Your source […]

President Trump: This Is How To Bring Back 1 Million Energy Jobs

11 Nov 2016   Shale Gas, USA

Dear President-Elect Trump, There’s work to be done. And I know you’re up for a challenge. In fact, I’m now sure of it. So let me lay out a policy position that I am truly hoping you will adopt as your own. I’m talking about natural gas as a transportation fuel: cheap, clean, abundant natural gas. And I’m talking about U.S. energy independence, balanced budgets, jobs, trade and the environment. We use natural gas for power generation and as a heating fuel but that’s an old story for a new reality. Fracking has unlocked a phenomenal amount of gas in the last decade. Our onshore wells are rivaling the reserves of the deep offshore giants. And we’re getting much more for much less these days. North America also has over 2 ½ million miles of pipeline with more coming on line plus distribution capabilities in every […]

U.S. gas production shows tentative signs of upturn: Kemp

2 Nov 2016   Shale Gas

U.S. natural gas production may be stabilising or even starting to rise as the boost to oil and gas prices in recent months stimulates an increase in new drilling. Marketed dry gas production amounted to 2,239 billion cubic feet in August, down from 2,302 bcf in August 2015, according to the U.S. Energy Information Administration ( tmsnrt.rs/2e9e05u ). Gas production has been down year on year by an increasingly large percentage since March as the effect of low prices and a reduction in drilling filters through. Output in July was down by more than 4 percent compared with the same month a year earlier, according to EIA survey data. But production bucked the trend in August and was down by just 2.7 percent from a year earlier ( tmsnrt.rs/2e9k1z2 ). Extrapolating a trend from a single month’s data is risky especially when the series has a high level of […]

Gas industry challenges new drilling rules in Pennsylvania

15 Oct 2016   Shale Gas

The natural gas industry in Pennsylvania is challenging new state regulations that govern surface development of shale gas wells, saying they threaten jobs and investment by adding up to $2 million to the cost of drilling a well. Energy companies in the Marcellus Shale, the nation’s largest natural gas field, filed suit against the Pennsylvania Department of Environmental Protection and the state’s Environmental Quality Board over rules that took effect last week, calling them financially burdensome, vague and unlawful. “The provisions we are challenging impose immediate harm to our industry because they affect our ability to operate and remain competitive,” David Spigelmyer, president of the Marcellus Shale Coalition, said Friday in a conference call with reporters. The suit, filed Thursday, marks the first time the powerful trade group has taken the state to court over drilling rules. It seeks to block enforcement pending a ruling on their legality. Neil […]

The U.S. Is Set To Dominate Global Natural Gas Markets

13 Oct 2016   Shale Gas, USA

The shale revolution has changed the U.S. natural gas production and trade dynamics forever. Domestic output and exports have been rising, to the point where the U.S. is poised to become a natural gas net exporter in the second quarter of next year, the EIA said last month. In this scenario of abundant resources, U.S. companies have been planning on building pipelines and LNG export terminals to ship domestically-produced natural gas to Mexico, Canada and to future LNG export hubs along the coast. These exports hubs will be used for further LNG shipments to markets in South America, Asia, Europe, and the Middle East. Since Cheniere Energy ( NYSEMKT:LNG ) shipped the first U.S. LNG commissioning cargo out of its Sabine Pass LNG terminal en route to Brazil in February of this year, the terminal has exported an estimated 113 Bcf of LNG to 12 countries […]

Is The Era Of Cheap Natural Gas Over?

11 Oct 2016   Shale Gas

Natural gas prices have been low for years, as shale gas drillers continued to break records with higher and higher production. But just as the oil markets have gone through a very painful bust that is leading to a drop off in supplies, the market for natural gas is going through a similar period of adjustment. Not only that, but demand is on the rise, with a wave of new gas-fired power plants coming online. The result is a much tighter market for gas than we have seen in years. Before there was a boom in oil production in the United States, the shale gas revolution led to massive flood of new supply, which sent prices careening downwards. Natural gas spot prices are always volatile, but have largely traded below $3 per MMBtu since 2014. With prices so low, companies pared back drilling plans and focused […]

Pennsylvania adopts new fracking regulations

8 Oct 2016   Shale Gas

Pennsylvania Governor Tom Wolf speaks on the final night of the Democratic National Convention in Philadelphia, Pennsylvania, U.S. July 28, 2016. New regulations governing the extraction of natural gas through fracking will go into effect on Saturday in Pennsylvania, the first overhaul since the industry took off in the state more than 10 years ago. The new rules allow the state’s department of environmental protection to require additional measures if fracking is taking place near public resources, and requires drillers to restore water supply that is degraded or damaged through fracking, according to the statement. Environmental groups hailed the new rules. An oil and gas industry group blasted the regulations, with a spokesman saying he expected legal challenges. The rules have been in development since 2011, and faced opposition from the oil and gas industry and their allies in the state legislature, where the regulations were rejected earlier this […]

New wave of power plants is fueling U.S. gas demand: Kemp

5 Oct 2016   Shale Gas, USA

(John Kemp is a Reuters market analyst. The views expressed are his own) The United States is experiencing a structural increase in gas demand with more gas-fired power stations operating more hours per year and consuming a record volumes of gas. But domestic gas production is turning down, with output nearly 4 percent lower in July 2016 compared with July 2015 (“Falling U.S. gas output meets stronger demand”, Reuters, Oct 3). Growing demand for gas and shrinking supplies are not sustainable, so gas prices will have to rise to encourage more drilling and limit the use of some gas-fired power plants. U.S. power producers had 448 gigawatts of gas-fired generation capacity in July 2016, an increase of 25 gigawatts since the end of 2012, according to the Energy Information Administration ( tmsnrt.rs/2dOroBg ). Installed gas-fired capacity is scheduled to grow by another 11.5 gigawatts to 459 gigawatts by the […]

Statoil completes sale of Marcellus acreage

17 Sep 2016   Shale Gas

Norwegian energy company Statoil said it retained some of its shale acreage in the United States, but completed a sale Friday of assets in West Virginia. Statoil said it closed Friday on the $96 million sale of 11,500 acres in the Marcellus shale natural gas basin in West Virginia to Antero Resources Corp. The Norwegian company retains about 350,000 net acres of the Marcellus shale natural gas basin in Ohio. The sale from the Marcellus shale, initialized in August, is the third for Statoil in the past two years. In December 2014, the company sold some of its interest in Marcellus for $394 million after suspending some rig work to save capital. […]

Is This A Sign That Oil Majors Are Becoming More Bullish

14 Sep 2016   Shale Gas

Drilling Rig French oil company, Total SA announced in a press release Friday that it would be exercising the rights to obtain 75 percent of the lease agreements in the Barnett shale gas and oil fields. The company already possesses the other 25 percent of the field, meaning they would have total production control. This comes at a time when Chesapeake Energy Corporation makes a move to exit the fields. Total will acquire the rights to produce after paying Williams Partners $420 million next quarter. In 2011, the Barnett field was home to over 80 oil rigs ; today that number has fallen to 3. Production can see substantial reductions when oil and gas prices are low. Natural gas production from the Barnett shale peaked in 2012 with 5,743 mb/day and oil in 2013 with 5,641 b/day. Total SA investing and acquiring the 215,000 acres could be signs of […]

France’s Total Takes Control of Barnett Shale in Texas

10 Sep 2016   France, Shale Gas

A rare Barnett Shale drilling rig, pictured last year. French oil major is now the… Total said on Friday it is exercising its preemption right to acquire the 75% share in the Barnett Shale which it doesn’t already own to become the sole owner and operator of the field. Total said its Total E&P USA unit will top up Chesapeake’s payment with $420 million to Williams for “a fully restructured, competitive gas-gathering agreement” in addition to paying $138 million to be released from three other contracts. “With the new conditions created by the exit of Chesapeake and the associated restructuring of the midstream contracts, we believe that we can extract significant value from the substantial, well-located resource base of the play,” Total E&P USA President José Ignacio Sanz said in a statement. The Barnett Shale was once a big-producing gas field near Fort Worth in North Texas, but in […]

Analyst: Northeast NGL Supply/Demand at ‘Crossroads’

10 Sep 2016   Shale Gas

Proposed Appalachian Storage Hub might incentivize region’s ethane recovery, petrochemicals investment, says S&P Global Platts analyst. Earlier this week, Rigzone presented an article featuring the perspectives of two prominent supporters of developing a $10 billion natural gas liquids (NGL) storage and distribution system in West Virginia, Ohio, Pennsylvania or Kentucky. The proposed Appalachian Storage Hub project would provide a regional home for ethane and possibly other NGL produced in the Marcellus, Utica and Rogersville shale plays and support growth in petrochemicals manufacturing – and job creation – in the four-state area, the hub advocates said. The project would also pose “an interesting question for NGL markets,” says one informed observer. “While there is little demand for the storage hub currently, it could incentivize petrochemicals firms to site projects in the region, depending further on continued supply from wet gas production in the area,” said Andrew Neal, NGL analyst with […]

Only Higher Prices Can Prevent The Imminent Natural Gas Bust

9 Sep 2016   Shale Gas

One hundred years of natural gas? Not at these prices. U.S. gas production is declining and shale gas output is down almost 2.5 Bcf per day. Production is decreasing while consumption and exports are both increasing. EIA data indicates a supply deficit by the end of 2016. Henry Hub spot prices have doubled since early March. Will companies show discipline to preserve higher prices? Not a chance. They will drill more wells if investors continue to provide capital. This, however, will probably be too little too late to stop the decline in gas production that is already underway. Real Gas Prices Have Never Been Lower In February 2016, I wrote that an increase in natural gas prices was inevitable and in April, I wrote that prices would double . Now, spot prices have doubled from $1.49 on March 4 to $2.97 per mmBtu on August 29 (Figure 1). Still, […]

Australian State To Permanently Ban Onshore Gas Fracking

30 Aug 2016   Australia, Shale Gas

The state of Victoria plans to ban shale and coal seam gas fracking in what would be Australia’s first permanent ban on unconventional gas drilling, citing the concerns of farmers and potential health and environment risks. However the government left the door open to allowing onshore conventional gas drilling after 2020. The decision was made despite the fact that most of eastern Australia’s gas supply is produced from coal seam gas and comes as a blow to manufacturers who have been clamouring for more gas supply to help keep prices down. “Our farmers produce some of the world’s cleanest and freshest food. We won’t put that at risk […]