From even a cursory glance at news over the past 24 hours it would be hard to miss the stories blaring the trumpets that the price of natural gas closed at a 4+ year high yesterday (NYMEX futures price closed at $4.84/Mcf), and that the price jumped an amazing 18% in a single day–the biggest jump in 14 years! The primary reason, according to news reports and interviews with traders, is low stockpiles (low storage) combined with short-term weather forecasts for colder weather in the northeast. Indeed, as we write this (sitting in Binghamton, NY), we await the arrival, in a few hours, of an early winter snowstorm of proportions usually not seen until the dead of winter. Some 3-7 inches of snow on the way, more in the higher elevations. The system will affect most northeastern states. Crank up the gas heat! The bazillion dollar question is: How long will the price of gas stay “high”–by which we mean over $3.25/Mcf?
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NatGas Prices in PA Catching Up with Rest of Country
Since our lead story today is about the spike up in the price of natural gas (see Price of NatGas Spikes to Highest Level in 4 Years – $4.84/Mcf), we thought it fitting to bring you a related story that caught our eye–on the price of natgas in Pennsylvania. For years PA, especially the dry gas northeast, has been plagued with some of the lowest natural gas prices in the U.S. Why? Prolific production and not enough pipelines to get all that production to higher-paying markets. The situation is changing, rapidly. Prices in the northeast Marcellus are catching up with the Henry Hub price in southern Louisiana, thanks to multiple pipelines coming online. What does it all mean for Pennsylvanians?
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EnCap Looks to Sell Royalty Stake in “Core” of Ohio Utica
EnCap Investments is a venture capital investor that funds independent companies in the U.S. oil and gas industry. EnCap has its fingers in a number of pies in the Marcellus/Utica. EnCap is the major investor behind Eclipse Resources and was instrumental in Eclipse selling itself to and merging with Blue Ridge Mountain Resources (see Eclipse Resources Merging with Former Magnum Hunter). EnCap is also a major investor in (i.e. owner of) PennEnergy Resources, which recently cut a deal to buy Rex Energy (see Rex Energy Sells Itself to PennEnergy Resources for $600M). Another way EnCap invests in our region is by funding drilling programs in return for royalty payments (or more properly, for a thin slice of the royalties). EnCap has put their royalty interests in several “core” Utica Shale counties up for sale.
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FERC Approves Rest of Columbia WB XPress Pipe for Startup
In early October the Federal Energy Regulatory Commission (FERC) granted TransCanada permission to begin service on part of its Columbia WB XPress pipeline project, the “Western Build” portion of the project (see FERC Approves Columbia WB XPress Pipe for Partial Startup). The good news is that yesterday FERC granted permission to start up the rest of WB XPress, the “Eastern Build.” The $900 million WB XPress project is located in West Virginia and Virginia and expands capacity along the Columbia Gas Transmission (CGT) pipeline system by 1.3 billion cubic feet per day (Bcf/d), linking Marcellus gas supplies to new markets. The whole WB XPress enchilada is now ready to let it flow.
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NY State Court Denies Northern Access Pipe Eminent Domain
Another bump in the road for National Fuel Gas Company and their Northern Access Expansion pipeline project. Not a major hurdle. Not an apocalypse. Not the end of the line. A bump. The Appellate Division of New York State Supreme Court (in NY, Supreme Court is a low court, one step up from county court), overturned the decision of the lower Supreme Court granting NFG the power of eminent domain to build Northern Access, a project not scheduled to get built until 2022. The attorney who won the case against NFG proclaimed without eminent domain, “The pipeline is dead.” We say he’s dead wrong.
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The War to Build PennEast Pipeline Continues
It’s been almost a year since the Federal Energy Regulatory Commission (FERC) granted final approval for the PennEast Pipeline project, a $1 billion, 120-mile natgas pipeline that will stretch from northeast PA to the Trenton area of New Jersey (see FERC Grants Final Approval for PennEast Pipe – Real Battle Begins). DTE Energy’s NEXUS Pipeline, a 255-mile pipeline from Columbia County in Ohio to Southern Michigan, received its FERC approval around the same time. NEXUS is already built and flowing, PennEast hasn’t turned the first shovelful of dirt yet. What’s going on?
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Virginians Save $11B in 10 Years Thx to Fracked Shale Gas
Residents of Virginia have benefited in a major way from an abundance of cheap, clean-burning shale gas. How much benefit? Try $11 billion of money went directly into the pockets of Virginia residents and businesses over the past 10 years thanks to low-priced natural gas–fracked gas, coming from the Marcellus/Utica. Industry group Consumer Energy Alliance (CEA) has just published a new report that shares the good news (full copy below). You may recall not long ago CEA published a similar study for Pennsylvania (see PA Consumers Save $30B Over 10 Years Thx to Marcellus Shale), and West Virginia (see WV Consumers Saved $4B Over 10 Years Thx to M-U Shale). Now it’s VA’s turn. Even though VA doesn’t extract shale gas, they still enjoy its benefits!
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Energy Stories of Interest: Thu, Nov 15, 2018
The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: US LNG player Cheniere fires up Corpus Christi production; Haynesville’s gigantic gas resurgence could be a winner in LNG export race; Think oil has been volatile? Watch natural gas; Firmer Henry Hub natural gas price, high shipping rates pressure US LNG margins; Cheniere bets $15 billion on world gas demand despite tariff; U.S. crude oil and natural gas production increased in 2017, with fewer wells; Why new rail car specs are creating obstacles for crude-by-rail; Climate contrarian uncovers scientific error, upends major ocean warming study.
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Accident Kills Rig Worker on Shell Well Pad in Tioga County, PA
This news is a couple of weeks old, but we’ve only just happened across it while researching another story. On the morning of October 27, Mark Jones, an employee of Deep Well Services, was working at a Shell rig site in Tioga County, PA when “a large piece of equipment fell on him, pinning him to the platform 65 feet in the air where he was standing.” The blunt force trauma, hitting him in the head, killed him. We are always saddened to read of such accidents. Here is the one and only story we could locate describing what happened:
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EQT Tries to Gut WV 1982 Minimum Royalty Law for Flat Rate Leases
EQT certainly isn’t following Dale Carnegie’s advice on How to Win Friends and Influence People. Just the opposite, as the company continues to squeeze every last penny it can out of landowners’ pockets who hold old “flat rate” leases in West Virginia. We’ve reported on EQT’s efforts to overturn WV’s Senate Bill (SB) 360, passed earlier this year and signed into law by Gov. Jim Justice (see EQT Still Fighting WV Minimum Royalty Law for Flat Rate Leases). That law disallows post-production deductions for flat rate leases, ensuring landowners receive a minimum 12.5% royalty. In April, EQT sued to overturn the original law, from 1982, on which SB 360 rests–the law that guarantees a 12.5% royalty. Get rid of the original law, and the later law (disallowing deductions) disappears too.
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EQT Pays $394K for Acid Mine Leak in Mon River Following HDD Work
On January 29, 2017, EQT used underground horizontal directional drilling (HDD) to drill a hole under State Route 136 in Allegheny County, PA, to install a water pipeline. As they were drilling, using what we now know was an out-of-date map, EQT hit an abandoned coal mine full of water, and four million gallons of acid mine drainage (AMD) leaked into the Monongahela River. EQT worked hard and fast to stop the leak (stopping it two days later) and set up a system to prevent any further leaks. Now, nearly two years later, it’s time to pay the piper. EQT just agreed to a fine of $294,000 for violating the Clean Streams Law, and payment of an additional $100,000 to the Clean Streams Foundation to provide for maintenance, operation, and replacement of a system to keep AMD from leaking at the site in the future.
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EQT Stock Falls 46% in One Day, but Investors Didn’t Lose 46%
Normally if a company’s stock falls upward of 50% in a single day, it indicates a catastrophe has happened. Bad news of biblical proportions. But such is not the case with EQT, the country’s largest natural gas producing company. EQT’s stock closed at $34.64 per share on Monday. By the end of Tuesday, it was $18.56, down 46.4%. Why? Because the company split in two, with EQT Corporation retaining all of the drilling assets, and a new company, Equitrans Midstream Corp., taking off with all of the midstream (pipeline) assets.
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EIA Oct ’18 Drilling Report: Shale Gas Output Up 1 Bcf/d – Again!
We’re speechless–and that doesn’t happen often. The U.S. Energy Information Administration’s (EIA) monthly “Drilling Productivity Report” (DPR) said that in October the country’s seven major shale plays would produce an amazing, all-time high of 73 billion cubic feet per day (Bcf/d) of natural gas production (see EIA Sep ’18 Drilling Report: Shale Output Flies Past 73 Bcf/d). Last month, EIA said that in November shale gas output would rise a dramatic 1 Bcf/d to 74 Bcf/d (see EIA Oct ’18 Drilling Report: Shale Gas Output Up Another 1 Bcf/d). And now, it’s happened again! EIA issued the the latest DPR yesterday and said that in December, shale gas output will go up ANOTHER 1 Bcf/d, to 75 Bcf/d.
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GE Begins Divesting from Baker Hughes Early
Less than one year after buying Baker Hughes (in July 2017), GE decided in June of this year it didn’t want its bright shiny new toy any more and would, over the next 2-3 years, divest itself of Baker Hughes (see GE Dumping Baker Hughes in Bid to Boost Stock Price). We figured GE would look for a new buyer and sell the whole thing all at once. But that’s not how it works in the world of high finance. GE owns 62.5% of all Baker Hughes stock (BH is, on paper, a separate company). Instead of waiting 2-3 years, GE is moving ahead now, beginning to sell some of its BH stock. Ever so gradually (don’t want to flood the market all at once). The plan, being called “mutually beneficial for both companies” by GE CEO Larry Culp, will draw down GE’s ownership to just over 50%, with an eye to completing the breakup sometime in late 2019.
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Natural Gas with Zero Emissions? This Will Give Antis Heartburn
Natural gas-fired electric generating plants are a big deal. They burn far more efficiently, and pollute way less, than either coal or oil plants. Yet anti-fossil fuelers still hate them because, well, they burn a fossil fuel. And that means they put carbon dioxide (CO2) into the air. And ya know, CO2 is going to make Mom Earth fry “someday.” Whatever. But what if you could capture all of the CO2 and use it/channel it somewhere else, so it didn’t escape into the air? And what if you could ensure that no methane (CH4) escaped either? What if you had a truly zero-emissions natural gas-fired electric generating plant? Such a thing IS possible, and three investors, including Exelon (Fortune 100 electric generating company) is betting on this new technology as the future of electric generation. The question is, will antis shed their prejudice and embrace this new technology?
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Energy Stories of Interest: Wed, Nov 14, 2018
The “best of the rest”–stories that caught MDN’s eye that you may be interested in reading: Paid to protest: Lifting the curtain on Keep Wayne Wild, LLC; McCormick: WV should pitch energy jobs to veterans; Prometheus, Summit open Lebanon, Missouri LNG facility; Massachusetts lawmakers schedule 2 hearings natural gas disaster issues; Natural gas: The $4 dam is breaking for the bears; How much could coal generation stem gas price upside in a cold winter?; And just like that, everybody stopped talking about $100 oil; Oil plunges over 8% as Trump faces off with Saudi Arabia, Russia over production; Structure of fossil-fuel source rocks is finally decoded; IEA says gas to overtake coal in energy mix by 2030; New global emissions rules boost LNG as shipping fuel; First U.S. LNG cargo since 10 percent tariff enacted arrives in China.
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