Some SWPA Landowners See Royalty Checks Fall 75% in 1 Year
CBS News, an ultra-biased mainstream media news outlet that we don’t typically watch or read, is publishing a series of articles on the effects of COVID-19–how it has changed the lives of average Americans. In a somewhat unusual twist, CBS focused on landowners in southwestern Pennsylvania who leased property for shale drilling. How has COVID impacted them? CBS interviewed several landowners who have seen their royalties drop like a rock over the last year–down some 75% from just a year ago. While CBS doesn’t say COVID is responsible for all of that drop, they do theorize it has contributed. Has it? Or is something else responsible for the huge drop in royalties?
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Summit Midstream Partners, formed in 2009 and headquartered in The Woodlands, Texas, operates natural gas, crude oil and produced water gathering (pipeline) systems in six unconventional resource basins, including the Marcellus and Utica. The company concentrates its time and money on four “core focus areas” including the Utica, the Williston (i.e. Bakken), the DJ Basin and the Permian. The Marcellus is part of the company’s “legacy” systems that doesn’t get as much love (and money). Last week the company issued its 2Q update. The company’s Utica operation was the star performer in 2Q, increasing flows through Summit’s system by 60%.
Even though the price of natural gas selling at regional trading points like Dominion South has gone up, don’t expect more production in the Marcellus/Utica. Diversified Gas & Oil (DGO) CEO Rusty Hutson, in an interview with S&P Global Platts, said most of the larger drillers in the M-U will not increase production even with higher prices. The ones who will drill more are smaller companies leveraged to the hilt–they have to drill to keep the cash flow coming in.
Two different trade unions are asking some great questions about Pennsylvania Gov. Tom Wolf’s plan to force the state to join the so-called Regional Greenhouse Gas Initiative (RGGI), a carbon tax on coal and gas-fired electric generating plants. For example, how would a $2.36 BILLION carbon tax reduce carbon dixoide emissions any more than is already happening by the use of natural gas? PA already reduced CO2 emissions by 32% over the same time period RGGI (a coalition of liberal northeastern states) began–far more of a reduction than RGGI states have experienced!–without belonging to the RGGI tax plan.
The onshore rig count continues to bump along near the bottom. A few weeks ago we noted that after hitting bottom, the Enverus rig count had once again started to climb (see 
MARCELLUS/UTICA REGION: Joe Biden’s energy plan will destroy Pa.’s economy; Project to make natural gas available to homes in Wayne County; Natural gas grand jury report ignores state’s history of responsible stewardship; OTHER U.S. REGIONS: Wyoming’s drilling rig count hits zero: what that means for the state and its economy; NATIONAL: FERC’s McNamee intends to step down in early September; DOE announces $33 million for natural gas pipeline retrofitting projects; New documentary film, ‘Juice,’ challenges elitism of anti-growth environmentalism; Biden vs. Trump: the battle over us energy policy and its consequences; A saga of NGL storage: RBN’s greatest hits; INTERNATIONAL: Bechtel names new oil and gas chief; Saudi Arabia turns off America’s oil taps again.