Chesapeake 1Q21: Returning to Its Roots of Drilling for NatGas
Chesapeake Energy issued its first quarterly update since exiting bankruptcy in February. It wasn’t the typical update most public companies issue. It’s a challenge to reconcile numbers before bankruptcy and after exiting bankruptcy. A few highlights: When combining numbers from before and after bankruptcy, we found (in digging through the SEC Form 8-K filing) that Chessy produced 2 billion cubic feet per day (Bcf/d) on natural gas, most of which was produced in the northeast PA Marcellus (1.26 Bcf/d). The company also produced an average of 80,000 barrels of oil and 22,000 barrels of NGLs (in non-Marcellus plays) in 1Q21. We also discovered the company’s strategy on where it plans to expand its shale gas drilling program (the answer may not please you)…
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Last Friday National Fuel Gas Company (NFG), the parent company for Seneca Resources and Empire Pipeline, issued its latest quarterly update for the quarter ending Mar. 31 (NFG’s second fiscal quarter, everyone else’s first quarter). The company’s purchase of Shell’s Marcellus assets last year (450,000 acres, 350 producing Marcellus and Utica shale wells in Tioga County) gave Seneca a 43% boost in production in its fiscal 2Q21 over 2Q20. Seneca drilled 14 new wells in fiscal 2Q.
A number of municipalities (mainly cities) in states like California, Washington, and Massachusetts have passed local ordinances banning the use of natural gas in new or refurbished construction. That is, they’ve become energy bigots, institutionalizing discrimination against forms of energy they irrationally hate. Prejudice and discrimination (hatred) are always ugly, whatever form they take, whether against other humans or against energy sources. Some states have passed new laws to prohibit local municipalities from engaging in energy discrimination and natural gas bans. Pennsylvania is the latest to consider such protection.
It honestly is one of the most bizarre things we’ve ever seen. The largest publicly-owned natural gas utility in the country, Philadelphia Gas Works, is actually looking at and considering the best ways it can kill itself. The implications are many. First and foremost it’s completely racist, as ending the sale of natural gas so will skyrocket the utility bills of its 500,000 customers, who are primarily people of color (44% African American, 14% Latino, 7% Asian = 65% in total). There is no way a majority of Philly residents can afford to wholesale replace their stoves and furnaces at a cost of tens of thousands of dollars. Yet there’s no mention of racism in reporting on this bizarre issue.
The Massachusetts Municipal Wholesale Electric Company (MMWEC) has paused plans (30 days minimum) to build a much-needed natural gas “peaker” power plant in Peabody, MA. Why? “To address concerns raised by local residents and advocacy groups.” In other words, a small number of crazies are out in force, bullying a tiny power plant that will only operate during peak demand–somewhere around 10 days out of the whole year!
Ellen Wald is a senior fellow at the Atlantic Council’s Global Energy Center, and president of Transversal Consulting, a global energy and geopolitics consultancy. She is the author of “Saudi, Inc.,” a history of Aramco and how the Saudi royal family controls this multitrillion-dollar enterprise. Ellen is one of our favorite Forbes authors. She recently published a fantastic editorial in The Hill (rag targeting DC swamp dwellers). Wald writes that President Biden’s plan that commits the U.S. to reduce its greenhouse gas (GHG) emissions over the next eight years to about 50 percent of what they were in 2005 is “impossible, unrealistic and insufficient.”
MARCELLUS/UTICA REGION: Antero can’t skip trial in W.Va. royalty owners’ payment suit; Ohio House passes bill blocking cities from banning natural gas; OTHER U.S. REGIONS: Tellurian to finish commercialization of Driftwood LNG first phase in few weeks; Texas is fighting back against big businesses that threaten oil, gas jobs; NATIONAL: EIA forecasts less natural gas-fired electricity generation this summer; Pipeline operator Energy Transfer mulls chemicals acquisition.