DUG East Summary: Things are (Mostly) Looking Up for M-U in 2022
It’s a wrap on Hart Energy’s DUG East (Developing Unconventional Gas) conference, held in Pittsburgh last week. Overall the sentiment, from the reports we’ve read, was a positive “up” kind of attitude among those attending. However, some words of caution were shared as well. One analyst, with rig counting giant Enverus, said he thinks more natural gas production is returning to the Marcellus/Utica, but not as much as growth (percentage-wise) as the M-U’s chief competitor, the Haynesville Shale.
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Each quarter NGI (Natural Gas Intelligence) runs the numbers and publishes a list of the 25 top natural gas marketers in the U.S. (or in the case of 3Q21, the top 24). These are not necessarily the top producers of natural gas, although in some cases they are, but the top sellers (vendors, jobbers) of natural gas. NGI’s latest quarterly report for third quarter 2021 shows overall the biggest sellers of natgas lost ground once again, which continues a four-year trend of year over year declines in the amount of gas sold.
Diversified Energy, which owns close to 8 million acres of leases with some 67,000 (mostly) conventional oil and gas wells (with over 400 Marcellus/Utica shale wells), made 2021 the year to expand–outside the M-U region. The company purchased major assets in the Cotton Valley/Haynesville region of Lousiana, the Barnett play in Texas, and most recently, in the Mid-Continent in Oklahoma. Diversified announced it has closed on its fourth purchase for 2021 in the Mid-Continent.
Southwestern Energy announced in early November it had struck a deal to buy GEP Haynesville, a subsidiary of GeoSouthern (see 
Project Canary, a program that certifies natural gas drillers and pipeline companies as producing responsibly sourced gas (RSG), continues to make big inroads in the Marcellus/Utica. Earlier this week MDN told you that Olympus Energy will use Project Canary to certify both its drilling and (believed to be a first in the country) its gathering pipeline system (see 
The DUG East (Developing Unconventional Gas) was held this week in Pittsburgh, PA. A number of big names–CEOs of major Marcellus/Utica companies–gave talks to those who attended. Two of the biggest names on the platform were Toby Rice, CEO of EQT Corporation (the largest natural gas producer in the United States), and Nick DeIuliis, CEO of CNX Resources, the separated arm of what used to be CONSOL Energy, a coal company. Both men are evangelists for natural gas, but both have a distinctly different style and way of going about their advocacy. It’s like apples and oranges.
Hart Energy’s DUG (Developing Unconventional Gas) East event was held this week in Pittsburgh, wrapping up this morning. Unfortunately, MDN could not attend the event this year. Some major news is coming from the event. One of the headline speakers from yesterday was CNX Resources CEO Nick DeIuliis who said he thinks it’s high time to seriously look at revising the now-ten-year-old impact fee that drillers pay (PA’s equivalent of a severance tax), a fee created as part of the Act 13 law. What would Nick change about the impact fee/tax?
There was a healthy number of new permits issued in all three actively drilling Marcellus/Utica states last week. In Pennsylvania, 14 new shale well permits were issued across the state. In Ohio, five new shale permits were issued, four of them to a single driller (Ascent Resources) in a single county (Jefferson). West Virginia came roaring back after getting skunked with no permits two weeks ago. WV issued 10 new shale permits last week with five going to a single well pad in Monongalia County.
Last Thursday CNX Resources reached a plea deal with the Pennsylvania Attorney General’s office over alleged violations of the Air Pollution Control Act and bad recordkeeping. Yeah, you read that right. State Attorney General Josh Shapiro (a real putz) leveled criminal charges against CNX over miscounting how many times the company used a pig (pipeline inspection gauge) to clean out a pipeline in Washington County, PA. An anti-fossil fuel zealot who lives near the pigging station complained about noise and emissions and ran squealing to the AG (pun intended).
The third quarter was not kind to Marcellus/Utica drillers with respect to the official income statements. Why? In a word, hedging. Take EQT for example. During 3Q, EQT lost nearly $2 billion because of bad hedges–locking in prices to sell production far below current market prices (see 
Chesapeake Energy lost $345 million during 3Q21, which was better than the $745 million net loss in 3Q20 (see 
In October the province of Quebec, Canada announced it will expropriate all of the rights for all oil and gas companies in the province to drill and extract oil and natural gas (see 
The so-called Ohio River Valley Institute (ORVI) is a far-left, hyper-partisan, nonprofit organization that routinely lies about the Marcellus/Utica industry. A Pittsburgh area labor and business group called Pittsburgh Works Together (PWT) routinely debunks ORVI’s falsehoods. Here’s the latest lie from ORVI: “[T]he Shell petrochemical complex has failed to produce economic growth in Beaver County.” Here’s the truth, the facts, as shared by PWT: “In the years before the COVID-19 pandemic began in 2020, Beaver County grew jobs far faster than the overall Pittsburgh region, the state of Pennsylvania, and the U.S, according to data from the U.S. Bureau of labor statistics. And Beaver County’s economy expanded twice as fast as the rest of the state, and faster than the U.S. economy overall, gross domestic product (GDP) data show.”