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10 New Shale Well Permits Issued for PA-OH-WV Aug 7 – 13
New shale permits issued for Aug 7 – 13 in the Marcellus/Utica crashed for a second week in a row. There were 10 new permits issued last week, down 14 issued the previous week (half of the 29 issued three weeks ago). Last week’s permit tally included 10 new permits in Pennsylvania, no new permits in Ohio, and no new permits in West Virginia (third week in a row for WV). The top permittee for the week was Chesapeake Energy, receiving 6 permits–4 in Bradford County and 2 in Susquehanna County.
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National Fuel Gas Company (NFG), headquartered in Buffalo, NY, is the parent company for Marcellus/Utica driller Seneca Resources and the parent of midstream company Empire Pipeline. Yesterday, NFG issued its latest quarterly update. NFG operates on a weird fiscal year system. This latest update is for the company’s third quarter, which would be everybody else’s second quarter update. NFG said it plans to “further moderate” its Seneca drilling activity as it shifts to slower production growth in the “low single-digit” range.
For individuals, discretionary income is what’s left after you pay your taxes and fixed costs like housing, food, and clothing. For shale drillers, the equivalent to discretionary income is cash flow from operating activities (CFOA), which is the net income a company generates adjusted for non-cash expenses like depreciation and stock-based compensation, and for changes in working capital. Drillers can use their extra cash to grow production by spending more for drilling new wells (capital expenditures or capex). Or drillers can send some of the extra cash back to investors via share buybacks and dividends. How did Marcellus/Utica drillers spend their CFOA during the first quarter of 2023?
Two major Marcellus/Utica drillers–Seneca Resources and Northeast Natural Energy (NNE)–have joined the CG Hub, the world’s first commodities trading platform focused exclusively on certified natural gas and certified natural gas certificates. Seneca and Northeast now provide access to a combined 1+ billion cubic feet per day (Bcf/d) of certified natural gas to traders via the CG Hub.
It’s possible to track which institutional investors (big investors like BlackRock) are buying or selling shares in various companies by reviewing Securities and Exchange Commission (SEC) Form 13F filings. S&P Global Market Intelligence performed a 13F review of which companies bought, and which sold (and how much) shares of stocks for shale gas drillers during the first quarter of 2023. The topmost active shale gas driller having its stock purchased by institutional investors was Comstock Resources, which drills exclusively in the Haynesville Shale. The reason Comstock came out on top, postulates S&P, is because the Haynesville is located close to the Gulf Coast and LNG export plants. However, it was the rest of the list that interested us.
Seneca Resources Company, the Marcellus/Utica drilling arm of utility giant National Fuel Gas Company (headquartered in Williamsville, NY), has contracted with a company called Tachyus (headquartered in Houston, TX) to use its cloud-based greenhouse gas tracking and reporting service called Aurion. The purpose is, of course, to lower Seneca’s carbon and fugitive methane footprint–and to prove that is has lowered it.
The weather has been fantastic for those of us living in the northeastern U.S. over the past few weeks. Clear blue skies (when they aren’t clouded with wildfire smoke from Canada), really warm temperatures, and absolutely no rain to spoil outdoor activities. Here in the Binghamton, NY area, we went from a surplus of rain and swollen rivers and lakes just a month ago to a rain deficit today. Lawns and fields and beginning to turn brown. Hey, we’re not complaining! But we do need some rain. The lack of rain in the Susquehanna River Basin has triggered water withdrawal restrictions for 42 oil and gas drillers and four other large water users (46 in all) by the Susquehanna River Basin Commission (SRBC). In many cases, the SRBC order is to “cease withdrawal.”
It’s been a wild ride for shale energy companies from the beginning of the shale revolution around 20 years ago. Here in the Marcellus/Utica, the very first Marcellus well was sunk by Range Resources in 2004. Until a few years ago, most shale drillers were not profitable, eating through investors’ money like candy. Just before the beginning of the pandemic, shale drillers got the “free cash flow” religion and began to pull back on new drilling in favor of profitability for shareholders. The pandemic, followed by Russia’s war against Ukraine, added new market gyrations. Bottom line: Last year, shale oil and gas drillers saw historic revenues and profitability. This year, the bottom is dropping out once again…
The PA Environment Digest Blog has been reviewing the reports filed by Dept. of Environmental Protection (DEP) workers again and noticed a situation at a well pad in Delmar Township, Tioga County. According to DEP reports filed, a Notice of Violation (NOV) was issued to Seneca Resources for a well pad located on DCNR State Forest land last September. Surface water samples from puddles indicate wastewater (brine) from one or more wells spilled onto the ground.
National Fuel Gas Company (NFG), headquartered in Buffalo, NY, is the parent company for Marcellus/Utica driller Seneca Resources and the parent of midstream company Empire Pipeline. Earlier this week, NFG issued its latest quarterly update. NFG operates on a weird fiscal year system. This latest update is for the company’s second quarter, which would be everybody else’s first quarter update. The big news from the update is that Seneca Resources has agreed to acquire upstream assets in northwestern Pennsylvania from Southwestern Energy for $127 million.