Commodity Price

Commodity Price | Industrywide Issues

Importance of Off-Shore Gas Decreases with Rise of Shale Gas
August 31, 2012August 31, 2012

The Gulf of Mexico has traditionally been a big source for both oil and natural gas for the U.S. When hurricanes blow through the Gulf and shut down oil and gas rigs, the markets always respond. That is, until now.

Even though Hurricane Isaac took an eerily similar path to Katrina (from 2005), and although nearly 3/4 of natural gas production coming from rigs in the Gulf was “shut-in” (or stopped, in lay terms), how did the markets respond? Gas futures prices went up 2%—hardly a blip. Why? Because of an abundance of shale gas—including (particularly) an abundant supply of shale gas from the Marcellus.

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Commodity Price | Economic Impact | Industrywide Issues | Statewide WV | West Virginia

WV Gas Utility Lowers NatGas Rate by 11.59%
August 9, 2012August 9, 2012

Bluefield Gas, a gas utility company based in Bluefield, West Viriginia, is lowering their rates for natural gas by 11.59%, effective November 1. Why? Marcellus Shale, of course.

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Commodity Price | Industrywide Issues

U.S. NatGas Prices Go Up, Except for the Marcellus
August 3, 2012August 3, 2012

Natural Gas Intelligence (NGI) reports the price of natural gas in the U.S. made impressive gains last month—all except for the price of Marcellus Shale natural gas, that is. According to a press release announcing the results of “bidweek,” the once a month pricing the industry uses to set prices that many buyers and sellers of natural use for the coming month, infrastructure constraints (lack of pipelines) in the Marcellus are pushing prices lower as gas supplies bottleneck in the region. More supply sitting around, lower prices. Simple economics.

Below is the press release from NGI talking about the latest price news. Near the bottom is a link to a video where you’ll find the voice of a certain MDN blogger interviewing price expert Pat Rau. Give it a watch/listen.

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Commodity Price | Economic Impact | Hydraulic Fracturing | Industrywide Issues

Harvard Study: Shale Drilling Means Oil Prices Heading Lower
July 18, 2012July 18, 2012

A Harvard University study published in June takes a look at oil and makes the bold prediction that world oil prices will go down, substantially, by 2020. Why? You guessed it—the miracle of hydraulic fracturing of shale, particularly in the U.S.

The study, titled “Oil: The Next Revolution – The Unprecedented Upsurge of Oil Production Capacity and What it Means for the World,” (see below), says the Bakken/Three Forks play in North Dakota and Montana “could become a big Persian Gulf producing country within the United States.” And that’s just one play, out of 20!

Although this Harvard study is focused on oil, and MDN is largely focused on natural gas, the study highlights the critical role played by shale formations, and drilling in shale, sometimes the same well bore, delivers not only natural gas but natural gas liquids and oil. So this study and it’s conclusions are well worth your time to review. Notice the chart on page 13 of the PDF file (page 3 of the report): It shows the U.S. pulling very close to Saudi Arabia in oil production by 2020. Astonishing!

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Commodity Price | Economic Impact | Industrywide Issues

Natural Gas Ties Coal in Generating Electricity in U.S.
July 16, 2012July 16, 2012

What’s the number one energy source used to create electricity in the United States? If you answered “coal” you would have been right—up until very recently. Natural gas’ use to generate electricity has now tied coal—something that hasn’t happened in at least 40 years.

And with strict new federal EPA rules in place, there’s virtually no chance new electric generating plants powered by coal will be built. To build a new coal-fired plant compliant with emissions levels by the EPA would be too expensive to make it profitable.

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Commodity Price | Economic Impact | Hydraulic Fracturing | Industrywide Issues

The Reason We Have Low Natural Gas Prices: Marcellus
June 25, 2012June 25, 2012

Startling new statistic from Bloomberg: The United States was able to produce enough energy from homegrown sources to meet 81 percent of our energy demand in 2011. Why? The miracle of hydraulic fracturing of shale.

Second startling new statistic: The Marcellus Shale alone produced 6.3 billion cubic feet per day in March. That’s enough gas to meet 62% of natural gas demand in 11 eastern states from Maine to Maryland. Astonishing.

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Commodity Price | Industrywide Issues

What’s the Reason Natural Gas Prices are So Low?
June 22, 2012June 22, 2012

Why are natural gas prices at historically low prices? According to gas pricing experts, you can sum it up in a single word: Marcellus.

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Alternative Energy | Commodity Price | Economic Impact | Hydraulic Fracturing | Industrywide Issues

Coal Use Decreases, NatGas Increases – Renewables? Irrelevant
June 13, 2012June 13, 2012

New numbers released by IHS CERA show how far coal has fallen as the fuel of choice to generate electricity in the U.S., and how high natural gas has risen to take its place. Here are some interesting statistics:

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Commodity Price | Economic Impact | Exporting | Industrywide Issues

New IEA 5-Year Report Says Natural Gas Future is Bright
June 5, 2012June 5, 2012

In a new report released earlier today at the World Gas Conference in Maylasia, the International Energy Agency (IEA) paints a rosy five-year picture for natural gas around the world. You may recall that last week the IEA released their “golden rules” for shale gas drilling (see this MDN story).

The report released today says a quarter of new gas demand over the next five years will come from China, and that electrical generating plants in the U.S. will convert and use gas as much as coal. The IEA also advocates for a global market price for natural gas and hints that a spot price for gas in Asia may be on the way.

From the IEA press release:

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Commodity Price | Economic Impact | Industrywide Issues | Muskingum County | Ohio

New Gas-Fired Electric Power Plant in Ohio
May 29, 2012May 29, 2012

Another story about how electric generating plants are switching from coal to natural gas. This one comes from Ohio, where Appalachian Power brought a newly completed gas-fired plant in February near Dresden. Why switch from coal to gas? It’s all in the economics. The cost of coal has skyrocketed from $43.75 per ton in 2007 to $63.78 in 2011, an increase of 46 percent. At the same time, natural gas has gone from over $14 per million Btus to around $2.70 today. Need we say more?

But at what price is it more economical to use coal rather than natural gas? Thanks to Appalachian Power, we now know.

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Commodity Price | Economic Impact | Industrywide Issues | Pennsylvania | Statewide PA

PA Utility Announces Second NatGas Rate Cut This Year
May 18, 2012May 18, 2012

On March 1, a little over two months ago, UGI Penn Natural Gas, a utility which serves approximately 158,000 customers in 13 counties in northeastern and central Pennsylvania, announced it was immediately reducing natural gas rates for its customers by 4.5 percent (see this MDN story). UGI announced yesterday it would file its annual rate on June 1 and it will request yet another 4.5 percent rate reduction on its annual rate which would take effect December 1. That’s a total of 9 percent in one year—thanks to the abundance of PA’s Marcellus Shale gas.

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Alternative Energy | Chesapeake Energy | Commodity Price | Energy Companies | Industrywide Issues

Boone Pickens Sells Chesapeake Stock, Strange Comment on NatGas
May 14, 2012May 14, 2012

Has T. Boone Pickens, Texas oil billionaire and author of “The Pickens Plan” that calls for America to use natural gas to reduce our dependency on OPEC oil and as a bridge to a renewable energy future, now turned his back on natural gas? His investment company, BP Capital Management, has sold off all of its Chesapeake Energy stock. Pickens’ comment on the reason for selling off Chesapeake was a tad strange:

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Chesapeake Energy | Commodity Price | Energy Companies | Industrywide Issues

Chesapeake’s NatGas Production Cuts Never Materialized
May 2, 2012May 2, 2012

In January 2012, Chesapeake Energy announced they would curtail (reduce) their natural gas production by 1/2 billion cubic feet (bcf) per day. In February, they announced they would double it to 1 bcf per day (see this MDN story). Other energy companies also announced they would cut production, all in an attempt to reduce supply and boost the price of natural gas. But commodities traders were wary of those announcements, saying in essence, “We’ve heard this before,” and that real cuts in production were never forthcoming (see this MDN story). Looks like the wary traders were right.

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Commodity Price | Industrywide Issues

Graph Showing NatGas Rig Count vs NatGas Price
May 1, 2012May 1, 2012

In a Reuters news story about the Energy Information Administration’s (EIA) latest report showing natural gas production fell slightly in February, we get the following graphic which MDN found interesting. It shows the Baker Hughes rig count (number of natural gas drilling rigs) plotted as one line, with the second plotted line representing natural gas futures prices. The natural gas rig count—drilling rigs dedicated to drilling for natural gas in the lower 48 states—is now at a 10-year low. The count as of last Friday was 613, the lowest it’s been since April 2002. Gas prices are also at 10-year lows.

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Commodity Price | Industrywide Issues

NatGas Commodity Price Hits 10-Year Low, Facts & Figures
April 12, 2012April 12, 2012

Yesterday the commodity price of natural gas hit a 10-year low, $1.984 per 1,000 cubic feet. There will be plenty of stories in the press about it. However, in one of those stories, we get this interesting and helpful information about the price, as well as the areas producing the most natural gas and the drillers producing it:

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Chesapeake Energy | Commodity Price | Energy Companies | Industrywide Issues

At What Commodity Price Does NatGas Drilling Stop?
April 10, 2012April 10, 2012

How low might the commodity price of natural gas go before drillers really will quit drilling and wait for the price to go up? We’ll give you “the magic number” in a moment. But first, the (rather sketchy) rationale for how we calculate that number.

It seems almost every day we hear in the mainstream news that the low commodity price of natural gas is forcing drillers to suspend or slow drilling operations—especially in the “dry gas” areas of the Marcellus Shale. Contrary to what “everyone” seems to be doing, Shell, Chevron and others have said they will continue drilling regardless of the low price of natural gas. And more than one analyst has said announcements of drilling cutbacks by Chesapeake and others is so much hot air and that they will believe it when they see it.

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