Commodity Price

Chesapeake Energy | Commodity Price | Energy Companies | Industrywide Issues

Traders Skeptical that Chesapeake, Others Cut Gas Production
March 8, 2012March 8, 2012

The commodity price of natural gas continues to hover near it’s 10-year low. That’s great news for consumers whose heating bills are lower, but not-so-great news for landowners with leases in the Marcellus Shale. Why? Because low prices mean it’s not profitable for drillers to go after shale gas. They are in it to make money, and if you lose money in mining natural gas, well, you stop doing it. And that’s what is happening in many Marcellus areas. Drilling hasn’t stopped—but it has slowed down.

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Commodity Price | Industrywide Issues | Pennsylvania | Statewide PA

PA Consumers See Natural Gas Bills Go Down Again
March 1, 2012March 1, 2012

The low commodity price of natural gas, due in part to the large supply created by Marcellus Shale gas, is resulting in lower monthly utility bills for customers in Berks County, PA, in an area not even part of the Marcellus Shale play.

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

Northeast PA Starting to Feel the Dry Gas Drilling Slowdown
February 20, 2012February 20, 2012

The decision by Chesapeake Energy and other drillers to reduce drilling in dry gas (methane only) areas and instead concentrate on wet gas (natural gas liquids) areas is already having an impact on Pennsylvania’s northeastern counties where drilling last year was extremely active. Rig counts are going down, and with them, the amount of drilling activity goes down. It ultimately impacts the local economy in those areas, as noted in a recent Scranton Times Tribune article.

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Commodity Price | Industrywide Issues

Predicting the Price (and Production) of Natural Gas
February 2, 2012February 2, 2012

According to David Sterman, a 20-year investment analyst writing on the Seeking Alpha website, the commodity price for natural gas has likely bottomed out in the U.S. and will now slowly rebound. Natural gas is currently trading around $2.45 per thousand cubic feet (mcf). Goldman Sachs believes by the end of this year prices should be around $3.75 mcf, moving to $4.25 in 2013, and $5.50 in 2014.

How does the commodity price of natural gas affect landowners? It costs drillers roughly $2.30 mcf to drill, pipeline and sell natural gas, so if prices hit that level, production stops. As the price falls into the sub $3.00 range, drillers slow production, stop production, or shift production from dry gas (methane-only) areas to more lucrative wet gas (natural gas liquids) areas.

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Commodity Price | Energy Companies | Industrywide Issues | Pennsylvania | Range Resources Corp | Washington County

Range’s Wet Gas Drilling Location & Dry Gas Drilling Timeline
January 31, 2012January 31, 2012

The talk coming from the largest drillers in the Marcellus Shale is that they will scale back drilling activities in the dry (methane only) portions of the Marcellus Shale play and instead focus on the wet (liquids-rich) portion.

Ever wonder where, exactly, the liquids-rich area can be found? We now know where it is for Range Resources, one of the largest drillers in Pennsylvania. We also have an estimate of how long drilling in the dry gas portion of the Marcellus may be pushed back for Range due to low prices for natural gas.

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Commodity Price | Economic Impact | Exporting | Industrywide Issues

EIA Issues Early Release Summary of Annual Energy Outlook
January 24, 2012January 24, 2012

Yesterday, the U.S. Energy Information Association (EIA) issued the 2012 Annual Energy Outlook (AEO2012) Early Release Reference case, which provides updated projections for U.S. energy markets through 2035 (a copy is embedded below). This Early Release Overview assumes no changes in current laws and regulations and is the prelude to the full AEO due out this spring. The AEO provides a comprehensive snapshot of the entire energy picture for the U.S. in particular, but in the wider context of world energy supplies. It is relied on by the government, politicians and the energy industry.

Among the observations and predictions in the Early Release for natural gas:

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Chesapeake Energy | Commodity Price | Energy Companies | Industrywide Issues

NG Prices React to Chesapeake’s Announcement to Cut Production
January 24, 2012January 24, 2012

Yesterday, MDN told you about Chesapeake Energy’s major announcement that they will reduce capital spending on dry natural gas, or methane-only production, by 70 percent this year (see this MDN story). Chesapeake is also shutting down 9 percent of their domestic production, some 0.5 billion cubic feet of natural gas per day, which represents 1.5 percent of the entire natural gas output in the U.S. The result is predictable—less supply and steady demand equals higher prices. And that’s just what happened:

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Commodity Price | Exporting | Industrywide Issues

Is the Shale Rush Almost Over? One Analyst Says Yes
January 16, 2012January 16, 2012

Jack Barnes, writing for Money Morning, analyzes the price of natural gas and why it’s so low—and what it ultimately means. He says that numerous shale plays in the U.S. do contribute to an overabundance of supply. But the real culprit, according to Barnes, is that major drillers are going after natural gas liquids (NGL), which can be used in a variety of ways. NGL are closely aligned with the higher price of oil and more valuable. In the process of going after NGL, “dry gas” (or methane) is recovered in the process too. It is the scramble for NGL that leads to an oversupply of methane, and that oversupply keeps natural gas prices low.

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Commodity Price | Economic Impact | Hydraulic Fracturing | Industrywide Issues

Marcellus Shale Means NJ Residents Heating Bills Vastly Lower
December 19, 2011December 19, 2011

Even though there is no fracking of natural gas wells in New Jersey, residents of that state are enjoying much lower heating bills this winter because of fracking. In fact, according to the AARP, using natural gas for heating costs about one-fifth of what it costs using oil. Why? The Marcellus Shale.

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Commodity Price | Industrywide Issues

Natural Gas Rig Numbers Down, Oil Rig Numbers Up in U.S.
December 13, 2011March 24, 2012

Kent Moors, writing on the Seeking Alpha website, comments on his observation from Baker Hughes well rig data for the U.S. that the number of rigs used to drill for natural gas has gone down over the same period last year, but that the number of rigs drilling for oil has skyrocketed.

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Commodity Price | Economic Impact | Industrywide Issues

Natural Gas Now Least Expensive Way to Generate Electricity
November 2, 2011November 2, 2011

Jack Kelly had an excellent column in Sunday’s Pittsburgh Post-Gazette. It starts out with a brief history of the discovery of oil in the U.S. and moves to shale gas and points out that shale gas is an even bigger game changer than oil was. Did you know that natural gas is now the cheapest way of generating electricity?! Renewable sources like wind cost 1.5 times more, and solar costs 3.3 times more to produce the same megawatt of electricity as natural gas.

Among Jack’s observations:

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

Marcellus Shale Gas Leads to Lower Prices for PA Consumers
November 1, 2011November 1, 2011

One of the arguments in favor of shale gas drilling is that it will create more supply leading to lower prices for consumers (that’s Economics 101 for the Occupy economic illiterates). Those opposed to drilling scoff and say it won’t happen, that the big, bad energy companies will rig the system to keep prices, and profits, high. Here’s a dose of reality for those who scoff:

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Commodity Price | Hydraulic Fracturing | Industrywide Issues

What Those Opposed to Gas Drilling Really Fear
September 21, 2011September 21, 2011

Dave McCurdy is president and CEO of the American Gas Association. He’s also a former congressman (Democrat) from Oklahoma. In an interview with the Washington Times, he minces no words and says what MDN has been saying all along: Those opposed to shale gas drilling are motivated by an ideology, a preference for renewable energy. McCurdy points out what they really fear is that renewables can’t compete with natural gas based on economics. So that ideology and fear leads them to oppose natural gas.

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Commodity Price | Economic Impact | Industrywide Issues | New York | Statewide NY

Wind Farm Project Canceled Due to Cheap Marcellus Gas
September 19, 2011September 19, 2011

Those who oppose natural gas drilling do so because it threatens their ideology that renewable energy should be the only available option. Renewable energy supporters don’t seem to care that it costs 3-5 times more (that’s 300-500 percent more) for electricity from renewable sources than from fossil fuel sources. Rather than celebrate our good fortune in finding a cheap, abundant source of something that pollutes far less than other sources—shale gas—they attack it and claim it’s just as bad as the dirtiest coal. It’s sad, really.

Here’s yet another example of so-called renewables failing the economic test, an example sure to push some of the antis over the edge. It looks like the $1 billion Great Lakes offshore wind farm is yes, out of wind (bad pun intended). And the reason why it’s being canceled? Marcellus Shale gas—abundant, and cheap.

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Commodity Price | Hydraulic Fracturing | Industrywide Issues

Fracking Creates an Oil Boom – Now More Oil than Gas Rigs
August 18, 2011August 18, 2011

Turns out that horizontal hydraulic fracturing, the process used to get natural gas from shale layers, is also a renaissance for oil production as well. According to the latest figures, the number of rigs drilling for oil in the U.S. has just surpassed the number of rigs drilling for natural gas—for the first time in 18 years—thanks to fracking.

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Commodity Price | Energy Services | Exporting | Industrywide Issues | Kinder Morgan | Pipelines

Marcellus Shale Gas May Soon be Exported – To California
July 7, 2011July 7, 2011

In an astonishing reversal, the operator of a natural gas pipeline that spans the United States is proposing to change the direction the gas flows through the pipeline in order to sell shale gas from the Eastern U.S., particularly the Marcellus, to the Midwest and Western U.S.

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