Commodity Price 51 - Marcellus Drilling News

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.

Commodity Price | Industrywide Issues

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

April 12, 2012April 12, 2012

trending down 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:

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.

NY Customers See 50% Price Decrease from PA Marcellus Gas

April 10, 2012April 10, 2012

Utility customers of Corning Natural Gas Corp. in New York State’s Finger Lakes region can thank their neighbors south of the border in Pennsylvania that they are now paying 50 percent less for their natural gas than they paid just one year ago. And they can also thank the energy companies who use hydraulic fracturing in the Marcellus Shale.

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

Low NatGas Prices Translate to Electricity Rate Cut by Peco

April 4, 2012April 4, 2012

Yet another Pennsylvania utility is lowering rates customers pay—this time it’s a rate cut for electricity by Peco Energy which supplies the Philadelphia area. Low cost natural gas is being used in electrical generating plants and the utility is passing along the lower cost to produce electricity to its customers, thanks in part to an abundant supply of Marcellus Shale natural gas.

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

Pittsburgh Customers Get Another NatGas Rate Reduction

April 2, 2012April 2, 2012

The Pittsburgh area’s three largest natural gas utilities have just dropped their natural gas rates (again) for customers—this time up to 22 percent.

Commodity Price | Industrywide Issues

NatGas Commodity Price Hits a New 10-Year Low

March 30, 2012March 30, 2012

The commodity price for natural gas in the U.S. hit a 10-year low yesterday after a government report of a larger-than-expected jump in supplies. There’s now more natural gas in storage than the entire country uses in a month.

Commodity Price | Industrywide Issues | Pennsylvania | Statewide PA

Number of NatGas Drilling Rigs Continues Slow Decline in PA

March 27, 2012March 27, 2012

The number of gas drilling rigs continues a slow decline in Pennsylvania as companies reallocate those rigs to Ohio and to areas in the country where shale oil drilling is expanding.

Commodity Price | Energy Companies | Industrywide Issues | Range Resources Corp

Range CEO Predicts Long-Term Commodity Price of NatGas

March 23, 2012March 23, 2012

Here’s a prediction on the commodity price of natural gas from John Pinkerton, CEO of Range Resources, as delivered at the Wall Street Journal’s ECO:nomics conference this week:

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.

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.

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.

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.

Range’s Wet Gas Drilling Location & Dry Gas Drilling Timeline

January 31, 2012January 31, 2012

Interstate 79 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.

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:

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: