Left Begins to Talk Down More Energy for AI Data Centers
For some time, we’ve brought you news of the coming expansion of new data centers due to the rapid (explosive) spread of AI or artificial intelligence. Every time you type a query into ChatGPT or another AI engine, a process runs on a computer in a data center somewhere. That computer uses electricity. The electricity comes from somewhere — most of the time from natural gas being burned in a power plant. More AI queries equals more computers (and data centers) needing more energy. Just two days ago, we told you that most of the big pipeline companies in the country, including Williams, Energy Transfer, Kinder Morgan, Enbridge, and TC Energy, are telling investors of this coming expansion as an opportunity (see Big Midstream Companies Eye Data Center/AI Market for New Pipes). Solar and wind are NOT up to the task of supplying extra electricity for data centers and AI. Enter the radical left to pee all over the concept that we need more data centers because their favored form of energy isn’t up to the task.
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The Ohio Oil and Gas Land Management Commission (OGLMC) continues to do its job. Yesterday, the group held a meeting and awarded five contracts for drilling and fracking UNDER (not on) several state-owned lands, including a contract with EOG Resources to drill under 85 acres in Keen Wildlife Area in Washington Township, Harrison County, for $211,650 ($2,500/acre). Also of interest at yesterday’s meeting was that 40 parcels of land in Salt Fork State Park and Salt Fork Wildlife Area were removed from the committee’s agenda. Apparently, the nominating company withdrew its application for those tracts.
Yesterday, the “front month” NYMEX natural gas contract for Sept. delivery gained 4.60 cents per million British thermal units (MMBtu), rising 2.15% to $2.1890/MMBtu. Hey! Above $2 for five consecutive trading sessions! How long will the price stay above $2? Zacks.com took a stab at answering that question.
One of the pleasures we’ve had over the years in writing MDN and attending various industry events is meeting the great people who either work in or support the oil and gas industry. One of those people is Alex Epstein, author of the book, “
What had been a regular stream of talk about providing power to data centers and artificial intelligence (AI) has become a torrent. There is a clear connection between data centers and the natural gas industry. This most recent round of quarterly financial updates by the biggest of the big pipeline companies (all of which have a huge presence in the Marcellus/Utica) reveals a new opportunity: building natgas pipelines directly to data centers. Why? Because increasingly those data centers are considering making their own power.
The mighty Shell ethane cracker plant in Monaca (Beaver County), PA, has a new person in charge: Emma Lewis, senior vice president of U.S. chemicals and products at Shell. We told you Lewis had replaced Hilary Mercer back in January (see 
A Washington County, PA, man and his anti-fossil fuel lawyer have won the right to force Chevron executives to testify in court in a case where the man accuses Chevron of using PFAS (“forever chemicals”) in fracking fluids in 2011-2012 near his home. He alleges the chemicals spread to his water well and damaged his health and the health of family members who drank and used the “contaminated” water.
In July, MDN told you about a disappointing (but not surprising) decision from the Democrat leftists on the Pennsylvania Supreme Court (see 
The vast majority (up to 99%) of Pennsylvania’s abandoned conventional wells are “orphans,” or wells without an identifiable, documented owner whom the state can hold liable for cleanup. Orphan wells date back to the Civil War in some cases. Even with “newer” wells, the problem has been poor recordkeeping by the PA Dept. of Environmental Protection (see 
The Baker Hughes U.S. rig count has gone up three out of the last four weeks, including last week, when it went up by two to 588. However, it’s still down 41 from the 629 it hit earlier this year in March, so we don’t get overly excited about reading that it went up again last week. It’s still below 600, an important psychological level. The Marcellus/Utica stayed even last week with 36 active rigs. However, one rig moved. Pennsylvania gained a rig and now operates 21 active rigs. Ohio lost a rig and now operates 10 active rigs. West Virginia remained the same with five active rigs. The M-U’s primary competitor, the Haynesville, was down two rigs and now operates 32 rigs. The gap between the M-U and Haynesville grows!
Once a month, the U.S. Energy Information Administration (EIA) analysts issue the agency’s Short-Term Energy Outlook (STEO), their best guess about where energy prices and production will go in the next 12 months. Starting in June, the EIA axed its monthly Drilling Productivity Report that focused on shale plays and instead rolled it into the monthly STEO (see 
Here’s a court case that flew under the radar until now. It’s a case that has the potential to affect some drillers and some royalty owners in Ohio. Sabre Energy Corporation (the plaintiff) sued Gulfport Energy Corporation and Antero Resources Corporation (the defendants) for breach of contract. Sabre Energy owns Overriding Royalty Interests (ORRIs), or fractional shares, in defendants’ shares of royalties from their oil and gas leases. Sabre Energy contends that these ORRIs attach to defendants’ recently drilled deep horizontal wells, and so the defendants owe it royalties.
As we’ve discussed many times before, the price for natural gas (especially the NYMEX futures price) is primarily determined by supply and demand — Economics 101. When there is too much supply with the same or less demand, prices go down. And boy, have they gone down! The problem we’ve struggled with all this year is too much supply. A number of drillers (many in the Marcellus/Utica) have pulled back on production to take some of the supply off the table. A good measure of supply is the inventory or storage number. Natural gas is stored during the “summer” season for use later during the “winter” season. As we began the injection “summer” season earlier this year, natgas inventories were 39% above the five-year average. The U.S. Energy Information Administration (EIA) predicts inventories will have dropped to 6% above the five-year average by the end of October.