Associated Gas in Oil Plays Not a Threat to M-U This Time Around
In years gone by, when oil drilling in the Texas/New Mexico Permian, Texas Eagle Ford, or North Dakota Bakken picked up, the increase in oil drilling came with an increase in natural gas production–something called “associated gas” because the gas is not produced for its own sake but as a byproduct of oil drilling. With tightening environmental laws that require oil drillers to capture instead of burn off or flare the gas, those oil drillers looked for markets to sell their associated gas. All of that extra associated gas would compete in the market with Marcellus/Utica gas, because our gas and the associated gas often flows to the same Midwest and Gulf Coast markets. Prices crash due to an abundance of supply with the same (or even less) demand. This time around, things have changed.
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The West Virginia Public Energy Authority is a seven-member board that aims to make the best use of WV’s abundant natural energy resources. State code gives the board power to buy, lease, and issue bonds to build electric power plants and natgas transmission projects. Gov. Jim Justice reactivated the board last summer after it had been dormant for upwards of a decade. The first meeting of the new board is next Wednesday.
Frankly, we sometimes wondered if we would ever see this day! Fantastic news: The Mariner East Pipeline system, including Mariner East 1 (ME1), Mariner East 2 (ME2), and Mariner East 2X (ME2X), is now completely built and in the ground. According to an update by builder and owner Energy Transfer issued yesterday, the company is in the process of commissioning and bringing the remaining bits online. The entire system will be online during the first quarter of this year–no later than March 30th. Hallelujah!
There was a time in the Marcellus/Utica when, if the price of natural gas went above $3/Mcf, drilling companies would drill like crazy. Cabot Oil & Gas (now Coterra Energy) would routinely drill wells when the price in the region was less than $1/Mcf! And somehow they made money. With prices hitting above $4/Mcf routinely, even flirting with $5/Mcf, you would think M-U drillers would ramp back up and try to make hay while the sun shines. But M-U drillers are not. They are showing remarkable restraint in NOT expanding their drilling programs. Why?
According to the Bureau of Labor Statics, the oilfield services and equipment industry grew by over 7,000 jobs in December 2021. Marcellus/Utica companies can’t find enough workers to fill all of the open positions in our region, especially in Pennsylvania. According to an article in the Wellsboro Gazette (Tioga County, northeastern part of the state), companies in Tioga and Potter counties can’t fill all of their open positions.
Founded in 1946, the Texas Independent Producers & Royalty Owners Association (TIPRO) represents nearly 3,000 individuals and companies from the Texas oil and gas industry. TIPRO is one of the country’s largest oil and gas trade associations and a strong advocacy group representing both independents and royalty owners in Texas. TIPRO generates some great research reports, including their latest annual “State of Energy Report” for 2022. The report, which looks at oil and gas across the country (not just Texas) finds that the O&G industry supported a total of 832,869 direct jobs in the U.S. last year. The U.S. O&G sector paid a national annual wage averaging $115,166 during 2021, 76% higher than average private sector wages!
Two days ago the Pennsylvania Dept. of Environmental Protection (DEP) gave a briefing and delivered a report to the PA Environmental Quality Board (EQB). Kurt Klapkowski, Director of the Bureau of Oil and Gas Planning and Program Management, said the state’s conventional oil and gas drilling companies only paid $46,100 of the $10.6 million it cost for the DEP to regulate that industry in FY 2020-21. That’s a pretty serious deficit. What is DEP suggesting as a fix?
Get a load of this… Last May, the International Energy Agency (IEA) and its Executive Director Fatih Birol published a nonsensical “report” called “Net Zero by 2050: A Roadmap for the Global Energy Sector” (see 
In May 2017, Murrysville Township (Westmoreland County) struck a zoning compromise with local drillers on the distance of setbacks (see 
In the closing hours of the 2014 West Virginia legislative session, the legislature passed Senate Bill (SB) 373, the Aboveground Storage Tank Act (see 
As part of its fourth-quarter and full-year 2021 update, Canadian pipeline giant Enbridge (with huge assets in the U.S., including in the Marcellus/Utica) announced it is spending $400 million to expand capacity on its Texas Eastern Pipeline Company (TETCO) system. Enbridge will also spend an additional $100 million on TETCO for the newly-announced Appalachia to Market Phase II expansion. That’s half a billion dollars on TETCO spending beginning this year. TETCO currently flows roughly 1.9 Bcf/d of Marcellus/Utica molecules with the power to influence gas prices (see 
MDN first told you about plans to build the Chickahominy Power Station, a 1,650 megawatt state-of-the-art natural gas-fired power plant in Charles City County, VA, in June 2018 (see