Oil Price War: Halliburton Furloughs 3,500 in Houston
And so it begins. We’ve seen it before during oil and gas “down cycles.” Some of the first companies to lay off workers are the oilfield services (OFS) companies. Companies like Halliburton. It’s a yo-yo. Lay off a bunch of people (hundreds or thousands), and in a few years when things turn around, hire back a bunch. Some pejoratively call it boom and bust. We’re entering another serious down cycle with impending layoffs. Yesterday Halliburton announced a new twist. Instead of laying off thousands, the company will “furlough” some 3,500 workers. Here’s how it works…
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Yesterday we wrote that the price of oil is in a free fall, heading toward $20/barrel (see 
Radicalized leftist groups pretending to care about the environment, including the Center for Biological Diversity, Sierra Club and Ohio Environmental Council, have struck again. In May 2017 the three groups sued the U.S. Forest Service and U.S. Bureau of Land Management (BLM) to block the sale of leases for oil and gas drilling in Ohio’s Wayne National Forest (WNF). Last week a federal judge ruled in their favor. The court has effectively blocked all future lease auctions for WNF and is considering overturning two previous auctions. This is a DIRECT attack on the property rights of private landowners.
Yesterday EQT, the nation’s largest natural gas producing company, issued a press release to update investors and the marketplace on a couple of important issues. First, the company has sliced off another $75 million in previously-planned spending for 2020. The company now plans to spend $1.075 – $1.175 billion on drilling and other expenses this year. Second, the company “has entered into an agreement with a third-party to permanently release firm transportation obligations of approximately 400 MMcf/d, or approximately 15% of EQT’s current portfolio.” Translation: EQT was able to cancel 15% of the contracted pipeline capacity they had, lowering expenses.
Each month the U.S. Energy Information Administration (EIA) produces its Drilling Productivity Report (DPR), our favorite monthly report. The DPR estimates how much oil and natural gas each of the country’s seven largest shale plays produced in the previous (current) month, and how much each will produce in the coming (next) month. The February DPR showed, for the first time, combined natgas production from all shale plays would decrease beginning in March (see 
In early January, the average price for a barrel of oil was $63. Yesterday the price closed at $28.70. Word on the street is that the price may go as low as $20/barrel, soon, and stay there for a while. Why? Because the Saudis and Russians have oil-pumping fever. They’re pumping as much oil as fast as they can. And that’s producing a global surplus of oil chasing buyers who don’t want it. According to IHS Markit VP and head of oil markets Jim Burkhard, “The last time that there was a global surplus of this magnitude was never. Prior to this the largest six-month global surplus this century was 360 million barrels. What is coming will be twice that or more.” The price of oil has crashed–and unless the Saudis and Russians let up, the price will stay crashed for some time to come.
Adelphia Gateway is a plan to convert an old/existing 84-mile oil pipeline stretching from Northampton County, PA through Bucks, Montgomery, and Chester counties, terminating in Delaware County at Marcus Hook, into a natural gas pipeline–flowing Marcellus gas to southeast PA. Roughly half of the pipeline was previously converted and already flows natgas. In December the Federal Energy Regulatory Commission issued final approval for the project (see 
In Ohio forced pooling is called “unitization.” When a landowner/leaseholder owns 65% of the mineral rights under property in a given location and wants to pool other neighboring properties into an oil or gas drilling unit, that landowner/leaseholder files a request with the Ohio Dept. of Natural Resources Division of Oil and Gas Resources Management. The Division head then schedules a hearing to consider the request. All such hearings scheduled for this week are now canceled and will be rescheduled. Furthermore, the Division will only be able to accept new unitization requests on Tuesdays and Thursdays, and they will only return phone calls about unitization on Fridays. All due to the COVID-19 coronavirus.
Drilling, whirring, humming, thumping, grinding, engines running, hammering, back-up warning beeps, banging, clanging. Those are the sounds of progress happening in Chester County, PA. Contrary to the griping and moaning mainstream media reports about those who live near Mariner East 2 (ME2) pipeline construction, the sounds of ME2 construction are music for at least one local resident because he knows about the economic prosperity this project will bring to the region.
Electric power generator FirstEnergy (now called Energy Harbor Corp.) pulled off what we consider the biggest case of deception in the history of Ohio by pressuring Ohio legislators and a RINO governor to sign into law a bill to force Ohio residents to pay the company $1 billion so it can keep open two uneconomic/failing nuclear power plants (see 
There is an increasing call from economists to “let the free market” determine who lives and who dies in the oil and gas industry. We won’t lie–we live in dire times. We don’t know what the outcome will eventually be. While the world is gripped in COVID-19 coronavirus panic, the Saudis and Russians have flooded the world markets with oil, forcing the price of oil to collapse. Now our own economists are writing that shale companies already teetering on the brink of bankruptcy should be allowed to go under. Don’t prolong the agony. There were already on the way out. But is that wise?
Mountaineer NGL Storage is planning to build an NGL (primarily ethane) storage operation in Monroe County, OH, located just across the river (and border) from West Virginia. Last summer David Hooker, president of Mountaineer and president of the parent company Energy Storage Ventures (located in Denver, Colo.) announced the project had received all necessary permits to begin construction, and that construction “could” begin by the end of March this year (see 
One of our favorite Energy in Depth writers, Nicole Jacobs, has just published a great post that outlines the huge impact new natural gas-fired (mostly Utica Shale gas) power plants have had and will have in Ohio. She includes a list of 10 projects either already built and running, under construction, or on the books to get built. When you add up the total capacity for all 10 plants, they will generate an amazing 9,215 megawatts of electricity, enough to power upward of 9 million homes! The companies building those 10 plants are investing $15.9 billion. This is huge for Ohio’s economy.
In a disappointing decision, Pennsylvania Commonwealth Court recently ruled a long-running lawsuit filed against Grant Township (Indiana County, PA) will continue on through the court system. For the past several years we’ve reported on the case of Grant Township, a town that passed an ordinance cooked up by the radical Community Environmental Legal Defense Fund (CELDF) to try and block a state-approved injection well. Part of the ordinance was tossed. However, Commonwealth Court has decided the town can continue to try and make a case that it should be able to override state law with its home-cooked regulations because by doing so they will somehow protect citizens’ health, which the town says is allowed under PA’s poorly-written Environmental Rights Amendment (ERA).