Research

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    Lower 48 NatGas Production Rose 0.5 Bcf/d in January

    Bentek Energy, the energy analytics arm of Platts, released their prediction for total natural gas production in the lower 48 states yesterday. The U.S. Energy Information Administration (EIA) won’t release their final numbers until the end of February. What did Bentek find? Natural gas production went UP in January, over December, by about one-half a billion cubic feet per day (0.5 Bcf/d). The leading reason was an increase in output from the Utica/Marcellus region, but other regions increased slightly too. Here’s the low down on how/why natgas production rose last month…
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    Deloitte: 35% of Pure Play Drillers Will Go Bankrupt in 2016

    A new study just released by powerhouse consulting firm Deloitte delivers some profoundly bad news. The study is titled “The Crude Downturn for E&Ps: One Situation, Diverse Responses” (full copy below) and it reveals that 35% of “pure play” drillers (those who invest and concentrate all of their efforts in a single shale play) are at “high-risk of slipping into bankruptcy in 2016.” That’s a total of some 175 companies worldwide. There are a number of pure play drillers in the Marcellus/Utica. We sincerely hope Deloitte is wrong, but what if they’re not…
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    Report: Benefits of a Second American Shale Boom

    A fascinating new research paper just published by conservative think tank Manhattan Institute says there IS an antidote to being manipulated by America’s enemies, many of them members of OPEC. There IS an antidote to wild price swings in oil and gas prices. There IS an antidote to the poor economic conditions we experience here in the U.S. under Barack Obama. Know what it is? A second shale boom. IF the U.S. were to become the dominant exporter of energy around the world, we reap economic and geopolitical benefits like you can’t believe. In “Expanding America’s Petroleum Power: Geopolitics in the Third Oil Era” (full copy below), the author notes that the number of cars in use worldwide has risen threefold, aviation miles have gone up sevenfold, and maritime shipments increased threefold in the last 40 years. What powers 95% of that transportation? Oil and its derivatives. We need a second American shale boom and we need it soon. Read about it below…
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    BP Energy Outlook 2016: NatGas Surpasses Coal by 2035

    UK oil and gas giant BP released the 2016 edition of their BP Energy Outlook on Wednesday. BP, being a European company, lards the Outlook up with flowery talk of renewable this and sustainable that. But there are a few facts from the Outlook that slap you in the face: (1) By 2035, across the entire world, 80% of all energy will come from fossil fuels. So much for renewables riding in to the save us all “any day now.” (2) Natural gas is the largest-growing fossil fuel and by 2035 it will have replaced coal as the #2 source of energy in the world. (3) The U.S. will achieve overall energy self-sufficiency by 2021, and oil self-sufficiency by 2030. Another fun fact from the BP Energy Outlook: shale gas will account for 20% of total global gas output by 2035. Read the full report below…
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    Anti Groups Abruptly Cut Funding for OH Fracking Study

    Two days ago we told you about a three-year study conducted at the University of Cincinnati that looked at fracking and its potential affects on water wells in five Ohio counties. The research found no evidence that fracking had led to any kind of water well contamination (see Antis Not Happy with Results of OH Fracking Study They Funded). We now have a bit more to the story. The two anti groups that funded the research, the Deer Creek Foundation in St. Louis and the Alice Weston foundation from Cincinnati, abruptly stopped funding the study when they got the preliminary (and as yet, unpublished) results. The foundations thought they had bought and paid for a particular outcome, and when that didn’t happen, they withdrew their money and presumably will now support someone they can buy off. Here’s an update on this developing story from the Ohio Oil and Gas Association…
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    Oil & Gas Investment in 2015 Down Average 35% – 2nd Largest Ever

    Another interesting article from our favorite government agency, the U.S. Energy Information Administration (EIA). We all know that drillers spent a lot less last year than the year before on drilling. How much, on average? According to new research by the EIA, mining and exploration investment (which includes oil and gas and coal) declined 35% in 2015, the second largest year-over-year decline since the U.S. Bureau of Economic Analysis (BEA) began reporting the series in 1948. Did you catch that? Last year investment in oil and gas decreased the second largest amount since the government has kept records on it. Wow. This year promises even more cuts. Here’s what the EIA says in their latest report…
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    EIA Feb DPR: Utica NatGas Output Continues to Increase

    Earlier this week our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The February 2016 report shows what the EIA predicts oil and natural gas production will be in March from the seven largest commercial shale plays in the U.S. What does the report (full copy below) show? Very broadly, it shows that the decline in natural gas production is picking up speed, while the decline in oil slowed (reversed, actually). In January’s report, the EIA said for February the combined output of natgas would decline by 405 million cubic feet per day (MMcf/d). In this report, forecasting March production, the EIA says the decline will go down another 451 MMcf/d over the February number. That is, the rate of decline is increasing. There’s only one shale play of the seven with an increase in natgas output from the previous month. Can you guess which one? That’s right–the Utica…
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    Antis Not Happy with Results of OH Fracking Study They Funded

    Researchers from the University of Cincinnati have been studying fracking and its potential affects on water wells in five Ohio counties for the past three years. The lead researcher, Dr. Amy Townsend-Small, shared the results at a recent meeting of the anti-drilling Carroll Concerned Citizens. She said, “The good news is that our study did not document that fracking was directly linked to water contamination.” Oh oh. That’s NOT good news for antis–and frankly, they didn’t like her telling them the truth of what her study found. Townsend-Small also said this, “I’m really sad to say this but some of our funders, the groups that had given us funding in the past, were a little disappointed in our results.” You can be sure that any future funding for studies Townsend-Small wants to make, at least from radical environmentalists, will be nonexistent. She had the temerity to tell the truth–to the people who hired her to not tell the truth. That takes courage…
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    IHS Says Drillers Need to Cut Spending 50% *This Year*

    Yesterday MDN highlighted a couple of “bad news for the Marcellus” stories: The Dismal Outlook for Marcellus/Utica Drilling in 2016 and Rig Counts for World, US & Marcellus/Utica Continue to Tumble. We’re aware that at least one anti group picked up and repeated our stories to their email list–no doubt as a twisted celebration of some sort. So be it. At MDN we don’t sugarcoat the truth. It is bad out there and will continue to be most likely for this year and into next year. We’re not the only ones who don’t sugarcoat the truth. IHS, a highly respected oil and gas research firm, is out with more analysis of their IHS Energy Comparative Peer Group Analysis of North American E&Ps. In this latest analysis, IHS uses words like “gloomy outlook” and says drillers (E&Ps), in order to stay afloat, will need to spend about 50% less in 2016 than they did in 2015…
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    EPA Science Advisory Board Engaging in Fraud re Fracking Study

    Last December we asked a very important question: Will EPA Whore Itself to Antis and Change Fracking Water Study?. We now know the answer: Yes. The EPA is engaging in political prostitution, having sold itself to the Democrat kook left fringe base of the party. As we stated in December, the one great, huge, towering problem that anti-drillers have is that there is no scientific evidence that supports their wild claims that fracking contaminates water–which is their favorite lie to spread. When the Environmental Protection Agency arrived at the same conclusion, that fracking doesn’t pollute water, after four years of studying it, that really took the wind out of the sails of rabid fossil fuel haters (see EPA Draft Report Says Fracking Doesn’t Pollute Groundwater Supplies). So now the EPA has set about to “fix” it by changing the results of their original findings. It’s like the experiments you used to do in chemistry lab in high school. You add 5 grams of chemical compound A to 10 grams of chemical compound B and the observable result should be that the new mixture/compound turns blue. But for whatever reason it turns orange. So on your lab paper you record the result as (yes) turning blue! You receive a “100” on your lab report. The EPA, using a small group of bought-and-paid-for “scientists” called the Science Advisory Board is reviewing the earlier finding that took the EPA four years of research to produce–so the EPA has cover to say “it’s blue” and not orange. That’s what is now happening. It’s called scientific fraud…
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    5 New Pipelines Now Give Northeast Drillers Access to New Markets

    Our favorite government agency, the U.S. Energy Information Administration, continues to pump out the hits. Yesterday we highlighted a story from the EIA about the price of natural gas in the Marcellus/Utica gradually rising because new pipelines have provided new markets for northeast drillers (see EIA: New Pipelines Continue to Boost Marcellus/Utica Gas Prices). Today we bring you another great EIA story. This one does a deep dive into five pipelines that have come online in late 2015/early 2016 and that are now providing drillers with access to new markets that pay more for gas than they can get here at home…
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    EIA: New Pipelines Continue to Boost Marcellus/Utica Gas Prices

    It’s a pretty simple case of cause and effect, and economics 101. If you build more natural gas pipelines from the northeast to other regions, drillers can sell their gas to new markets. New demand = higher prices. And that’s just what’s happening in the Marcellus/Utica. The U.S. Energy Information Administration (EIA) pointed out in a recent Natural Gas Weekly Update that prices being paid in the Marcellus/Utica have gone UP because of new pipelines (see New Pipelines in the Marcellus Dramatically Improved Prices in 2H15). The great researchers at EIA have now expanded on that theme and have posted a new article on their Today in Energy which expands on that theme…
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    New Report Says O&G Industry Repeating Mistakes from Last Downturn

    According to a new report published Monday by DNV GL, a Norway-based technical advisory firm for the oil and gas industry, a majority of oil and gas professionals believe the industry is repeating the mistakes they made during the last serious downturn in the industry. Namely, companies are laying off too many workers and cutting budgets too much. The report is titled “A New Reality: the outlook for the oil and gas industry in 2016” (grab a copy below). According to DNV GL Vice President Graham Bennett, “The operators can weather the low oil price storm for some time, but the supply chain will suffer far more, and there is a risk of a permanent loss of capacity in the supply chain if low prices persist.” Rather than being too quick to cut bodies and budgets, survey respondents believe now is the time to cut complexity, increase collaboration and work on standardization…
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    ExxonMobil: Fossil Fuels Will Produce 80% of World Energy Thru 2040

    Understanding the global energy picture is helpful so we know where the shale energy piece “fits” in that picture. Each year ExxonMobil prepares an annual energy outlook. On Monday they released the 2016 ExxonMobil Outlook for Energy: A View to 2040 report (full copy embedded below). Some interesting tidbits from the report: “In 2040, oil and natural gas are expected to make up nearly 60 percent of global supplies, while nuclear and renewables will be approaching 25 percent. Oil will provide one third of the world’s energy in 2040, remaining the No. 1 source of fuel, and natural gas will move into second place.” Perhaps most astonishing (for wacko environmentalists) is this: Fossil fules–oil, natural gas and coal– will continue to meet almost 80 percent of the world’s energy needs through 2040. It is intellectual suicide to pretend so-called renewables will be able to shoulder the energy burden in our lifetime. Ain’t gonna happen. We live in a world powered by fossil energy–and THERE’S NOTHING WRONG WITH IT…
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    LNG May Not be a Panacea for Marcellus/Utica NatGas Producers

    Last November MDN editor Jim Willis attended a Genscape/Bloomberg joint event in New York City (at Bloomberg’s offices) called “Gas and Power Winter Outlook 2015.” It was part advertisement for the Bloomberg terminal and the many fantastic resources available on their terminal, part advertisement for Genscape and the truly unique and innovative services they provide, along with a healthy sprinkling of predictions about where the natural gas market will head over the winter months. Jim enjoyed it a great deal because it provided perspective on the larger worldwide market and how it drives our markets here at home. One very interesting thing Jim learned was this: Asian countries in general, and Japan in particular, are reducing their need for LNG (liquefied natural gas) because, in the case of Japan, the country is starting up its nuclear energy program again, and because solar energy is coming online and providing a greater share of the country’s electric needs. With more nuclear and solar, Japan needs less LNG. Here in the U.S., particularly in the Marcellus/Utica region, we have pegged a lot of our hopes on a robust export market for our natural gas. But what if that market is disappearing right before our eyes? That’s kind of the upshot of a new report just released by economists at global consulting firm The Brattle Group. The report, called “LNG and Renewable Power: Risk and Opportunity in a Changing World” (full copy below), takes a close look at the competition playing out between renewable energy like solar and wind and natural gas-fired electric from LNG…
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    Fourth Quarter 2015 U.S. Well Completions Down 51%

    Just how bad is it in the oil and gas patch? One measure of activity is called well completions–how many new wells are fully drilled, fracked and ready to be brought online into production. According to the American Petroleum Institute’s “2015 Quarterly Well Completion Report, Fourth Quarter” report, well completions in the fourth quarter of 2015 were down 51% from the fourth quarter of 2014. Ouch. If you compare full year figures, 2015 well completions were down 35% over 2014 rates…
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