EY Study Shows Oil & Gas Industry “Resilient” and “Profitable”
Powerhouse consulting and accounting firm Ernst & Young (EY) has just published its annual study, “US Oil and Gas Reserves, Production and ESG Benchmarking Study” (full copy below). The EY study reveals an industry with “remarkable resilience and financial performance” despite facing a challenging economic landscape in 2023. The study, which examines the 50 largest publicly traded exploration and production (E&P) companies, highlights the industry’s ability to navigate price fluctuations and maintain a trajectory of growth and profitability. Read More “EY Study Shows Oil & Gas Industry “Resilient” and “Profitable””
According to an analysis by Reuters, U.S. electricity generators consumed a record amount of natural gas in the first four months of the year as prices dropped to the lowest level in real terms for more than half a century. Ultra-low prices encouraged more power production from some of the least-efficient single-cycle gas and steam turbines at the expense of coal. From January through April 2024, natural gas was the #1 source of fuel used to generate electricity with 42% of all electricity generated coming from natgas. Coal was used to produce 15% of all electricity, meaning between the two fossil fuels, 57% of all electricity came from fossil fuels. Further meaning your EV runs on fossil fuels, not “batteries.”
We are officially range-bound with respect to the Baker Hughes U.S. rig count. The count has gone up and down every few weeks. But since the third week of June, the range has been as low as 581 and as high as 589. And that’s it. Last week, the national rig count lost two rigs and now stands at 586. The Marcellus/Utica also lost one rig and now uses 35 active rigs. Pennsylvania remained the same with 21 active rigs. Ohio lost a rig (second week in a row) and now operates nine active rigs. West Virginia remained the same with five active rigs.
America’s natural gas and oil industry announced “a landmark partnership” in late 2017 called The Environmental Partnership to “accelerate improvements to environmental performance in operations across the country” for lowering methane emissions (see 
CNX Resources released its first Radical Transparency™ assessment report yesterday. The initial results of nine months of continuous air emissions monitoring at natural gas well sites and compressor stations in southwestern Pennsylvania indicate that CNX natural gas development poses no public health risk. Period. The data is collected and disseminated to the public by an independent third-party contractor. This is objective, you-can’t-argue-with-it data shows CNX is not causing any kind of public health hazard. Big Green isn’t happy that their lying narratives are now countered by objective (truthful) data.
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 
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.
The U.S. national oil and gas rig count lost ground last week it had gained the week before. The national combined Baker Hughes oil and gas rig count now stands at 586 rigs, down three from 589 two weeks ago. The Marcellus/Utica lost one rig last week. Pennsylvania lost a rig and now operates 20 active rigs. Ohio operated 11 active rigs. West Virginia remained the same with five active rigs. The M-U is operating a combined 36 rigs. The M-U’s primary competitor, the Haynesville, was down one rig from two weeks ago and now operates 34 rigs.
As you may have noticed, a number of our posts today are stories about gas-fired power plants, which are vitally important (very big) customers for shale gas. According to an analysis by Reuters, natural gas use by power generators has expanded by around 3.5% a year over the past three years and is by far the largest single source of gas used in the U.S. However, natural gas consumption by the other major sectors, including industry, households, and commercial, is falling each year. The fall in usage by industry, etc., is more than the growth in powergen.
According to the U.S. Energy Information Administration (EIA), injections into natural gas storage so far this injection season (April 1–October 31) is 15% (166 Bcf) *less* than the previous five-year average (2019–23) for the same period. Injections into storage are also 15% (172 Bcf) less than this same time last year. Yet working natural gas inventories in the Lower 48 states are 17% *higher* than the five-year average and 8% higher than this time last year. How can that be?
According to the U.S. Energy Information Administration (EIA), the average monthly wholesale spot (not futures, but spot) natural gas price at the U.S. benchmark Henry Hub fell by 20% to $2.56 per million British thermal units (MMBtu) between January and June of this year. In January, the Henry Hub price averaged $3.18/MMBtu, then dropped to $1.49/MMBtu in March, marking the lowest average monthly inflation-adjusted price since at least 1997. In addition, prices from February through April 2024 were the lowest ever recorded for those months.