EIA Jan. DPR: M-U Production Still Capped, Haynesville Expands
Here at the beginning of 2023, the Marcellus/Utica continues to produce about the same amount of natural gas that produced in 2022–essentially capped at around 35.5 billion cubic feet per day (Bcf/d) of production. The U.S. Energy Information Administration (EIA) published its latest monthly Drilling Productivity Report (DPR) yesterday, and the report shows that, once again, M-U production (called “Appalachia” in the report) is still capped–at 35.3 Bcf/d in January. EIA predicts it will increase to 35.4 Bcf/d (adding a piddly 93 MMcf/d) in February 2023.
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A week ago, MDN told you that the Bidenista who heads up the Consumer Product Safety Commission (CPSC) was floating a trial balloon of banning the use of natural gas stoves across the entire country (see 
In a recently issued report, Moody’s Investor Service predicts that while upstream oil and gas spending on capital expenses will come in lower than the levels seen between 2015 and 2019, spending in 2023 will be higher, by 10-15%, than it was last year. Upstream capital spending is set to reach $460 billion to $480 billion in 2023. As you might imagine, more than half of the increase is needed just to cover the cost of Bidenflation–not because there’s actually more drilling being done.
Once a month, the analysts at the U.S. Energy Information Administration (EIA) 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 or so. We sometimes poke some good-natured fun at the EIA because one month, their predictions go up, the next month, down, etc. What about the latest STEO dart board, published yesterday? EIA predicts average natural gas production will be 100.34 Bcf/d in 2023 and will go even higher to 102.29 Bcf/d in 2024. The current all-time high was 98.02 Bcf/d, and that was last year. As for the commodity price of gas, EIA says the Henry Hub spot price will average $4.90/MMBtu in 2023, down from $6.42/MMBtu in 2022.
Natural gas stoves are used in roughly 40% of households in the United States. The hard-left Bidenistas who control the U.S. Consumer Product Safety Commission are floating a trial balloon that they want to ban them all, forcing you (if you have one) to replace it with an electric stove. The stated reason for forcing a change is that gas stoves supposedly emit cancer-causing, and asthma-causing, chemicals. The Bidenistas are attempting to use fear as a weapon to convince people to go along with this tyranny. Don’t let them.
S&P Global Commodity Insights published an analysis article speculating on the overall level of natural gas production we can expect to see in the U.S. in 2023. According to S&P’s analysts, weaker prices for the NYMEX Henry Hub futures price expected this year, along with recent weakness in the internal rate of return (IRR) for companies, are combining to lower the amount of growth in natgas production we might otherwise have experienced. S&P isn’t saying we’ll go backward–with less production. It’s saying production won’t grow as much as it could have if not for these negative factors.
Last Thursday, the Pennsylvania Department of Environmental Protection (DEP) published its 2021 Oil and Gas Annual Report (about five months late). This is the sixth year in a row the DEP has published the report in an interactive, electronic (i.e. online only) format. Don’t worry, we’ve turned the report into a convenient PDF for MDN readers. What does the 2021 report show? Permits issued went down, but the number of new wells drilled went up. Natural gas production has gone up (again)–to another new all-time record high.
It’s been a while since we’ve updated rig count numbers–mainly because the most reliable source we can find about basin numbers comes from S&P Global Commodity Insights (based on Enverus rig data), and S&P has not provided an update for a few months. This week they did update the number, and they are interesting. According to S&P’s analysis, based on Enverus data, the Haynesville Shale in northern Louisiana and eastern Texas (the main competitor to the Marcellus/Utica) is showing 81 active drilling rigs. That is an astonishing number, up some 37% over the same time last year. The current active rig count in the M-U, according to S&P, is 47 (with 33 rigs operating in the Marcellus and 14 in the Utica). The Haynesville is running 1.7 rigs for every 1 rig in the M-U. This is the worst imbalance we’ve seen to date.
The International Energy Agency (IEA) is at it again. In May 2021, IEA issued an astonishing report calling for an end to all investments in oil, gas, and coal to reach the fantasy goal of net zero by 2050 (see 
JobsOhio, a private nonprofit largely funded by liquor sales that the state allows the nonprofit to collect (in essence, it collects sales tax on liquor sales), pays Cleveland State University to research and issue a report every six months on Utica Shale investment. The latest semi-annual report (full copy below) covers shale investment in the Ohio Utica from July 2021 through December 2021. Here’s an astonishing statistic: With this latest report, total Utica Shale investment in the state of Ohio since 2011 is nearly $100 billion!
Contrary to all the blabbering by enviro-nuts, using natural gas reduces so-called greenhouse gas emissions, specifically carbon dioxide (CO2), and helps to achieve theoretical “net-zero” carbon emissions much sooner than by not using natural gas. Validere, a measurement, reporting, and verification (MRV) SaaS company, released a study on Friday that is eye-opening. The study looks at the climate benefits of building and using two Appalachia-to-Southeast pipelines–the Atlantic Coast Pipeline (ACP, now canceled), and the Mountain Valley Pipeline (MVP, on pause).
New analysis by S&P Global Commodity Insights finds higher natural gas prices have made methane capture projects increasingly economic, potentially unlocking vast amounts of new supply while lowering overall emissions. The analysis, funded in part by the Environmental Defense Fund (EDF), an anti-fossil fuel organization, says projects that capture and commercialize vented, fugitive, and flared methane are now cost-effective, given the high price of natural gas. In general, we agree.
We spotted a post by our favorite government agency, the U.S. Energy Information Administration (EIA), that says although natural gas use by the “industrial sector” leveled off over the past few years, industrial sector usage of natgas is growing again, at least for this year. EIA figures industrial sector usage will grow 2.4% in 2022. However, due to the high price of natgas and the sucky Biden economy, EIA believes industrial sector gas usage will decrease 3.4% in 2023.
S&P Global Commodity Insights issued its latest 2023 Energy Outlook yesterday. The analysis is quite interesting, with ten “key themes” that will most affect world energy (and oil/natgas prices) next year. The number one key theme may surprise you: “China’s COVID policy is the most important fundamental factor for energy markets.” If not for China shutting down entire regions in an effort to stamp out COVID spread, S&P says the price for commodities like oil and natural gas would have continued to be high this year. If China’s demand comes roaring back in 2023, watch out! Prices will be “well supported,” according to S&P. More like “through the roof.” If COVID continues and China’s demand stays low, look for prices to remain lower too.
Each year oil and gas supermajor BP (formerly British Petroleum), one of the largest oil companies in the world, publishes an annual Statistical Review of World Energy. We typically bring you a copy with analysis, as we did for the 71st annual edition published in July of this year, covering 2021 (see