IFO Report – PA Shale Production Down Second Quarter in a Row
Yesterday the Pennsylvania Independent Fiscal Office (IFO) released its latest quarterly Natural Gas Production Report for April through June 2022 (full copy below). There were 133 new horizontal wells spud (drilled) in 2Q22, an increase of 13 wells (10.8%) compared to 2Q21. However, natural gas production volume was 1,836 billion cubic feet (Bcf) in 2Q22, a slight decrease (-0.9%) from 2Q21. It is the second quarterly decrease in production in a row. It appears that maybe PA has hit a plateau for natural gas production.
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Powerhouse consulting and accounting firm Ernst & Young (YN) has just published and released a new study called “US oil and gas reserves, production and ESG benchmarking study” (full copy below). The EY study shows U.S. oil and gas producers “recovered and reset” in 2021, posting increased profits of $73.7 billion and $211.9 billion in revenues, with significant deal activity that drove $144.1 billion in capital expenditures. The study documents how the industry’s 50 largest publicly traded exploration and production (E&P) companies responded to higher commodity prices in 2021 with an analysis of reserve and production information, as well as their environmental, social, and governance (ESG) disclosures.
Global research firm Wood Mackenzie recently published an analysis of where investors are putting their money in the energy sector. Unsurprisingly (for us), WoodMac found investors are plowing money like crazy into “pure play” (meaning single focus) oil and natural gas companies instead of into companies that dabble in “low-carbon diversification” (i.e. renewables). Fossil energy companies that stick to their knitting (stay focused on fossil energy) are outperforming renewable-focused companies big time.
Yesterday MDN poked fun at the gyrating up-and-down predictions from the U.S. Energy Information Administration (EIA) with respect to the spot price of natural gas at the benchmark Henry Hub (see 
Once a month, the analysts (interns?) at the U.S. Energy Information Administration grab the official Henry Hub pricing dart board and play a quick game to determine what price they will predict for the average Henry Hub spot price for natural gas for the rest of this year, and then an average price for all of next year. At least, that’s what EIA’s predictions have come to feel like. How else to describe the wild gyrations both up and down in EIA’s monthly Short-Term Energy Outlook predictions? Here’s what we mean…
As we point out in a companion story today, some in the oil and gas industry have sold out and are supporting the Manchin-Schumer methane tax. It’s sad (and angering). As we point out in that post, those companies believe they are insulated from the effects of the methane tax because they have already deployed technology to reduce methane emissions from their operations. But what happens when the federal government changes the rules by telling them their technology is junk and they have to replace it with new government-blessed technology? Right on cue, the Dept. of Energy announced it will spend $32 million on “research” to figure out what kind of technology can lower methane emissions.
Enverus, a leading global energy data analytics and SaaS technology company, earlier this week released Macro Forecaster, a new report that assesses the continued impact of COVID-19, the Ukraine war, and the weakening global economy on near-term oil and gas balances. Enverus predicts the price of oil will be somewhere in the range of $80s or $90s per barrel by the end of this year. The company also predicts natural gas will slump to about $4.50/MMBtu by next summer.
Most of the time, when we write about LNG (liquefied natural gas), we write about exports. In particular, U.S. exports. The International Group of Liquefied Natural Gas Importers (GIIGNL) advocates for the other end of the deal–those importing LNG. GIIGNL recently issued its 2022 annual report (full copy below). It really is quite fascinating. The report includes a list of long- and medium-term contracts (>4 years) signed in 2021–who the buyer is, who the seller is, and which countries the gas is going from and to.
Oil and gas giant BP recently released its annual Statistical Review of World Energy–the 71st edition (full copy below). Among the interesting findings in BP’s analysis of global energy last year: Fossil fuels–coal, natural gas and oil–accounted for 82% of primary energy use worldwide last year, down from 83% in 2019 and 85% five years ago. The report doesn’t disclose what percentage of world energy use comes from so-called renewables, wind and solar. We suspect it remains at around 3-4% as in years past. Meaning the legacy media narrative of renewables saving the world is once again exposed as horse manure.
Shale energy mergers and acquisitions (M&A) have been quite active for the first half of 2022. According to powerhouse energy data company Enverus, the first quarter saw $14.7 billion worth of M&As. The second quarter saw $12 billion in M&As. However, almost all of it happened outside of the Marcellus/Utica. There was $2.8 billion worth of M&A in the M-U during 1Q22, and $0 in 2Q22. One of the main reasons our play hasn’t seen more M&A? Lack of pipelines to move natural gas out of the northeast.
Some on the left (not all) get starry-eyed about the potential future of using hydrogen as the world’s key energy source. They believe hydrogen can and should replace both oil and natural gas. Hydrogen as a fuel source got off on a bad foot with the 
There’s something of a mystery brewing–something nobody seems to be able to explain. Since January, the U.S. rig count has added 150 rigs–hitting the highest level of rigs active in the field since late 2019. In addition, new well counts are up, and more completions are happening. More rigs and more wells getting drilled and completed. Yet natural gas production this summer has evened out and is not increasing. Why?
It has been a wild ride for LNG over the past few years. From record low prices for LNG to record high prices. From not being able to give it away to not being able to produce enough. Earlier this month, the International Gas Union (IGU) released its 13th annual 2022 World LNG Report–the world’s most comprehensive public source of information on key developments and trends in the LNG sector (full copy below). Global LNG trade grew by 4.5% last year, reaching an all-time high of 372.3 MT. A strong post-pandemic recovery resulted in a surge in LNG imports, even though the annual growth rate of 4.5% remains far from pre-COVID-19 levels of 13.0% in 2019. We suspect this year’s growth rate (which will be reflected in next year’s report) may swing back to pre-COVID levels.