Report: U.S. Natural Gas’ Place in the Global Economy
Every now and again MDN editor Jim Willis attends a conference or seminar that reminds him how parochial we in the natural gas industry sometimes are. We often (understandably) have our heads down, focused on who’s drilling where and fretting over how we’ll get that gas to market. Sometimes it’s good to lift your head up and observe the entire energy landscape. Natural gas is one piece of the puzzle. An important piece, to be sure! But still, just one piece. Trends in coal, nuclear, solar, wind, hydro–they all play a part in the larger picture. The world of energy is dynamic and changing. New solar plants going up in Japan actually DO have an impact on Marcellus gas production–because that means Japan may decrease its LNG imports–which potentially would come from our LNG exports. You get the picture. This past May the Center for Strategic & International Studies (CSIS) held a one-day workshop with government, industry, and policy experts, to explore the outlook for U.S. natural gas markets in the global energy landscape. In November they condensed the material from that workshop into a report. Below is a full copy of that report. This will help you (as it does us) think about the bigger picture and where we here in the Marcellus/Utica fit into that picture…
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Yesterday our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month. EIA has adjusted their previous prediction for December’s natural gas production from 61.7 billion cubic feet per day (Bcf/d) to 62.3 Bcf/d. Wow! Not only that, EIA predicts average production in January 2018 will hit 63 Bcf/d–yet another record high in a string of successive monthly record highs going back more than a year. The 800-pound gorilla is, of course, the Marcellus/Utica region. Our region will add another 347 million cubic feet per day (MMcf/d) of natural gas production from December to January. Yikes! Of the seven major shale play regions tracked in the DRP, Appalachia (the Marcellus/Utica) represents a full 42% of total U.S. production! Our region is a MONSTER natural gas producer. Here’s the latest DPR, along with some analysis from Reuters…
Another bought-and-paid-for junk science report has been released and is now grabbing headlines from lazy (or biased) mainstream news organizations. A study by researchers from the University of Chicago and Princeton University, funded by the uber-liberal (and anti-drilling) MacArthur Foundation. The MacArthur Foundation funds some of the worst of the worst Big Green groups, including Earthworks, Natural Resources Defense Council, and the Sierra Club, among others. The “study” looked at health records from Pennsylvania and purports to find that in those locations with fracked shale wells, babies are born with lower birth weights than in areas without fracking. And there’s the headline everyone is grabbing. Here’s how it works: Big donors like the MacArthur Foundation go shopping for scientists at highly respected, reputable universities they can buy off with a research grant. They then tell the researchers what the outcome of the study will be. The researchers then conduct their research and magically come to the predetermined conclusion and get it published in a “peer reviewed” (and obscure) scientific journal. It has just happened again, with a study titled “Hydraulic fracturing and infant health: New evidence from Pennsylvania” (full copy below). How do we know this is actually junk science? Even the left-leaning Science magazine says this about the study: “…there is no smoking gun that proves how fracking impairs infant health.” When the left says that about a study, it’s junk…
The GECF (Gas Exporting Countries Forum) has just released its latest annual report, titled “2017 Global Gas Outlook” (full copy below). The report is remarkable for its prediction that by 2040 demand for natural gas across the globe will increase 53% from what it is today. Staggering! What’s even more remarkable is that the GECF is largely made up of oil producing/exporting countries–including Algeria, Iran, Libya, Nigeria, Russia, the United Arab Emirates and Venezuela. For oil countries to say gas is on fire and going through the roof–now that’s news! Even though these countries secretly hate the U.S. and its abundant shale reserves, they put on a good public face. GECF’s secretary general, Seyed Mohammad Hossein Adeli, said this about American shale gas: “The growth of shale is good because more gas will contribute to the penetration of gas worldwide.” Er, right. Whatever you say, Seyed. Here’s an overview of the report, followed by a copy of the full report…
An important research report has just been released that shows no connection between Marcellus Shale drilling and death (i.e. mortality) rates in Pennsylvania. Since the dawn of shale fracking, antis have made wild claims about fracking leading to low birth weights, asthma, and early death for those who live near active shale drilling operations. This study (full copy below) refutes that junk science–by using real data and real facts. Energy in Depth (an industry group) sponsored the research, but they hired an independent researcher to do the work. Hey, if we don’t pay for real research, it won’t get done! The independent researcher analyzed Pennsylvania Department of Health data for the state as a whole and the counties of Bradford, Greene, Lycoming, Susquehanna, Tioga, and Washington from 2000 to 2014. The data shows mortality rates in those six PA counties (which happen to be the counties with the most Marcellus Shale development) have declined or remained stable since shale production began in the region. In fact, the top Marcellus counties experienced declines in mortality rates in most of the indices. This is yet more proof that natural gas is not only good for the environment, it’s good for humans too…
Yes, we must revisit the topic of “fracking causes earthquakes” yet again (sigh). But maybe this time something good will come of our discussion. Researchers at Stanford University (crazy California) have discovered a way to detect thousands of faint, “previously missed earthquakes” triggered by fracking and by injection wells. “The technique can be used to monitor seismic activities at fracking operations to help reduce the likelihood of bigger, potentially damaging earthquakes from occurring,” according to a published research study. By now you know our standard explanation, the facts about fracking and earthquakes: (1) Injection wells can and do cause detectable earthquakes–when they are located over faults. (2) Fracking shale wells rarely causes detectable earthquakes. We know of perhaps a half dozen times when fracking a well, which again happened to be over a fault, caused an earthquake. Out of the millions of fracked wells that have been drilled. Statistically speaking–fracking doesn’t cause earthquakes–detectable earthquakes, that is. You have to understand something about earthquakes and fracking. From the Standord researchers: “Earthquakes generated by fracking are typically no larger than magnitude 0. That’s equivalent to the amount of energy released when a milk carton hits the floor after falling off a counter.” However, every now and again an earthquake will hit a 1 or even 2 magnitude. Above 2 is barely noticeable by humans. What the Stanford researchers have done is to figure out how to monitor seismicity when fracking (or injecting wastewater into wells), and use that information to predict when the activity may lead to triggering a larger quake. Now that is useful information…
Last week MDN’s favorite government agency, the U.S. Energy Information Administration, posted an article about the increase in LNG exports from the United States. The article highlighted the one existing and five forthcoming LNG export facilities that are changing the world energy picture by exporting (literally) boatloads American natural gas. The existing, going-full-bore LNG export plant is Cheniere Energy’s Sabine Pass plant, located on the Louisiana Gulf Coast. Two of the five forthcoming plants (Cove Point and Elba Island) are located on the East Coast–Maryland and Georgia respectively. Cove Point is due to begin exports this month (see 
West Virginia University (WVU) is a research powerhouse. They have lots of researchers doing important work in a variety of disciplines. One of those disciplines is natural gas. WVU founded the Center for Innovation in Gas Research and Utilization (CIGRU) to “conduct transformative, fundamental, research directed at innovative pathways for shale gas utilization and upgrading.” CIGRU, along with two other non-shale related research programs, have just collectively received a $3.9 million Research Challenge Grant from the West Virginia Higher Education Policy Commission. The WVU press release doesn’t say how each of the three different recipients (CIGRU being one of them) got, but we figure they likely divided it evenly, hence our assumption that CIGRU got $1.3 million. And what will CIGRU do with the money? Figure out ways to keep more of the Marcellus/Utica gas coming out of West Virginia’s rocks in the state–used by residents and businesses who reside in WV. They want to grow the “downstream” sector of end users of natural gas and other byproducts from shale drilling…
Researchers at Tufts University say they have found a better, cheaper way to convert methane (i.e. natural gas) directly into methanol. “The direct oxidation of methane—found in natural gas—into methanol at low temperatures has long been a holy grail,” so says the Tufts announcement. A group of chemical engineers say they have found a way to do it. What’s the big deal about methanol? Methanol plants convert natural gas into methanol, used as a chemical feedstock (or raw material) to create other things, like gasoline, antifreeze, plastic bottles–even LED and LCD screens. In August 2016 MDN was the first to share the news that US Methanol is building at least two, rumored up to five, methanol plants in West Virginia (see 
The number crunchers have been crunching away at our favorite government agency, the U.S. Energy Information Administration. And what have they found in crunching shale-related numbers? The Marcellus/Utica (i.e. the Appalachian region) is a monster. In 2012 the M-U produced a cumulative 7.8 billion cubic feet per day (Bcf/d) of natural gas production. Now, in 2017, it’s producing 23.7 Bcf/d. That’s triple the volume in just five years! No other shale play comes close. When you look at the EIA chart (below) you easily see that Appalachia, the Marcellus/Utica, is THE big kahuna of shale plays…
Methane (i.e. natural gas) is often made out to be a bogeyman by radical environmentalists. They’d have you believe a single molecule wafting into the air will cause global warming and make Mom Earth fry. It’s bunkum. However, the fairy tales we grow up with exert a strong control over us later in life. The hew and cry of so-called environmentalists is that extracting natural gas leads to fugitive methane in the atmosphere–and fugitive methane diminishes the benefits of using natural gas. Some quacks like Cornell professors Tony Ingraffea and Robert Howarth actually say burning dirty coal is better than extracting and using clean-burning natural gas (see 
Researchers with Halliburton and EQT have created a new friction reducer, testing it in three Marcellus wells. What’s a friction reducer? It is a chemical substance used to reduce the amount of friction water (or other liquids) encounters in a pipe. Lots of water (and recycled wastewater) is pumped down the bore hole to frack a Marcellus well–upward of 5 million gallons. About 20% of that water comes back out of the hole and is recycled and used again for more fracking. The problem is, the wastewater has a lot of minerals in it, i.e. it’s super “salty.” In order to keep recycling and using the wastewater to frack more wells, typically fresh water has to be added because as the wastewater gets more salty, it encounters more friction along the pipe. So a friction reducer is needed to keep the liquid flowing fast along the pipe. The innovation–the breakthrough that Halliburton has pioneered–means that drillers won’t have to add fresh water to recycled wastewater for fracking. They can now use 100% recycled wastewater with no fresh water added. Even as the wastewater is reused again and again, getting more salty, it can still be used without mixing in fresh water…
The National Association of Regulatory Utility Commissioners (NARUC) is an organization you may not have heard much about. NARUC is a non-profit organization representing state public service commissions who regulate the utilities that provide essential services such as energy, telecommunications, power, water, and transportation. NARUC has just done us all a favor. On Monday NARUC released a new report on best practices and recommendations for state regulators to promote and support the expansion of natural gas service in unserved and underserved areas, including rural areas. “Report of the NARUC Task Force on Natural Gas Access and Expansion” (full copy below) is a 57-page report for state public utility/service commissions that includes eight recommended ways states can grow natural gas use to those not currently served by it…
Each year (for the 11th year running) the Canadian-based Fraser Institute surveys petroleum industry executives and managers (333 of them for 2017) asking them their opinions on the barriers to investing in exploration and production in various geographies across the globe. That is, what makes them more likely or less likely to spend money drilling in a particular location? The Global Petroleum Survey (full copy below), tallies the survey responses and ranks each geography from most desirable place to invest, to least desirable. The rankings for this year are interesting and illustrative that politicians’ words and regulatory environment have a direct bearing on where, and how much, drilling companies are willing to spend. No money spent, no drilling. The barriers to spending in a given geography include: high tax rates, costly regulatory schemes, uncertainty over environmental regulations and the interpretation and administration of regulations governing the petroleum industry, and security threats. Only one state in the Marcellus/Utica ranked in the Top 10 “most attractive” jurisdictions for oil and gas investment–West Virginia…
Each year the International Energy Agency (IEA) issues a special World Energy Outlook report. The 2017 edition was recently published. This latest edition of the Outlook says the global energy market will be completely reshaped over the next 25 years by four main forces: (1) the U.S. (because of shale) will become THE global oil and gas leader; (2) the cost of renewables will fall, meaning we’ll see more renewable energy; (3) electricity’s share of the energy mix will grow; and (4) China is going greener. We don’t know about that last one. Ever visited Beijing? Don’t go outside without a gas mask–the pollution is so heavy you literally can’t breathe. Anywho…Perhaps the biggest force is the first one. In addition to leading the world in oil and gas production, the U.S. will become the world’s largest LNG exporter in the next few years–by the mid-2020s according to IEA. That changes everything. Even with the rise of natgas (via LNG) and renewables over the next few decades, IEA says it’s still too soon to hold a funeral for oil. Global oil demand will continue to grow year in and year out through the forecast period (all the way to 2040). Tell us again, green Nazis, how renewables will take over the world within a generation. (We just picked ourselves up off the floor from laughing so hard.) Oil and natural gas are the primary sources of energy for the world, and they will be after everyone reading this is long dead…