Crude Oil is Trading at a 12-Year High Against Natural Gas
When drilling for oil (or for natural gas), quite often, the hydrocarbon you’re not drilling for comes out of the ground along with the hydrocarbon you are drilling for. Natural gas coming out of the ground along with oil (in an oil play) is called “associated gas.” And in the Marcellus/Utica, other hydrocarbons (aside from methane) come out too, including ethane, propane, butane, and isobutane — called natural gas liquids (NGLs). Production of oil and NGLs are measured in barrels (Bbl), while methane is measured in thousand cubic feet (Mcf) or million Btus (MMBtu). Years ago, the oil and gas industry created a way to evaluate the total output for a given well or wells by converting all of the hydrocarbons into one unit, called barrels of oil equivalent (Boe). Not long after that came a comparison of how much each commodity sells for on an equivalent basis.
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According to S&P Global and its crack statistics unit, U.S. liquefied natural gas (LNG) and liquefied petroleum gas (LPG, mostly propane) exports both hit new all-time record highs for the period of Jan. 1 through April 29 this year. And that’s despite the fact that the Freeport LNG export facility has experienced a major outage since January. And speaking of the problem-plagued Freeport facility, one of its three trains, Train 3, received around 830 MMcf of natural gas yesterday. Meaning it’s back online. Finally. Up down, up down, up down. Now, up again.
Energy comes in many forms. Most energy produced and consumed in the world comes from fossil fuels. In the United States, fossil fuels (oil, natural gas, and coal) provided 79% of all the energy we used in 2022, according to the authoritative U.S. Energy Information Administration (EIA). The false narrative that so-called renewables (which are unreliable) like solar and wind are about to take over is just that — completely false. The EIA published a post yesterday to note that U.S. carbon dioxide (CO2) emissions coming from the production of energy last year fell by 3% from the previous year, mainly due to the change from using coal to using natural gas to generate electricity.
OTHER U.S. REGIONS: New emissions regs have truckers eyeing alternate fuels; NATIONAL: Lower natgas prices squeeze Big Oil’s profits in Q1 2024; INTERNATIONAL: Oil falls as geopolitical risk premium decreases; Four key reasons why U.S. will never stop targeting Russian LNG; Electric grid wars are a direct assault on the Western middle class.
Last week, CNX Resources issued its first quarter 2024 update. The company’s earnings totaled a paltry $6.8 million, or just $0.04 per share in 1Q24. That compares with $710 million, or $4.22 per share, in last year’s first quarter (down 99%). CNX’s revenue for 1Q24 fell 39% to $384.6 million from $1.28 billion last year. Production was 140.4 Bcfe (billion cubic feet equivalent) in 1Q24 — which works out to 1.54 Bcfe/d — up from 135.9 Bcfe last year (up 3%). The company announced it had delayed completion activities on three Marcellus Shale pads consisting of 11 wells “due to the challenging near term gas market conditions.” By delaying, the company will produce roughly 30 Bcfe less this year for a new target of 540 to 560 Bcfe.
Antero Resources, which is 100% focused on the Marcellus/Utica with over 500,000 net acres under lease (and the largest M-U driller in West Virginia), issued its first quarter 2024 update last week. The company reports net production averaged 3.4 billion cubic feet equivalent per day (Bcfe/d) during 1Q24, an increase of 5% year-over-year. Of the company’s 2024 production, liquids (NGLs) averaged 202 thousand barrels per day (MBbl/d), an increase of 8% from 1Q23. Natural gas production averaged 2.2 Bcf/d, up 4% from 1Q23. The company made $36 million in 1Q24 versus a profit of $213 million in 1Q23 — down a big 83% year over year.
The Bidenistas at the EPA attacked coal and gas-fired power plants last week, threatening to destabilize the existing electric power grid (see 
In addition to opposition from the editors of the Wall Street Journal to the Biden EPA plan to ration electricity by prohibiting existing coal and any new gas-fired power plants (see today’s companion story), prominent Republican legislators in Pennsylvania issued statements challenging the new regulations. The Pennsylvania Senate President Pro Tempore, Senate Majority Leader, Senate Appropriations Committee Chair, and Chairman of the Senate Environmental Resources and Energy Committee all issued statements describing how the EPA regs will kill gas-fired power in the Keystone State.
Last week, the Baker Hughes U.S. rig count lost six rigs, down to 613, the lowest the count has been since February of 2022. Since last October, the national count had gone as low as 616 and as high as 629, and that was it. No higher and no lower. That is, until last week when we crashed through the floor and went lower, down to 613. The Marcellus/Utica lost one rig last week and now runs 40 rigs. Pennsylvania lost one rig and now runs 21 rigs; Ohio (which lost one rig two weeks ago) remained static with 11 active rigs; and West Virginia remained the same with 8 rigs.
According to a Bloomberg article, Venture Global LNG Inc. expects to begin production at its second liquefied natural gas export facility in Louisiana in mid-2024. The new facility is called Plaquemines LNG, located in Plaquemines Parish, Louisiana, approximately 20 miles south of New Orleans. Venture Global has asked the Federal Energy Regulatory Commission (FERC) for permission to import up to three LNG cargoes to test the facility before it’s ready to go. But then, will Venture Global claim it’s not ready for another 2+ years as they have with its first facility, the Calcasieu Pass LNG export facility in Cameron Parish, Louisiana?
Two weeks ago, during the week of April 8 -14, 17 new permits were issued to drill in the Marcellus/Utica (see 17 New Shale Well Permits Issued for PA-OH-WV Apr 8 – 14). Last week, for the week of April 15 – 21, 16 new permits were issued. However, the composition of where the permits were issued changed significantly from the typical pattern. Only two of the permits were issued in Pennsylvania last week, both for EQT (one in Fayette County, the other in Greene County). Ohio received six new permits divided evenly, with three going to INR and the other three to EOG Resources. INR’s permits were all issued in Guernsey County and EOG’s in Harrison County. West Virginia, which typically receives the fewest new permits, took the lion’s share with eight new permits. Jaybee Oil & Gas received three permits in Tyler County. Southwestern Energy also received three permits but in Wetzel County. Tribune Resources received one new permit (Tyler County), and EQT received one permit (Marion County).
One month ago, Ohio Attorney General Dave Yost took legal action seeking to force Austin Master Services (AMS), a radiological waste management solutions company operating in Belmont County, OH, to correct “egregious violations of Ohio law” regarding the storage of oil and gas waste that he says threatens the Ohio River and Martins Ferry’s drinking water supply (see 
Range Resources Corporation, the very first company to drill a shale well targeting the Marcellus Shale layer in Pennsylvania (in 2004), issued its first quarter 2024 update earlier this week. Unlike other large Marcellus/Utica drillers, Range is holding its production flat (not decreasing). The company zags while everyone else zigs. During 1Q, Range produced 2.14 Bcfe/d (billion cubic feet equivalent per day), with approximately 68% of production comprised of natural gas and the rest in NGLs and oil. The company averaged 2.14 Bcfe/d, with 69% of that as natural gas, for all of 2023 (see 
The Bidenistas attacked coal and gas-fired power plants yesterday, threatening to destabilize the existing electric power grid. Under 1,020 pages of new regulations, which will go into effect this year, all coal-fired plants that are slated to remain operational in the long term and all 
Two days ago, MDN reported that an LNG cargo vessel had left the Freeport LNG dock partially loaded (see