MDN Upstream Index (MUI) – May 18, 2023
The most recent day of active trading was Wed., May 17, 2023. The numbers below reflect yesterday’s closing numbers.
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Other Stories of Interest: Thu, May 18, 2023
MARCELLUS/UTICA REGION: Coterra management remains defensive, despite outlook; Antero Resources is simply one of the best; OTHER U.S. REGIONS: LNG lobbyists ghost wrote officials’ letters supporting gas storage project; NATIONAL: What does a 2023 US recession mean for oil and gas in the country?; Are we being deceived by this natural gas market?; Shale drillers are auctioning off rigs at bargain basement prices; ChatGPT ponders U.S. electric grid collapse; INTERNATIONAL: Ineos founder fears for North Sea future; Russia steals oil market share in Asia from energy allies; Chevron’s carbon capture flagship is stuck at one-third capacity; EU president lets the de-growth cat out of the bag; S.Africa circles back to shale gas as power crisis drags.
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DC Circuit Guts PHMSA Reg re Shut-off Valves on Gathering Pipes
In November 2021, the Bidenistas initiated a massive power grab to transfer the right of individual states to regulate local natural gas gathering pipelines to the federal government’s Pipeline and Hazardous Materials Safety Administration (see Massive Power Grab Proposed by Biden DOT: Regulate Gathering Lines). The oil and gas industry asked Biden to pause the power grab by 3-5 years. In April 2022, the Bidenistas rejected that request, so the GPA Midstream Association (later joined by the American Petroleum Institute) sued the Dept. of Transportation and its PHMSA division to block the new regulations. PHMSA agreed to pause enforcement until May 2024 (see PHMSA Backs Down, Pauses New Gathering Pipe Reg After Getting Sued). However, the pause in enforcement didn’t stop the PHMSA from floating onerous new one-size-fits-all regulations on gathering pipelines. Yesterday, the U.S. Court of Appeals for the District of Columbia (DC Circuit) gutted the new PHMSA reg for gathering pipelines.
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Canadian Methane Offsets Co. Buys Northwest Pa. Well Plugging Co.
Zefiro Methane Corp., a private “methane offsets originator” (we will explain) headquartered in Vancouver, British Columbia, has acquired a majority ownership stake in Plants & Goodwin (P&G), an OFS and oil well-plugging company located in Bradford (McKean County), Pennsylvania, for an undisclosed sum. It appears P&G will continue as its own standalone company, but its services of plugging abandoned and orphan wells will be joined with the services Zefiro offers in methane emission offsets–also known as carbon offset credits.
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Allegheny County | Berkshire Hathaway | Energy Services | Industrywide Issues | Pennsylvania | Pipelines
Upgrades to Eastern Gas Metering Station in Plum Done by Summer
Eastern Gas Transmission and Storage (EGTS), a subsidiary of Warren Buffett’s Berkshire Hathaway Energy company, provides natural gas transportation and storage services with one of the largest underground natural gas storage systems in the United States. Essentially EGTS is a pipeline network that connects to other pipelines to flow and store natural gas in six states: Maryland, New York, Ohio, Pennsylvania, Virginia, and West Virginia. An upgrade of an EGTS metering station in Plum (Allegheny County, PA, near Pittsburgh) is currently under construction and due to be complete “by summer.”
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TVA Proposes NatGas Power Plant, 122-Mile Pipeline for East Tenn.
The Tennessee Valley Authority (TVA) is a federally-owned electric utility corporation in the U.S. TVA’s service area covers all of Tennessee, portions of Alabama, Mississippi, and Kentucky, and small areas of Georgia, North Carolina, and Virginia. TVA is the sixth-largest power supplier and the largest public utility in the country. In July 2021, MDN told you that TVA is spending over $1 billion to replace six coal-fired plants with natgas-fired turbines (see TVA Investing $1B to Build New Natgas-Fired Electric Plants). Good news! TVA announced earlier this week that it would convert a second coal-fired plant, this one in East Tennessee, to a natural gas-fired plant capable of generating 1.5 gigawatts of electricity. The project also includes contracting with Enbridge to build a new 122-mile pipeline.
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Cleveland U Study: Ohio Utica Shale Investment Tops $100 Billion
JobsOhio, a private, nonprofit corporation that works on behalf of the state to drive job creation and new capital investment in Ohio by attracting business, contracts out economic research to Cleveland State University (CSU) to keep tabs on the Utica Shale industry. JobsOhio released the latest CSU updated report yesterday (full copy below), showing that more than $100 billion has been invested in Ohio across natural gas, natural gas liquids, and petrochemical supply chain industries in just over ten years. Massive!
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EIA Predicts Henry Hub Price to Hit Average $3.71 in December 2023
Lately, we’ve been closely monitoring the price of natural gas, looking for indicators as to when the price will quit bumping around near $2/MMBtu and go higher once again. Two days ago, we told you experts are predicting we’ve now hit bottom, and the price of natgas will begin to rise (see Big NatGas Investor Says Commodity Price has Bottomed, Going Higher). Yesterday, the U.S. Energy Information Administration (EIA) outlined its case for why it believes the average price of the NYMEX Henry Hub will hit $3.71/MMBtu by December of this year.
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FERC Chairman Willie Phillips (a Democrat) Offends the Radical Left
Willie Phillips, Acting FERC Chairman We’re rapidly warming up to Federal Energy Regulatory Commission (FERC) Acting Chairman Willie Phillips. He’s a unicorn–a Democrat in a position of high power in the D.C. swamp who is actually reasonable (able to be reasoned with). Phillips does not irrationally hate all fossil fuels, as do many of the whack jobs in his party. Because Phillips has voted with the two Republican commissioners to approve a number of new fossil energy pipeline projects, the whack jobs hate him and want him gone.
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MDN Upstream Index (MUI) – May 17, 2023
The most recent day of active trading was Tue., May 16, 2023. The numbers below reflect yesterday’s closing numbers.
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Other Stories of Interest: Wed, May 17, 2023
NATIONAL: EPA running roughshod over Congress and consumers; INTERNATIONAL: Japan embraces G7’s gas support but companies may face problems; India looks to lock in long-term LNG deals; Oil falls as Chinese demand growth slows.
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USFS Approves Plan for MVP to Build Through Jefferson Natl Forest
A small bit of progress to report about the 303-mile Mountain Valley Pipeline (MVP), which stretches from Wetzel County, WV, to Pittsylvania County, VA. Yesterday the U.S. Forest Service (USFS) issued its latest (third!) approval for MVP to traverse a piddly 3.5 miles of the federally-owned Jefferson National Forest. We have no doubt that radicalized leftists will, once again, challenge this permit, and that the colluding three Democrat judges of the U.S. Court of Appeals for the Fourth Circuit will overturn it. That is, unless so-called permitting reform is passed by Congress, removing the 4th Circuit’s jurisdiction over this project.
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EIA May Drilling Report: Noticeable Drop in Growth of New Production
click for larger version The recent news stories we’ve read (and reported) announcing a pullback in natural gas production are borne out by the latest monthly U.S. Energy Information Administration (EIA) Drilling Productivity Report (DPR). The May report, issued yesterday (below), shows a slowdown in the growth of natural gas production. This is subtle, but don’t miss it. That does not mean we will produce less gas from shale in the coming month; it means the rate of growth of new (all-time high) supplies is slowing. And at some point, we do expect to see negative growth–shrinking production.
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NatGas Commodity Price Up 5% Yesterday – Is the Trend Our Friend?
Yesterday the commodity price of the Henry Hub natural gas benchmark (the NYMEX front-month futures price) popped by 5%, rising 11 cents to close at $2.38/MMBtu. (Unfortunately, the price widget along the right side of the MDN website has not been updated. It still shows Friday’s closing numbers, even though it uses yesterday’s date.) We follow the price of gas regularly because (a) it affects how much in royalties landowners receive, and (b) it affects how profitable it is to drill, a good indicator of whether drilling will pick up or slow down. As we said yesterday, experts are predicting we’ve hit bottom, and the price of natgas will now begin to rise (see Big NatGas Investor Says Commodity Price has Bottomed, Going Higher). Inventories of gas are still high. The weather is still warmer than normal. So why is the price rising now?
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3 NYC Pension Funds Sued by Workers for Divesting from Fossil Fuels
Three New York City pension funds–the New York City Employees’ Retirement System, the Teachers’ Retirement System, and the Board of Education Retirement System–were sued this week by municipal employees for breaching their fiduciary duty and divesting from fossil energy companies. The plaintiffs allege the divestments have resulted in the loss of billions of dollars that otherwise would have gone to retirees. The pension funds went woke and decided they could no longer support companies that (in their wrong opinion) are creating catastrophic, man-made global warming.
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DOE Rule Change Means LNG Projects Must Build Within 7 Years
The Dept. of Energy (DOE) grants permission for LNG export facilities to ship LNG to non-free trade agreement countries. It can take years to sign up enough customers (via contracts) and investors to make a “final investment decision” (or FID) to move forward with a project that often approaches $20 billion. LNG builders need to know once the plant is built, it can actually ship to other countries. But the DOE grants its permission to export with a string attached: The plant must get built and begin shipping within seven years–or the permit expires. Until April, LNG builders would routinely ask for an extension to the seven-year period. In April, the DOE changed its policy and declined to extend a permit for Energy Transfer’s Lake Charles LNG project beyond seven years (see Biden DOE Denies Lake Charles LNG Time Extension for Exports).
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