PA PUC Explains Federal Power Grab in Regulating Gathering Pipes
The Pennsylvania Public Utility Commission (PUC) has traditionally not regulated nor overseen low-pressure natural gas gathering pipelines in the state because it’s not required to (nor allowed to) by the federal Pipeline and Hazardous Materials Safety Administration (PHMSA). That has changed. The PHMSA published new standards that bring gathering pipelines under its regulatory umbrella. The PA PUC held a public hearing in early December and subsequently published material from that hearing in the Pennsylvania Bulletin in late December–material that discusses how the change in PHMSA’s gathering pipeline regulations affects PA.
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The Freeport LNG export terminal, located in Quintana Island, Texas, has been offline and not producing LNG since June 2022 due to an explosion (see 
It’s that time of year. Typically at the end of a year, or the very beginning of a new year, publications will pontificate on what they predict will happen in the coming 12 months. We’ve seen a number of such articles about the energy space, including some predictions targeted specifically for the Marcellus/Utica. We’ve selected three such articles to share with you–all of them from authors and publications we highly respect.
NATIONAL: Domestic terrorists are targeting the U.S. energy grid; The U.S. will need thousands of wind farms. Will small towns go along?; Where will WTI oil price be at end 2023?; Wellhead equipment co. Cactus to acquire pipe technologies co. FlexSteel; Cramer: Charts suggest oil, natural gas could be due for a ‘boom’; INTERNATIONAL: China-Russia east-route natural gas pipeline increases daily gas delivery; First LNG cargo arrives at Germany’s LNG terminal in Wilhelmshaven; Meet Shell’s new CEO.
Last July, Pennsylvania Gov. Tom Wolf, controlled by the extreme left in the Democrat Party, allowed PA House Bill (HB) 2644 to become law without his signature (see 
The Marcellus/Utica is THE number one natural gas-producing region in the country–by far. Much of the country, including the M-U, was affected by the bomb cyclone called Winter Storm Elliott over the Christmas break. The bitter cold froze off wells and caused the M-U region collectively to experience a temporary drop in production of roughly 27%. Pennsylvania’s production dropped around 20%, while Ohio’s production dropped 50%.
We came “this close” to a major electricity blackout in New England over the Christmas break, during the bomb cyclone cold snap called Winter Storm Elliott. The ONLY thing that prevented a major blackout (with people freezing to death) was…oil. Fuel oil, specifically. So-called renewable energy–solar and wind–bombed out during the bomb cyclone. Natural gas did what it could, but there wasn’t enough natgas to keep the power generators turning because people like newly-elected Gov. Maura Healey (Massachusetts wacko leftist) blocked new natgas pipelines during her tenure as the state’s Attorney General. What was left was to burn to keep the lights on and to keep people from freezing to death was fuel oil (much dirtier than natural gas). Welcome to the leftist utopia of New England. During the next bomb cyclone, New England may not be so lucky.
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.
What a difference three years can make! Three years ago, Henry Hub prices were hovering around $2 per thousand cubic feet (Mcf). Stock valuations for Marcellus/Utica drillers were majorly depressed (down 80-90% from previous highs), and gas producers were struggling. Fast forward to today. Balance sheets and earnings statements are through the roof. Most experts believe $4-$5/Mcf gas is sustainable–at least for the next X years. What does the future look like for M-U drillers? What are the risks? And can we keep the current bright outlook going?
It’s rare these days to come across information about the terms of a lease deal. Back in the day, when leasing was still going strong and there were a number of landowner coalitions, we would learn of lease terms and share them here on MDN. When we hear of lease terms nowadays, it’s almost always a deal between a municipality or governmental entity and a driller, forcing the information to be made public. We have one such deal to share today. Earlier this week, the East Guernsey Local School District Board of Education (in Lore City, Guernsey County, Ohio) voted to approve an oil/gas lease with Encino Energy.
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.