NYMEX NatGas Soars Another $0.46 to Close at $8.41 – “Irrational”
Yesterday MDN told you we would likely see the front-month NYMEX natural gas contract settle above $8/MMBtu by the end of yesterday (see NYMEX HH Natural Gas Price Trades Above $8/MMBtu, Closes @ $7.95). Indeed it happened–in spades. The NYMEX closed at $8.41/MMBtu, up $0.46 cents from the day before. Analysts are calling these prices “irrational” and predicting a crash–but not any time soon. Look for prices to remain elevated for the foreseeable future.
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Energy Transfer, one of the biggest pipeline and midstream companies in the U.S., issued its quarterly update yesterday. Of particular interest to us was the honorable mention the Mariner Easter (ME) project received. Construction of the final phase of the Mariner East project was completed in 1Q22, bringing Energy Transfer’s total NGL capacity on the Mariner East pipeline system to more than 365,000 barrels per day, including ethane. NGLs, including those flowing through the ME system, along with LNG, were the two dominant themes running through yesterday’s update.
Pennsylvania State Sen. Gene Yaw has been a champion in the fight to defeat Gov. Tom Wolf’s hideous carbon tax, otherwise known as the Regional Greenhouse Gas Initiative (RGGI). Wolf is trying to force PA to join over the objections of a majority of state legislators. In his latest missive about RGGI, Yaw connects some dots that need to be connected–between Russian money funding Big Green groups, and the groups using that money to lobby, influence, and litigate in an effort to force PA to join RGGI. It’s an effort to force PA to use less fossil energy. Clearly, RGGI is anti-fossil fuel. We would argue, as does Yaw in this excellent editorial below, that RGGI is also anti-American.
Diversified Energy CEO Rusty Hutson and his wife Kimberly Hutson, both natives of West Virginia, recently donated $1.8 million to West Virginia University to help fund an experiential learning program, a nursing initiative, and neuroscience care at the university. We have chronicled a number of generous donations by Marcellus/Utica companies and their foundations. However, this has to be the single largest donation by an individual connected to the industry that we’ve seen, to date.
NATIONAL: USA LNG deals surge; Why surging natural-gas prices haven’t sparked a drilling boom; INTERNATIONAL: OPEC fails to increase oil output.
Pin Oak Energy Partners, a relatively young Marcellus/Utica driller based in Akron, OH (privately owned), has hired Detring Energy Advisors to market some of the company’s Utica Shale assets. The assets include 22,000 acres in Harrison and Tuscarawas counties, Ohio. According to the company’s website, Pin Oak owns some 317,000 net acres with some 207,000 “net deep acres” with Utica/Point Pleasant and Marcellus potential. Pin Oak owns and operates over 3,300 producing wells–most of them conventional, some shale.
Yesterday MDN brought you the news that Equitrans Midstream, builder of the 303-mile Mountain Valley Pipeline (MVP) project from West Virginia to southern Virginia, has decided to roll the dice for a third time with the radical judges of the U.S. Court of Appeals for the Fourth Circuit by applying for a new permit to cross 3.5 miles of the Jefferson National Forest (see 
MAX Environmental has operated the Bulger hazardous waste landfill in Smith Township (Washington County), PA since 1958. MAX has operated a second site, the Yukon hazardous waste landfill in South Huntingdon Township (Westmoreland County), PA since 1964. One of the primary customers for both landfills over the past 15 years has been the Marcellus industry–dumping drill cuttings (leftover dirt and rock from drilling). In 2019 MAX filed a request with the PA Dept. of Environmental Protection (DEP) to “delist” both sites as hazardous landfills, given what they accept is not hazardous. Some of the neighbors along with various Big Green groups object to the change in classification.
Another day, another deal from Energy Transfer (ET) in signing up customers to accept shipments of LNG produced by ET’s yet-to-be-constructed LNG export facility in Lake Charles, Louisiana located on the Calcasieu ship channel. Yesterday we told you ET had signed up Singapore’s Gunvor to accept 2.0 million tonnes (MT) per year (see 
Natural gas traders’ nerves have gotten the better of them. Yesterday the NYMEX “front month” futures contract price for natural gas hit $8.14/MMBtu before falling back to close at $7.95. That is the highest price NYMEX gas has traded for in the past 14 years–since 2008. The main reason for this most recent spike up seems to be chatter about European countries imposing tighter sanctions on Russia, and the very real possibility Russia may retaliate by cutting off gas supplies to European countries beyond Poland and Bulgaria. A contributing factor is a temporary decrease in pipeline flows in both the Bakken and the Marcellus/Utica.
Last week Pennsylvania issued 16 new shale well permits. EQT led the way with ten permits, all of them for wells in Greene County. You just HAVE to read the names of the wells (below). After getting skunked for two weeks in a row, Ohio finally issued permits once again last week–ten of them. Ascent Resources scored six permits, mostly in Belmont County. Encino Energy had four permits, all in Carroll County. Finally, West Virginia had nine permits. Antero Resources scored seven of the nine (six in Wetzel County), and Southwestern took the remaining two permits (both in Marshall County).
Coterra Energy, the new name for the merged Cabot Oil & Gas and Cimarex Energy, issued its first quarter 2022 update yesterday. Like other large Marcellus/Utica drillers, Coterra lost a bunch of money on derivatives (bad bets on the future price of oil and gas). However, unlike other large M-U drillers, Coterra still made money in 1Q22–a LOT of money. The company made $608 million in 1Q22 vs. making $126 million in 1Q21–nearly 5X as much. How? The price of natgas nearly doubled over the past year, that’s how. Coterra generated a massive $961 million in free cash flow, returning most of it to shareholders via dividends ($0.60 per share) and stock buybacks.