NatGas NYMEX Futures Price Spikes 72% – Most EVER in Single Day
Yesterday afternoon the price of the NYMEX Henry Hub “front month” February futures contract for natural gas went on a wild ride. The February contract, due to expire at the end of trading, at one point sold for $7.40/MMBtu, up some 72% in a single day! The price finally settled at the end of trading at $6.265/MMBtu, up $1.99 (46%) from the previous day. It was the single biggest spike in the price of the front contract ever, since the contract launched in 1990 and the largest one-day gain on record. What in the world happened? And is this an indicator of higher prices to come?
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Yesterday CNX Resources issued its fourth quarter and full-year update for 2021. As it has done over the past few years, CNX did not issue a full update (no narrative), opting to let its official SEC filing do the talking for it. What does the quarterly update show? The company pumped 1.7 billion cubic feet per day (Bcf/d) of natural gas and equivalents during 4Q. CNX averaged 1.6 Bcf/d for the full year. The company swung from losing $873 million in 3Q to making a profit of $630 million in 4Q–a $1.5 billion swing! How many wells did CNX drill in 4Q?
On Wednesday the Pennsylvania State Senate passed Senate Bill (SB) 806, a bill aimed at providing clarity in the royalty payment statements landowners receive from oil and gas drillers. Sometimes deductions are posted on royalty statements with very little (if any) description of what those deductions are for. SB 806 will clear up the confusion. PA Senator Gene Yaw is the prime sponsor of the bill.
Powerhouse data analytics firm GlobalData, based in London, recently published a report on the Marcellus/Utica region. Among the findings, GlobalData analysts project M-U natural gas production will increase at the average annual rate of 5.1% from this year through 2025. They forecast natgas production will hit 38.3 billion cubic feet per day (Bcf/d) by 2025. Are they right?
Diversified Energy (formerly Diversified Gas & Oil), which owns close to 8 million acres of leases with some 67,000 (mostly) conventional oil and gas wells, made 2021 the year to expand–outside the M-U region. The company purchased major assets in the Cotton Valley/Haynesville region of Lousiana, the Barnett play in Texas, and most recently, in the Mid-Continent in Oklahoma. Diversified got its start by buying up old conventional O&G wells in Appalachia. But a funny thing happened on the way to the forum…Diversified has begun buying older shale wells too. The company is now the fifth-largest owner of shale wells in the southwestern PA Marcellus.
According to ISO New England, the electric power grid manager for New England, short-term power demand forecasting shows projected peak load reaching 19,250 MW on Jan. 29, because of the coming winter storm. The grid’s expected winter power demand peak, or what they plan for at the maximum, is 19,710 MW. That’s really too close for comfort. Electric power and natural gas prices are currently spiking to insanely high levels because of the coming storm, and because there’s not more capacity to send natural gas to the region.
This is getting interesting. Last week MDN told you that Canadian driller Questerre Energy has found a way to fight back against Quebec, Canada’s insane, irrational plan to outlaw all oil and gas drilling–including drilling in the province’s Utica Shale layer–by forming an alliance with a local Indian tribe to drill on Indian land (see 
MARCELLUS/UTICA REGION: Lefties push electric heat pumps to replace natural gas furnaces, hot water heaters; OTHER U.S. REGIONS: WEC Energy to pilot hydrogen fuel in Michigan natural gas plant; Forced electrification will cost Maryland consumers more than $26K per household; NATIONAL: One year later Biden admin still hasn’t held onshore lease sales; US LNG exports go up by 5 from last week; The U.S. is now the world’s leading LNG exporter. Let’s make sure it sticks.; Backlash against renewables surged in 2021, with 31 Big Wind and 13 Big Solar projects vetoed; We can store our excess renewable energy in an energy vault; INTERNATIONAL: Yamal natural gas pipeline running eastwardly – away from Germany.
Pennsylvania’s Pipeline Investment Program (or PIPE) issues grants covering part of the cost for building new natural gas pipelines to connect homes and businesses, typically in rural parts of the state, to homegrown Marcellus Shale gas supplies. We’ve written about many of the PIPE grant projects in the past (
The number crunchers at the U.S. Energy Information Administration (EIA) have analyzed proved reserves data for 2020 (the most recent year available) and have determined proved reserves dropped by 4% in 2020. Why? Due to the lower price natural gas was fetching. In these days of natgas flirting with $4-$5/MMBtu it may be hard to recall that just a little more than a year ago gas was bumping around in the $2-$3 range.
The Barack Hussein Obama administration went crazy with over-regulation in many sectors. One of them was to redefine “waters of the United States” (or WOTUS) as everything down to, no exaggeration, mud puddles (see 
Natural gas production has taken a “precipitous drop” in the U.S. in January according to S&P Global Platts. After approaching a record high at over 96.3 billion cubic feet per day (Bcf/d) in late December, U.S. natural gas production has “tumbled since the start of the new year,” falling by over 4 Bcf/d to average just 92.2 Bcf/d in January. Why?
As predicted last week by Reuters, Chesapeake Energy announced yesterday it is buying Marcellus driller Chief Oil & Gas plus associated non-operated assets from Tug Hill Operating for $2 billion in cash and approximately 9.44 million common shares. The total purchase price (given the current CHK stock price of $67/share) is roughly $2.6 billion. The combination makes Chesapeake a powerhouse driller in the northeast Pennsylvania Marcellus with 653,000 acres of leases.