Understanding Natural Gas Storage – Mundane but Crucial
There are a number of factors that influence the availability and price of natural gas. Without a doubt, the #1 factor in gas prices is the weather. Another factor not often discussed is storage. Natural gas is stored mainly in large underground caverns during the “summer” months (called “injection season,” April through October). Natgas is later withdrawn for use during the “winter” months (“heating” or “withdrawal” season, November through March). RBN Energy takes a look at this often overlooked aspect of the industry, educating us on the current status of gas storage across the country.
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OTHER U.S. REGIONS: California building temporary gas power plants; NATIONAL: Reality will trump narratives on the energy transition path; INTERNATIONAL: Millions of electric car batteries will retire in the next decade. What happens to them?; US imposes Nord Stream 2 gas pipeline sanctions.
A profoundly biased and inaccurate article published by Environmental Health News attempts to paint two proposed shale gas wells as an environmental disaster and existential health threat akin to a nuclear meltdown. The article is so over the top it’s laughable–but instructive nonetheless. Apex Energy has proposed drilling two wells on a pad in a rural part of Trafford, PA township, straddling Allegheny and Westmoreland counties. The location is “within one mile of Level Green Elementary School and within two miles of 12,733 residents in Penn Township and Trafford Borough (about 17 miles east of Pittsburgh).” Are the kiddies at nearby schools and residents of Trafford really in danger?
On Wednesday, the Pennsylvania Senate Environmental Resources and Energy Committee approved a letter to the state’s Independent Regulatory Review Commission (IRRC), asking the IRRC to oppose the Regional Greenhouse Gas Initiative (RGGI), an obscene carbon tax aimed at closing down coal and natural gas-fired power plants in the state. Democrats on the committee railed against the vote calling it meaningless when they know it’s anything but. If the IRRC turns against RGGI, the left’s carbon tax scheme will die.
It’s been our observation since beginning to write about the shale energy space in 2009 that every year or two most drillers, at least the publicly traded drillers, issue new notes (what we call IOUs) to pay off already-issued notes coming due within a few years. And if there’s any money left over from the new tranch of notes issued, they use it to pay down other debts or “for other corporate purposes.” The latest swap-new-notes-for-old-notes comes from a major Marcellus/Utica driller, Southwestern Energy, which last week floated $1.2 billion of new notes to help pay off what amounts to $1.4 billion of older notes coming due in the next few years.
Nuverra Environmental Solutions (formerly Heckmann) is one of the largest companies in the United States that handles the transportation and disposal of shale drilling wastewater and leftover rock and dirt from drilling. The company has major operations in the Marcellus/Utica region. We keep an eye on its performance as an indicator of whether there is more or less drilling happening in the M-U. For over a year, it’s been less. In 2020 Nuverra’s revenue sank by 34% and the rig count that it tracks fell by 27% (see 
It’s been hard to miss the recent “the sky is falling” report issued by the IPCC (Intergovernmental Panel on Climate Change). Mainstream media has been in the throes of multiple orgasms over the 
The latest weekly Enverus U.S. rig count shows total rigs in use hitting a new post-pandemic high. For the week ending August 19, the rig count stood at 624, up 7 rigs from the previous week. That’s yet another new rig count high since April 2020. The Marcellus play regained a rig it lost from the previous week, while the Utica stayed even for a second week in a row. Collectively the M-U is currently running 45 rigs, up one rig from the previous week.
During the second quarter (May through June), ten of the largest oil and gas producers covered by S&P Global Market Intelligence saw their NGL (natural gas liquids) revenues grow substantially from the same period a year ago. Those ten companies, half of them drillers in the Marcellus/Utica region, saw NGL prices increase from 104% to as high as 261%. The extra money from NGLs made what turned out to be a down quarter financial-wise (because of bad bets on hedges) better than it would have otherwise been.
Mountain Valley Pipeline (MVP) is a 303-mile pipeline from West Virginia to southern Virginia that is 92% complete (in-the-ground). The pipeline is targeted to be in-service by the middle of next year. The project is currently stalled, temporarily, due to frivolous lawsuits filed by disgusting Big Green groups like the Sierra Club. MVP Southgate is an extension to MVP that will travel an additional 75 miles from southern Virginia (where the current MVP terminates) into North Carolina. MVP Southgate has not yet broken ground. The project has been opposed by North Carolina and the same mish-mash of “environmental” groups that opposed MVP. However, this week there are two fewer groups opposed to Southgate than there was last week.
We hate to keep harping on this, but we keep reading stories about a developing issue here in the Marcellus/Utica. That issue is the lack of pipeline capacity to flow an increase in gas production from the northeast to other locations. The experts at RBN Energy predict that within the next two years M-U producers will “hit the capacity wall” and run out of extra pipeline capacity for an ever-increasing amount of natural gas production. When will the Northeast run out of “exit capacity” and how bad could constraints get?
The Pennsylvania House Environmental Resources and Energy Committee held a hearing on Tuesday that investigated the economic benefits of the state’s 1,000-plus miles of gas pipelines. The adults in the room all acknowledged even if there is a transition away from fossil fuels “someday,” pipelines hauling natural gas around the state will need to be kept up and running for *at least* the next 30 years (likely longer). Pipelines are here to stay. A band of radical anti-fossil fuel nutters behaved badly during the hearing, as they so often do, and had to be ejected.
Whether we think it’s a good idea or not (we don’t), there is no denying that the Marcellus/Utica industry has collectively jumped off the RSG/ESG cliff. RSG stands for “responsibly sourced gas” and ESG is “environmental, social, governance.” Responding to pressure from investors and customers, most M-U drillers are now making moves to prove the natural gas they produce has been produced using practices that protect the environment. We say the gas has always been produced responsibly and we have nothing further to prove, but hey, who are we? Anywho, the Pittsburgh Business Times delves into the programs–Project Canary and MiQ–that M-U drillers have embraced as their preferred method of proving environmental friendliness.
“Look ma, no hands on the steering wheel!” Forget about self-steering/self-driving cars. That’s yesterday. Now we have self-steering (or “autonomous”) directional drilling–oil and gas drilling that steers itself using artificial intelligence. Brought to you by the largest oilfield services company in the world: Schlumberger.