M-U Forward NatGas Prices Head Higher – Supply Can’t Keep Up
The price of natural gas traded on “forward” contracts for the fall at what used to be called the Dominion South (now called Eastern Gas Transmission) trading hub near Pittsburgh is up 23 cents (14%) for contracts in September and October. Forward prices are based on current spot prices. Translation: The market is strongly indicating it thinks the price of M-U gas is heading higher in the coming fall months.
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An interesting post by our favorite government agency, the U.S. Energy Information Administration (EIA) about their latest predictions for the price of natural gas at the benchmark Henry Hub. EIA predicts the average price at HH this year, in 2021, will end up being around $3.07 per million British thermal units (MMBtu). The average in 2020 was $1.998 (round it up to $2.00). So this year the average price will be some 54% higher than last year. What about 2022?
We have published a number of posts about hydrogen (H2), the next “big thing” in energy (
Two of three Marcellus/Utica states received permits to drill new shale wells last week, and boy did they open the floodgates! Pennsylvania issued 30 new permits, the majority of which are located on three well pads operated by EQT, Chesapeake Energy, and Range Resources. Ohio issued no new permits. After getting skunked for two weeks in a row, West Virginia issued 16 new permits–to just two drillers: Antero Resources and EQT. All of the WV permits were issued in the same county.
MARCELLUS/UTICA REGION: Pipelines deliver the energy that powers Pennsylvania – and the U.S.; OTHER U.S. REGIONS: Is wider well spacing leading to better performance?; NATIONAL: Biden admin crackdown prompts refinery closure; INTERNATIONAL: BP to stick with oil and gas for decades, CEO says; European natural gas prices hit highest level in over a decade; Oil prices falter amid OPEC+ meeting rumors; China on top of the LNG market.
The West Virginia Dept. of Environmental Protection (WV DEP) is moving forward with its constitutional duty to evaluate whether or not the state should issue a federal Clean Water Act permit allowing Mountain Valley Pipeline (MVP) to finish crossing water bodies it hasn’t already crossed under a previous permit (which was overturned by the lefties of the U.S. Court of Appeals for the Fourth Circuit). WV DEP will hold an online, virtual hearing tonight at 6 pm to accept comments from the public.
Last week CenterPoint Energy filed a request with the Indiana Utility Regulatory Commission (IURC) to replace portions of its coal-fired generation fleet with two natural gas combustion turbines. The two units would provide a combined 460 megawatts (MW) of electricity as a backup to CenterPoint’s wind, solar, and battery storage. The plants would not operate continuously (which is a shame). Where will the gas come from to feed these new gas-fired plants?
We spotted an article on OilPrice.com (no friend of the oil and gas industry, despite the name of the site) that makes the bold claim that “oilfield services companies are making a full comeback.” That’s music to our ears! Oilfield services companies including Schlumberger, Halliburton, Baker Hughes, and National Oilwell Varco are reporting that prices for their services and equipment have “bottomed out” and they are now recruiting new workers. Since February some 27,000 OFS laid-off workers have returned to work.
In March we told you about House of Representatives (HR) Bill 1512, the Climate Leadership and Environmental Action for our Nation’s Future Act (or CLEAN Future Act). The bill gives vast powers to the unelected bureaucrats at the EPA to set new regulatory demands before permits can be approved for facilities that produce plastics or the raw materials used to produce plastics, such as ethylene or propylene (see 
If you’ve been reading MDN over the past few months, no doubt you’ve detected our skepticism over the sudden rise of ESG (environmental, social, governance) programs that are now all the rage with oil and gas companies, including Marcellus/Utica companies. As we previously stated, “We’re approaching the point where we’ll puke if we hear much more about ESG. The problem, from our perspective, is that the term itself is nebulous. Anyone can define ESG any way they want. What does ESG really mean?” So when we spotted an article titled “How to tell a real oil and gas ESG program from a fake,” we just had to read it.
We finally come to the end of a saga that began nearly three years ago, in Sept. 2018 when six men were charged with conspiring to illegally alter emissions systems on 30+ trucks with heavy-duty diesel engines, trucks used to haul water and wastewater to and from Marcellus Shale wells (see 
In May MDN brought you the news that landowner Gateway Royalty was sounding the alarm over a new bill quickly advancing in the Ohio legislature. House Bill (HB) 152 would use forced pooling if 65% of a proposed unit’s landowners are leased (too low a bar) and also would force the landowner to accept a 12.5% royalty and force them to accept post-production deductions with royalties in some cases potentially going down to nothing (see 
As temperatures rise across the U.S. and Americans flip on air conditioning which makes a big draw on the electric grid, stocks of natural gas in storage are decreasing. Natgas is used to generate electricity. When there’s less supply to meet existing or growing demand, economics 101 tells us the price of the good or service (in this case natural gas) goes up. And indeed that’s exactly what’s happening. As the price of natgas increases, so too does the share price for M-U drillers.
Each quarter NGI (Natural Gas Intelligence) runs the numbers and publishes a list of the 25 top natural gas marketers in the U.S. These are not necessarily the top 25 producers of natural gas (although in some cases they are), but the top 25 sellers (vendors, jobbers) of natural gas. NGI’s latest quarterly report shows overall the biggest sellers of natgas “lost ground” once again in 1Q21, which continues a two-year trend of year over year declines in the amount of gas sold.