Other Stories of Interest: Mon, Sep 20, 2021
MARCELLUS/UTICA REGION: Tennessee Gas Pipeline incrementally adds infrastructure; OTHER U.S. REGIONS: How BP is counting on poultry litter for renewable natural gas; NATIONAL: US natural gas storage fields add more than market expects, prompting price slide; INTERNATIONAL: Biden urges world leaders to cut methane gas emissions; Gazprom denies European Parliament’s accusations of rigging gas prices.
Read More “Other Stories of Interest: Mon, Sep 20, 2021”
It’s that time of year again–for annual maintenance at the Cove Point LNG export plant, located on the shoreline of Maryland. The plant, built by Dominion Energy, is now controlled and operated by Berkshire Hathaway following Warren Buffett’s purchase of Dominion’s extensive pipeline network last year (see 
Exactly one month ago MDN brought you the news that the Federal Energy Regulatory Commission (FERC) has provisionally approved a request by Equitrans’ Mountain Valley Pipeline (MVP) to change the method it uses to cross 136 streams and 47 wetlands (see 
Earlier this week MDN told you that a major national proxy advisor, Glass Lewis, is recommending shareholders from both Cimarex Energy (Permian oil driller) and Cabot Oil & Gas (Marcellus gas driller) approve a proposed merger on September 29 when they vote (see 
MDN editor Jim Willis has had several conversations this past week about the price of natural gas and how prices in the Marcellus/Utica are influenced by national and international events. “Is it possible,” one questioner asked, “to say that if the NYMEX price is X, then my local trading hub in the M-U will likely be X plus or minus Y?” Unfortunately, the answer is no. There is no one “price” of natural gas. The Henry Hub futures price (the NYMEX) is often quoted as “the” price, but in reality, there are hundreds/thousands of prices. Natgas is a commodity and traded at hundreds of points along major pipelines throughout the country. This post attempts to explain more about the complex landscape of what influences the price of natural gas where you are.
Lately we’ve seen multiple news articles about yet another city, or even state, that has launched a lawsuit against one or more Big Oil companies claiming their products are causing man-made global warming (an abject lie), and that those companies have known about this situation for years without doing anything about it, causing the earth to toast. Such lawsuits are not, frankly, about stopping global warming. They are about a government shakedown–politicians dipping their hands into the pockets of companies with money and stealing it. An excellent article appearing on the RealClearEnergy website describes what has been happening with these lawsuits, and why these lawsuits cannot be allowed to go forward.
Even with the onslaught of leftist attacks on the fossil fuel industry–in particular against natural gas pipelines–there are still some 45 major natgas pipeline projects projected to come online over the next five years. Of those 45, we count 16 that are located in the Marcellus/Utica (i.e. Appalachian) region. There’s certainly no guarantee all 16 (or all 45) will end up getting built. But if the 16 pipe projects in the M-U do get built, that will add another 7.9 billion cubic feet (Bcf) of M-U molecules flowing to other markets. Cool.
The NYMEX futures price for natural gas hit yet another 7-year high yesterday, closing up $0.20 to close at $5.46/MMBtu. The national spot price average (for physically traded/delivered gas) was up $0.18 to an average of $5.53/MMBtu. According to Bespoke Weather Services, the reason for ongoing run-up in prices is fear: “It is all fear in the market, owing to storage levels that are viewed as less than sufficient in the event of a cold winter, not just here in the U.S. but even more so over in Europe.”
Because of the soaring price of natural gas (see our companion post today), and because gas drillers have shown remarkable restraint and a real effort to scale back capital spending in an effort to generate free cash flow, investors have taken note and like what they’ve seen. The share price in most pure-play shale gas producers (mainly those in the M-U) posted double-digit gains in value over the past month.
The so-called budget reconciliation bill Democrats are trying to force through Congress against the will of the American public, a $3.5 trillion monstrosity, will do great harm to the oil and gas industry. On Monday we told you that 130 energy, manufacturing, business, and labor trade organizations, led by the American Petroleum Institute, are sounding the alarm about the methane tax that’s part of the bill (see 
LDC Forums held its Mid-Continent Forum (in person!) in Chicago earlier this week. One of the hot topics of discussion was ESG (environmental, social, governance) and RSG (responsibly sourced natural gas). We’re not big fans of either ESG or RSG, but hey, what do we know? At any rate, you can’t miss all the chatter about ESG/RSG over the past six months or so. Everyone (and we mean everyone) in the oil and gas industry seems to have gotten the ESG/RSG religion. So we found it interesting that members of a pro-ESG/RSG panel said, “it could be some time before a mature market develops for certified gas supply.”
We suppose we should have known. In querying the same Ohio Dept. of Natural Resources (ODNR) database we’ve been querying for years (maintained by ODNR), beginning about two months ago we noticed no new permits had been issued for new Utica Shale wells in the state. A week or two here and there is not all that unusual given the downward trend in drilling new wells. But the trend went on for two months. We were suspicious. A couple of sharp MDN readers emailed to say that ODNR is producing regular reports of new Utica well permits at a different location. Doh! We wish the ODNR had posted some sort of notice about the change in not continuing to update their other database. At any rate, we’ve gone back to early July to harvest and present all of the missing Ohio new weekly permit reports below…