Debrosse Memorial Report: Steep Decline in 2020 Ohio O&G Production
In June the Ohio Oil & Gas Association (OOGA) held its 74th Annual Winter Meeting in Columbus. Yeah, you read that right. The Winter Meeting was moved to June this year due to COVID. As with previous annual OOGA meetings, one of the speakers was Martin Shumway, technical director at Locus Bio-Energy Solutions. Shumway shared details from the latest DeBrosse Memorial Report (full copy below). What does the report show for 2020? Ohio oil and natural gas production both experienced steep declines last year. Oil production was down 16% from 2019, and natural gas production was down 10% from 2019. Even though the production news for 2020 is negative, this report is jam-packed with terrific, very useful information about Ohio’s shale industry.
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In June MDN brought you the news that Enbridge’s Texas Eastern Transmission (TETCO) pipeline is being flow-restricted by the Pipeline and Hazardous Material Safety Administration (PHMSA). Some 40% of the Marcellus/Utica molecules that flow through TETCO’s pipeline to destinations in the southeastern U.S. have disappeared and were predicted to stay that way until the end of September (see 
Atlantic Coast Pipeline (ACP) had laid 31 miles of pipeline and had cut trees for 222 miles along the 600-mile route before Dominion Energy, the builder, decided last summer it no longer wanted to be in the interstate pipeline business, canceling ACP (see 
Yesterday PA Gov. Tom Wolf grabbed some headlines by having his Dept. of Environmental Protection (DEP) announce they will “soon” begin to require *all* landfills in the state to test leachate (water with nasty stuff in it that comes from landfills) for radioactivity. The Wolf DEP press release takes great pains to point out the new testing includes landfills “that accept unconventional oil and gas waste.” Which is the purpose of the announcement. To plant the seed that maybe, just maybe, drill cuttings are causing folks to glow in the dark. Radiation poisoning. Yet buried in the press release is this statement about a previous study of leachate from PA landfills with and without drill cuttings…
Increasingly ours is a world run by computers. Even in-the-ground pipelines are monitored and controlled by computers. The ransomware attack earlier this year against Colonial Pipeline, a pipeline that flows a significant amount of refined products (gasoline and diesel fuel) from the Gulf Coast where it’s refined as far north as New Jersey, was a wake-up call for all pipelines. The Transportation Security Administration (TSA) heard the call and responded. In May the TSA issued an initial “security directive” requiring pipelines, including natural gas pipelines, to do certain things to protect themselves and the public they serve. Last week TSA issued a second such pipeline directive.
When drillers for natural gas sink a hole and methane (CH4) begins to come out of the ground, a number of other hydrocarbons come out of the ground along with it–at least in “wet gas” areas. Those other hydrocarbons include ethane (C2H6). Ethane production in some M-U wells goes as high as 6% or more of the hydrocarbons coming out. For years ethane has been a waste product, something drillers pay to dispose of–typically by “rejecting” it and slipping it into the methane stream. Increasingly ethane, which is now trading at its highest price in two-and-a-half years, has become a profit center. Why? Because it’s used to make plastics.
OTHER U.S. REGIONS: Haynesville production surge looms as drilling, well completions accelerate; NATIONAL: In 2020, the United States produced the least CO2 emissions from energy in nearly 40 years; Biden’s oil, gas leasing plan likely waiting for Senate vote on BLM director; Surging North American natural gas prices look to test major producers’ discipline; Deb Haaland’s oil and gas stall; INTERNATIONAL: Oil prices decline as delta variant spreads; With Quebec rejecting a $14B LNG project, is the industry at a dead end in Canada?
Ohio’s House Bill (HB) 6 law granted billions (plural) of dollars to FirstEnergy in an attempt to prop up the company’s economically failing nuclear power plants. FirstEnergy bribed state legislators to pass, and keep passed, HB 6 by paying out $61 million to a small group of insiders, including the now-former Speaker of the House (see 
A Pennsylvania Democrat lawmaker from Beaver County (southwestern PA) who professes to support the Marcellus industry, Rep. Rob Matzie, has written a letter to Dept. of Environmental Protection (DEP) Secretary Pat McDonnell (a fellow Dem) asking him to deny a request by PennEnergy Resources to withdraw as much as 3 million gallons of water a day from Big Sewickley Creek and one of its tributaries for shale fracking. Matzie says that’s just too much water to withdraw from the creek.
So-called environmentalists filed a lawsuit last week to block the construction of an LNG unloading facility in Greenpoint, Brooklyn. National Grid, a huge utility company that supplies natural gas to all of Long Island, including two New York City boroughs (Queens and Brooklyn), needs a way to inject more natural gas into its distribution system…or else. Or else during extreme winter weather events some folks will run out of gas for heating and cooking. Antis don’t care–until they’re the ones who run out.
According to one of our favorite Forbes authors and research analyst, Jude Clemente, “demand for natural gas can only grow.” Right now the world collectively uses 375 billion cubic feet per day (Bcf/d) of natgas. Clemente says demand “is set to grow substantially in the years ahead.” One of the drivers of that growth will be carbon-neutral LNG. What is it and why will it drive more use of natgas? Clemente explains…
You can’t miss all the chit-chat coming from the oil and gas industry (particularly drillers) about being “net carbon zero” by such-and-such a date–typically by 2025. Or maybe 2030. CNX Resources, an independent natural gas driller (and midstream company) based in Pittsburgh, released its annual corporate social responsibility (CSR) report for 2020 yesterday. CNX continues to walk the talk when it comes to ESG (environmental, social, governance)–one of the few (only?) companies to do so. Get this: CNX has been net carbon *negative* (pulling CO2 out of the atmosphere) for its Scope 1 and 2 operations since 2016! It is the only E&P we’re aware of that can make that claim. Everyone else is still trying to get to net carbon zero, let alone net carbon negative as CNX has done.
According to the U.S. Energy Information Administration (EIA), prices for natural gas this summer are “the highest since 2014.” Who could have predicted? We sure didn’t. In June, the U.S. natural gas spot price at the Henry Hub averaged $3.26/MMBtu, the highest price during any summer month (April-September) since 2014. Prices in July have increased from June, averaging $3.67/MMBtu through the first two weeks of July. Yesterday the NYMEX futures price for the Henry Hub hit $4/MMBtu for the first time since Dec. 14, 2018.