Permian Gas Production that Competes with M-U Comes Roaring Back
Although we consider the Haynesville Shale play to be the chief competitor to the Marcellus/Utica (because the Haynesville is also a gas play and currently operates more rigs that we do here in the M-U), the Permian is another major competitor. After the M-U, the Permian produces more natural gas (associated gas) than any other play, including the Haynesville. According to the experts at RBN Energy, the Permian is already back to producing as much natural gas as it did prior to the pandemic, and the numbers will only continue to climb.
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Last week the Trump Dept. of Energy (DOE) released a new report titled “Economic and National Security Impacts under a Hydraulic Fracturing Ban” (full copy below). The report shows that a ban on hydraulic fracturing would spike greenhouse gas emissions, boost coal generation, and reverse America’s energy exporter status. A full-on fracking ban would result in 7.7 million jobs lost across the country and the overall U.S. economy would take a significant hit just as the pandemic recovery is underway. Devastating.
MARCELLUS/UTICA REGION: Utica Shale Academy receives new industrial maintenance equipment; OTHER U.S. REGIONS: California blackouts said caused by poor planning, under-used natural gas supply; NATIONAL: U.S. shale producers lock in future sales as oil prices rise to one-year high; Keystone XL commits to become first pipeline to be fully powered by renewable energy; Keystone pipeline: Biden ‘to cancel it on his first day’; U.S. LNG exports, average prices climb in November; Fossil fuel production expected to increase through 2022 but remain below 2019 peak; Global oil, gas workforce facing ‘crisis of confidence’ in wake of COVID-19; INTERNATIONAL: Rolls-Royce engines picked for world’s first LNG-hybrid tug; IEA calls for ‘urgent’ action to cut methane emissions from oil, gas sector; France’s Total quits top U.S. oil lobby in climate split.
Dear MDN Reader:
It’s been a long road, but we’re nearing the end. Shell’s $6 billion ethane cracker plant, officially called the Pennsylvania Petrochemicals Complex (PPC), is close to being done. It’s likely the PPC, located in Beaver County, PA, will be up and running sometime next year. When it is, the market for Marcellus/Utica NGLs will profoundly change. PPC will use an average of 85,000 barrels per day of M-U ethane. Our ethane will no longer be a waste product that many drillers pay to get rid of, but rather a profitable product they sell.
Anti-fossil fuel zealots sent a letter to Pennsylvania Gov. Tom Wolf two days ago asking him to use dictatorial powers to overturn a permit issued by the Dept. of Environmental Protection (DEP) that allows a wastewater injection well to be built in Penn Township. The radical group ProtectPT (funded by Heinz Endowments and Google’s former CEO Eric Schmidt), along with a number of other oddball groups, lobbed a Hail Mary, asking Wolf to exercise his “supreme executive power” to stop the project. Perhaps they’re confusing Wolf with the North Korean dictator Kim Jong-un?
Over the past week, the Enverus U.S. rig count jumped by a big 18 additional active rigs. The Permian play in Texas and New Mexico saw the biggest increase, adding 14 new rigs (the most since before the pandemic). The Marcellus added two more rigs, bringing the combined Marcellus/Utica rig count to 42, the highest we’ve seen in months–maybe more than a year.
In its January 2021 Short-Term Energy Outlook (STEO) just released, the U.S. Energy Information Administration (EIA) forecasts annual average production of U.S. oil will fall to 11.1 million barrels per day (b/d) in 2021 before rising to 11.5 million b/d in 2022. As for natural gas, EIA says U.S. marketed natural gas production will decline by 2% to an average of 95.9 billion cubic feet per day (Bcf/d) in 2021. Like oil, EIA predicts the fall in natgas production will reverse in 2022 and will rise by 2% to 97.6 Bcf/d.
Researchers at the University of Illinois Chicago have developed a cutting edge catalyst made up of 10 different elements–each of which on its own has the ability to reduce the combustion temperature of methane–plus oxygen. This unique catalyst brings the combustion temperature of methane down by about half, from above 1400 degrees Kelvin down to 600 to 700 degrees Kelvin. What it means is that natural gas can burn cleaner and emit far less carbon dioxide.
Over the objections of a junior creditor group, a judge for the U.S. Bankruptcy Court in Houston said yesterday he will approve Chesapeake Energy’s bankruptcy plan to jettison $7 billion (out of $8.9 billion) worth of debt. Chesapeake will exit bankruptcy within the next 30 days and will continue to retain and drill on its Marcellus Shale assets in northeastern Pennsylvania.
Yesterday the Pennsylvania Dept. of Environmental Protection (DEP) held a virtual hearing to accept public comment on the topic of issuing water crossing and sediment/erosion permits for the PennEast Pipeline project. The hearing lasted over three hours with some 70+ people speaking (for up to 3 minutes each). Much to the consternation of anti-fossil fuelers, there was a strong showing of support for the project.
In a pair of announcements earlier this week, U.S. Well Services announced it has signed new long-term deals with both Range Resources and EQT to supply “electric fracking” services. We told you in February 2020 that Range had signed on with U.S. Well Services to continue using its electric fracking service (see 
In November 2019 the U.S. District Court of Pennsylvania ruled that K. Petroleum Inc. (KPI), headquartered in Gahanna, OH, had breached a contract with Penneco Oil by not paying Penneco for gas flowing through KPI’s gathering pipeline system for wells owned and operated by Penneco. Yesterday the same court finally (after more than a year) completed calculations for what KPI owes Penneco. The tab comes to $511,292.15.
Drillers and pipeline companies often need the services of environmental and engineering consultants as they plan their projects. There are a number of companies in this space operating in the Marcellus/Utica. Investment firm Round Table Capital (RTC) Partners recently purchased three companies and is merging them to create “a market leader in the Environmental Consulting and Engineering Services market.” RTC launched this new venture with the acquisition of Hull & Associates, LLC in July of 2020 (the foundation of their new “platform”) and has further expanded Hull with the acquisitions of Duffield Associates, LLC and HSW Consulting, LLC in December.