Report: Dramatic Impact of COVID-19 on the U.S. Energy Industry
Economists at consulting powerhouse The Brattle Group have released an assessment/report on the impacts through early April 2020 of COVID-19 on the electric and natural gas industries. The report (full copy below) summarizes recent developments in energy commodity spot and forward pricing, electricity demand, and financial markets, and speculates on what will happen if the pandemic persists. One of the surprising findings (for us) is that weather is having far more effect on keeping natgas prices low than COVID-19. There’s plenty of charts and analysis–really good stuff to ponder. Battle Group has a lot of smart people thinking about this stuff.
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“Keep it in the Ground” (KIITG) has been the rallying cry of idiotic, low-brain function environmentalists for the past 3-4 years. They want “fossil fuels” to be kept in the ground, never to be developed. President Trump is mulling over a plan to KIITG–but not in the same way. Advisers to the President are proposing that the federal government pay for oil from American producers now, at historically low prices, but that the producers don’t deliver the oil right now. In fact, don’t drill at all–just keep it in the ground, out of the world market, in an attempt to lower world oil supplies and prop up the price.
MARCELLUS/UTICA REGION: Natural gas and oil industry steps up to help communities; Safety equipment relies on natural gas; New model could improve natural gas demand predictions in New York, other states; OTHER U.S. REGIONS: A big Texas shale explorer warns it’ll stop drilling if state imposes production caps; NATIONAL: Will Trump really slap tariffs on Saudi oil?; Natural gas price forecast – natural gas markets test lows; Democrats call for new gas pipeline moratorium amid pandemic; Bernie Sanders’ green energy poverty; Despite historic production cuts, oil is dying; 3 reasons why oil prices can hit $5.00; INTERNATIONAL: Underwhelming oil cut will weaken OPEC credibility.
The Pennsylvania Dept. of Environmental Protection (DEP) has reached an agreement with Range Resources that forces Range to pay $198,920 in fines for violations of state regulations and the Air Pollution Control Act–violations that happened in 2013, 2014, and 2015. Our reading is that most of the violations revolve around Range not filing the right paperwork.
A lot of things have changed over the past month since COVID-19 coronavirus lockdowns were instituted in many states, including New York and Pennsylvania. Some sleazy politicians, like Andrew Cuomo and the far-left Democrats in the New York State legislature, took advantage of the crisis to pass damaging legislation while no one paid attention (see 
We’ve previously brought you various articles, and comments on articles, describing how Marcellus/Utica drillers may benefit from the current crash in global oil prices. How? A number of oil drillers in Texas, Oklahoma, North Dakota and other oil states are not only not drilling new wells right now, but they’re also not completing previously drilled wells and in some cases, they are shutting in existing/flowing wells. All of which means there will be a rapid decline in the amount of “associated gas” being produced in those states. Less associated gas means less supply and less supply means higher prices–for M-U drillers. We spotted an article that does a good job at defining how this will likely play out. How much less associated gas can we expect? What does that mean for natgas prices (when will they go higher)? What if the price of oil is $40/barrel rather than $30/barrel?
We’ve been dreading this month’s edition of normally our favorite report, the U.S. Energy Information Administration’s (EIA) Drilling Productivity Report (DPR). The DPR estimates how much oil and natural gas each of the country’s seven largest shale plays produced in the previous (current) month, and how much each will produce in the coming (next) month. The past few months have seen a big decline in Marcellus/Utica gas production, more than half a Bcf/d (see 
Diversified Gas & Oil (DGO) owns close to 8 million acres of leases with some 60,000 (mostly) conventional oil and gas wells. Their focus has been to acquire quality production and cash flow–regardless of the well or commodity type (gas or oil)–in the Appalachian Basin. They currently have over 400 Marcellus/Utica shale wells in their portfolio too. DGO announced it has a conditional deal to buy another 6,500 conventional wells spread across West Virginia, Kentucky and Tennessee, along with a 4,700-mile gathering pipeline system located in WV. The deal, “subject to ongoing due diligence,” is for $110 million.
The deed is done as of 5 pm today. Chesapeake Energy, with a stock price bumping around close to $0 (15 cents per share when we checked this morning), is doing a reverse stock split where the company will combine 200 shares of outstanding stock into a single share. The move is aimed at boosting the per-share price and preventing the company’s stock from being delisted from the New York Stock Exchange. Chesapeake recently hired “restructuring advisers” to help it navigate a looming debt default (see 
A newly passed and signed-into-law bill in Virginia, House Bill (HB) 167, purportedly aims to “protect” electric consumers from shouldering the costs of new pipelines that would feed gas-fired power plants. What the bill actually does is remove freedom of choice for utility companies, driving 
We spotted a new scientific study published in an upcoming edition of the journal Water Research. The study is called: “Sulfate precipitation in produced water from Marcellus Shale for the control of naturally occurring radioactive material.” Researchers from the University of Pittsburgh have found a way to strip out radioactivity from produced water coming from Marcellus wells so the water can be boiled to produce clean water and usable minerals/salts.
Williams is one of the premier midstream (pipeline) companies in the United States. They own and operate more than 30,000 miles of pipelines, including the mighty Transco, the nation’s largest volume pipeline handling some 30% of all natural gas in the U.S., used every day for clean-power generation, heating and industrial use. Recognizing the economic carnage underway in many communities across the country due to the COVID-19 coronavirus, Williams has stepped up to offer $1 million in grants to nonprofit organizations–501(c)3s, K-12 public schools, and first responders. Details below on how to apply.