Shale Energy Stories of Interest: Tue, Mar 24, 2020
MARCELLUS/UTICA REGION: New York State PSC embarks on plan to examine natural gas usage, investments; EQT weighing options with in-person annual meeting; NATIONAL: Chesapeake Energy could finally be headed into Ch.11 bankruptcy; Natural gas craters to 1995 levels on weather woes, coronavirus; Natural gas finally starting to buckle against the broader market liquidation; Energy companies slash another $19B as oil price languishes; Midstream prices crash: maybe we have seen this before; Oil jumps as markets panic; SPDR S&P oil & gas E&P ETF…The knife is still falling; COVID-19 and the crude oil price crash puts the screws on U.S. refiners; How will the coronavirus affect energy use in America?; SHALEout! (video).
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As we told you last Friday, there was some confusion over whether or not construction of the Mariner East 2 (ME2) pipeline, which is nearing completion, is included under Pennsylvania Gov. Tom Wolf’s “stop work” order to prevent PA residents and workers from further spreading the COVID-19 coronavirus (see 
Advanced Power Services is building a 1,100-megawatt natural gas-fired electric generation facility in Wellsville, Columbiana County. Dominion Energy is building 5 miles of new pipeline, called the West Loop Project, from western PA into Ohio to feed the Wellsville plant (see 
Many states in the northeast and in Appalachia are now in lock-down mode with most businesses shuttered to prevent the spread of COVID-19 coronavirus. However, certain activities and businesses continue to operate. They are called “life-sustaining” or “critical” or “essential.” On the list of essential businesses in both Pennsylvania and Ohio are shale drillers. Although drillers continue to work, at least one Marcellus/Utica driller, CNX Resources (we suspect others) is making changes to keep its employees and contractors protected against the virus.
We spotted an interesting article appearing in the American Oil & Gas Reporter about results from using tiny ceramic beads as a proppant in oil and gas wells in several shale plays. Typically sand is used as a proppant to “prop open” tiny fractures to allow oil and gas to escape from shale rock. Sometimes ceramic beads are used. The article is based on a paper delivered at the Society of Petroleum Engineers’ Hydraulic Fracturing Technical Conference & Exhibition, held Feb. 4-6 in The Woodlands, Texas. Of particular interest to us are the findings for the Utica and Marcellus. The “micropropped” Utica wells showed a marked increase in oil production, while no such increase in production happened in micropropped Marcellus wells.
It certainly doesn’t feel as though we’ve hit the bottom yet when it comes to the effect of the coronavirus and Saudi-Russia oil price war on American shale companies. We still have a way (down) to go, unfortunately. But all is not lost. There is hope on the horizon. That’s the message we take from comments by an Enverus analyst. According to RBN Energy, we’ve seen this movie before. Maybe this movie has a different storyline, but the plot is the same. Can we predict how it will play out this time based on previous downturns? RBN offers up the five stages a shale play goes through.
What happens when an oil driller has a well or two or dozen where they get great oil production, but there are no pipelines connected to cart away the associated natural gas that comes out of the borehole along with the oil? There are only a couple of options–venting (releasing methane into the air) and flaring (burning the methane, turning it into carbon dioxide). There are a number of innovative companies that have a new solution: Go ahead and burn the methane, but burn it to produce electricity, and use the electricity (at the well site) to power computers. The computers are connected to a network of other computers and form a sort of supercomputer. Crusoe Energy Systems is one of those innovative companies, now using their distributed computing systems at oil wells to work on computations aimed at finding a vaccine for the COVID-19 coronavirus.
Should the U.S. government step in to help the American oil and gas industry, given the current double crisis of both lower demand (COVID-19) and oversupply (the Saudi-Russia oil price war)? We’ve written about rumblings that since the Saudis and Russians are dumping oil (selling it far below the price to make it) on the world market, in an attempt to bankrupt American shale drillers, that the government should consider either imposing tariffs on imported oil, or possibly embargo imported oil. Free traders are aghast at such a notion. Fair traders (like yours truly) are less aghast, although as a general rule we don’t favor government intervention in the marketplace. Below are two differing views on whether or not Uncle Sam should do something to help O&G. Interestingly, the American Petroleum Institute says “no way” to government intervention.
A worker hired to x-ray welds on sections of the Mariner East 2 pipeline in southwestern Pennsylvania has been charged falsifying records, indicating that he performed the work when he didn’t. That’s a felony. According to one news account the worker, from Westmoreland County, PA, is expected to plead guilty and faces up to five years in prison and a fine up to $250,000. The good news is that Energy Transfer, the builder, discovered the deception and immediately reported it. ET reinspected all of the welds supposedly inspected by this worker.
Yesterday Pennsylvania Gov. Tom Wolf issued an executive edict that all “Non-Life-Sustaining Businesses” will close as of 8 pm last night. Notwithstanding the sleazy attempt by State Sen. Andy Dinniman to shut down construction of the Mariner East 2 (ME2) pipeline project by using the virus as an excuse (see today’s companion story), there appears to be some confusion as to whether or not ME2 construction is subject to Wolf’s edict to stop construction. The Pennsylvania Public Utility Commission (PUC) refuses to tell ME2 to stop building. However, in Wolf’s list of what is “life-sustaining” and what isn’t, all construction, including “Utility Subsection Construction” is in the stop-work category. Is ME2 or isn’t it still actively under construction at this point?
Earlier this month the Ohio Oil & Gas Association (OOGA) held its 73rd annual Winter Meeting in Columbus. 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 2019? Ohio oil production hit the highest level ever in state history in 2019. There were 406 oil and gas wells completed last year, of which 351 (86%) were Utica wells. Belmont County saw the most wells drilled (80). Ascent Resources (formerly American Energy Partners) drilled the most wells last year in Ohio (104 wells), up 49% from 2018.
Pennsylvania House Bill (HB) 1100, aimed at attracting new petrochemical investment to the state, was passed by the PA Senate in early February (see 
The world as we knew it radically and fundamentally changed over the past two weeks. That’s a fact. The double whammy of the COVID-19 coronavirus shutting down world commerce (causing a big reduction in the use of oil and gas), and the Saudis and Russians engaging in an oil price war, flooding the world market with oil at a time when oil demand has gone down, is going to have an impact on the oil AND natural gas markets in the U.S. (and around the world) for months, likely years to come. How much of an impact is yet to be seen. We think the impact will be big. The experts at RBN Energy have taken a stab at predicting how these events will affect the entire U.S. oil and gas industry in 2020. As part of their coverage, RBN looks at impacts on “gas-focused” drillers, primarily in the Marcellus/Utica.
U.S. Senator Kevin Cramer, Republican from North Dakota, sent President Trump a letter on Wednesday asking the President to take “immediate action” in slapping an embargo on crude oil imported from Russia, Saudi Arabia, and other OPEC countries. In 2018 (most recent stats) the U.S. imported nearly 1.5 million barrels per day of oil from Russia, Saudi Arabia, and Iraq. Cramer wants the spigot turned off from those countries in order to give our own companies the opportunity to supply oil to ourselves. We personally love the idea–but there are others (whom we respect) who strongly disagree with an embargo or any kind of governmental interference in the free market.