Shale Energy Stories of Interest: Wed, Mar 18, 2020
MARCELLUS/UTICA REGION: EQT Corp. surges as the bearish natural gas thesis is dead; CNX Midstream Partners ‘re-evaluating’ capital allocation plans; OTHER U.S. REGIONS: FERC suspends Commonwealth LNG environmental review; Minnesota Supreme Court will review Superior natural gas power plant ruling; NATIONAL: Oil reverses deeply into the red; WTI closes at another four-year low; Estimating the possible decline of U.S. shale oil production with lower prices; Giant LNG projects face coronavirus death or delay; Natural gas price forecast – natural gas markets rollover; COVID-19, price wars and black swans: School of Energy goes virtual.
Read More “Shale Energy Stories of Interest: Wed, Mar 18, 2020”
Radicalized leftist groups pretending to care about the environment, including the Center for Biological Diversity, Sierra Club and Ohio Environmental Council, have struck again. In May 2017 the three groups sued the U.S. Forest Service and U.S. Bureau of Land Management (BLM) to block the sale of leases for oil and gas drilling in Ohio’s Wayne National Forest (WNF). Last week a federal judge ruled in their favor. The court has effectively blocked all future lease auctions for WNF and is considering overturning two previous auctions. This is a DIRECT attack on the property rights of private landowners.
Yesterday EQT, the nation’s largest natural gas producing company, issued a press release to update investors and the marketplace on a couple of important issues. First, the company has sliced off another $75 million in previously-planned spending for 2020. The company now plans to spend $1.075 – $1.175 billion on drilling and other expenses this year. Second, the company “has entered into an agreement with a third-party to permanently release firm transportation obligations of approximately 400 MMcf/d, or approximately 15% of EQT’s current portfolio.” Translation: EQT was able to cancel 15% of the contracted pipeline capacity they had, lowering expenses.
Over the past half-decade or more we’ve read and often reported on rumors and speculation that Chesapeake Energy Corporation, co-founded by Aubrey McClendon (who was later ousted by corporate raider Carl Icahn) would have to declare bankruptcy. Aubrey loaded the company up with debt. His successor, Doug Lawler, has tried to whittle that debt down, but he’s done his own fair share of larding the company up with debt too (see 
Each month the U.S. Energy Information Administration (EIA) produces its Drilling Productivity Report (DPR), our favorite monthly report. 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 February DPR showed, for the first time, combined natgas production from all shale plays would decrease beginning in March (see 
A number of Marcellus/Utica drillers and pipeline companies are taking action to slow and potentially stop the spread of the COVID-19 coronavirus. Several companies (so far) have instituted mandatory work-from-home orders. Those companies include the Pittsburgh-based companies CNX Resources, Equitrans, and EQT Corp. By the time this is published more may have joined the list.
In early January, the average price for a barrel of oil was $63. Yesterday the price closed at $28.70. Word on the street is that the price may go as low as $20/barrel, soon, and stay there for a while. Why? Because the Saudis and Russians have oil-pumping fever. They’re pumping as much oil as fast as they can. And that’s producing a global surplus of oil chasing buyers who don’t want it. According to IHS Markit VP and head of oil markets Jim Burkhard, “The last time that there was a global surplus of this magnitude was never. Prior to this the largest six-month global surplus this century was 360 million barrels. What is coming will be twice that or more.” The price of oil has crashed–and unless the Saudis and Russians let up, the price will stay crashed for some time to come.
It seems the news gets worse with each passing day. Yesterday we watched President Trump’s daily press conference to discuss the COVID-19 coronavirus. His health experts now recommend pretty much a shutdown of the entire country–no gathering in groups of more than 10 people for the next two weeks. Needless to say a number of conferences and events have either been canceled or postponed or rescheduled. One of those events is the Pennsylvania Independent Oil & Gas Association (PIOGA) Spring Meeting scheduled for April 1 in Pittsburgh. That event is now postponed (details below). Another is the 2020 Pennsylvania Oil and Gas Landowner Alliance (POGLA) Conference scheduled for April 19-21 in State College. Also postponed. We have a list below for those events now postponed or canceled.
Adelphia Gateway is a plan to convert an old/existing 84-mile oil pipeline stretching from Northampton County, PA through Bucks, Montgomery, and Chester counties, terminating in Delaware County at Marcus Hook, into a natural gas pipeline–flowing Marcellus gas to southeast PA. Roughly half of the pipeline was previously converted and already flows natgas. In December the Federal Energy Regulatory Commission issued final approval for the project (see 
In Ohio forced pooling is called “unitization.” When a landowner/leaseholder owns 65% of the mineral rights under property in a given location and wants to pool other neighboring properties into an oil or gas drilling unit, that landowner/leaseholder files a request with the Ohio Dept. of Natural Resources Division of Oil and Gas Resources Management. The Division head then schedules a hearing to consider the request. All such hearings scheduled for this week are now canceled and will be rescheduled. Furthermore, the Division will only be able to accept new unitization requests on Tuesdays and Thursdays, and they will only return phone calls about unitization on Fridays. All due to the COVID-19 coronavirus.
Drilling, whirring, humming, thumping, grinding, engines running, hammering, back-up warning beeps, banging, clanging. Those are the sounds of progress happening in Chester County, PA. Contrary to the griping and moaning mainstream media reports about those who live near Mariner East 2 (ME2) pipeline construction, the sounds of ME2 construction are music for at least one local resident because he knows about the economic prosperity this project will bring to the region.
Electric power generator FirstEnergy (now called Energy Harbor Corp.) pulled off what we consider the biggest case of deception in the history of Ohio by pressuring Ohio legislators and a RINO governor to sign into law a bill to force Ohio residents to pay the company $1 billion so it can keep open two uneconomic/failing nuclear power plants (see 
There is an increasing call from economists to “let the free market” determine who lives and who dies in the oil and gas industry. We won’t lie–we live in dire times. We don’t know what the outcome will eventually be. While the world is gripped in COVID-19 coronavirus panic, the Saudis and Russians have flooded the world markets with oil, forcing the price of oil to collapse. Now our own economists are writing that shale companies already teetering on the brink of bankruptcy should be allowed to go under. Don’t prolong the agony. There were already on the way out. But is that wise?