Tioga County, PA Excited About Shell Asset Sale to NFG
In early May Shell and National Fuel Gas Company (NFG) announced a deal for Shell to sell all of its remaining Appalachian assets, which includes 450,000 acres and some 350 producing M-U shale wells along with pipeline assets, to NFG for $541 million (see Fire Sale: Shell Sells All Remaining PA M-U Assets for $541M). The deal is expected to close by the end of July. Most of the assets are located in Tioga County, PA. Folks in Tioga County are excited that NFG (via its drilling subsidiary Seneca Resources) will soon ramp up drilling on the Shell acreage. The county is rolling out the red carpet.
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In early May MDN reported Elba Island LNG, a Marcellus Shale gas export facility located near Savannah, Georgia, was in the process of firing up train #8 of the 10 mini-trains being built (see 
Fossil fuel haters in New York successfully pressured New York Gov. Andrew Cuomo to reject the Williams Northeast Supply Enhancement (NESE) pipeline in May (see 
A group of leftwing radical professors (all of the Democrats) from seven universities in Ohio and Pennsylvania have colluded to write a letter to the governors of Ohio, Pennsylvania and West Virginia. The letter trash talks the billions of dollars in economic impact and tens of thousands of jobs ethane cracker plants and the petrochemical industry will have in the region. The leftist gang of seven poo-poos those estimates and says the proposed PTT cracker is too “risky” to approve. How do they figure?
Chesapeake Energy faces a series of deadlines to make payments to debtors. Today, June 15, is the first such deadline when something like $17 million in interest payments is owed. The company has a $134 million bond interest payment due on July 1 for its second-lien notes. Between today and the end of the month, rumor has it the company will declare bankruptcy (see 
MARCELLUS/UTICA REGION: Natural gas industry adapts to ‘new normal’ of pandemic; OTHER U.S. REGIONS: Texas oil, natural gas sector sees $30-59 WTI by next May, views Biden as biggest threat; NATIONAL: 97% Myth (video); The end of petroleum products would be the end of society as we know it; INTERNATIONAL: New York lender JPMorgan says Saudi’s oil market share set to hit the peak of 1980s; Covid: OPEC gets chance to gain upper hand in long battle with shale production.
CNX Resources, one of our favorite Marcellus/Utica drillers, issued an operational update yesterday with some interesting new information. Chief among the tidbits is the fact that CNX, beginning May 1, shut-in some of its production. Specifically around 375 million cubic feet per day (MMcf/d). The company expects that number to decline to 300 MMcf/d by July. After that, they’ll play it by ear.
Equitrans’ 303-mile Mountain Valley Pipeline (MVP) project from West Virginia to southern Virginia is now 92% in the ground and complete. That final 8% is frustratingly delayed because of lawsuits and regulatory actions brought on by Big Green groups. But have no fear. In an announcement released yesterday by the builder Equitrans Midstream, MVP will be 100% done and operational in “early 2021.” The end is in sight.
Two of the largest not-yet-completed pipeline projects in the Marcellus/Utica, Mountain Valley Pipeline (MVP) and Atlantic Coast Pipeline (ACP), are currently on hold with no construction activity due to various legal challenges by Big Green (see today’s story, Mountain Valley Pipe Update: Done and In-Service Early 2021). However, there are several other large and small M-U pipeline projects where construction continues, even with restrictions from the coronavirus pandemic. Which pipelines?
With EQT shutting in one-third of its production, Cabot shutting in some of its production, and today’s news that CNX has shut in production (see CNX Update: Shut-in 375 MMcf/d, Central PA Utica the Future), the cumulative effect of those three (plus other M-U drillers) is that our region now produces at least 2 billion cubic feet per day (Bcf/d) less of natgas than it did just a few months ago. That decrease is helping to “balance” gas flows and help prices to not drop further than they already have.
The U.S. onshore rig count continues to collapse, hitting a historic new low of 299. Over the past week, another 12 rigs disappeared from the count, mainly located in oil plays (like the Permian). Since the beginning of March, the Marcellus had (as of last week) lost 11 rigs in total. The Marcellus gained back one of those rigs. Since the beginning of March the Utica has stayed consistent with 10-11 rigs operating. Last week the Utica lost two rigs, now down to 9 rigs operating.
The International Energy Agency (IEA) released a report Wednesday titled, “Gas 2020: Analysing the impact of the COVID-19 pandemic on global natural gas markets.” IEA says the global gas market will experience its “largest demand shock on record” in 2020, with demand for natural gas worldwide decreasing by 4% this year. That’s a bit better than IEA’s previous estimate of a 5% decrease in 2020.
Enverus (formerly known as Drillinginfo) recently released its latest FundamentalEdge report that explores the ongoing supply response to demand destruction caused by the COVID-19 pandemic. As part of the report, Enverus estimates how much dry gas production each major shale play produced, month by month, from January through May of this year. The numbers show that production from the Marcellus/Utica, which produces the most natural gas of any play, decreased the most of any play–by some 1.5 billion cubic feet per day (Bcf/d) from January to May.
Lots of permitting activity to drill new shale wells last week in both Pennsylvania and West Virginia. There were 27 new permits issued in PA for June 1-5. There were 8 new permits issued in WV for the same time period. The Ohio Dept. of Natural Resources (ODNR) database appears to be working–we queried it for a variety of dates. The last date showing permits was for the week of May 4-8. Since that time no new Utica permits have been issued–or at least none have been recorded in the database. We’ll keep monitoring.