Low Price Silver Lining: Power Generation Uses More Natural Gas
If there’s any silver lining to the ongoing low price for natural gas (NYMEX price closed at $1.86 yesterday), it is that gas-fired power generation kicks in with more demand, which will ultimately cause the price to rise–or at least not fall any further. Electric generation is a critically important market for natural gas. We spotted a couple of interesting articles. The first, from Platts, outlines the relationship of low gas prices to more switching from coal to gas. Platts says if gas stays under $2/Mcf, “power burn could see significant upside risk.” The other article, from Rigzone, says natgas will generate nearly 40% of all electricity in 2020–double what it generated just 10 years ago.
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MARCELLUS/UTICA REGION: Appalachia, Permian drop by five rigs each in biggest play changes; Fake news is fracking endemic in environmentalism; OTHER U.S. REGIONS: New olefins cracker starts service in Louisiana; NATIONAL: Natural gas: capital retreat to send prices 50% higher; U.S. natural gas prices dip to four-year lows; Total’s U.S. portfolio said ready to drive global LNG sales growth; Energy Capital pauses pipeline deals on widening shale despair; Liberty Oilfield deploys new frac fleet, plans new build; Exxon: shale production growth is through the roof, and it’s just getting started; INTERNATIONAL: U.S. LNG export arb said ‘nearly’ shut as coronavirus curbs Asian buying; Failed OPEC response to coronavirus shows Russia is in charge; China reneges on commodity deals, worsens global trade chaos.
Pennsylvania Attorney General Josh Shapiro claims an accident in 2017 (based on human error) that resulted in 63,000 gallons of produced water in Lycoming County, PA spilling onto the ground (outside the well pad) is negligent and a crime. Shapiro has filed criminal charges against Inflection Energy and the subcontracting company they used, Double D. We view it as yet another stunt by a man who wants to tee himself up to run for governor.
A longtime dispute between the Pennsylvania Dept. of Environmental Protection (DEP) and Range Resources reemerged in January when the DEP ordered Range to fix a well in Lycoming County the DEP alleges is leaking methane into the surrounding ground and water supplies. The DEP says faulty cement casing allows methane to leak. Range maintains the methane was already in the ground/water supply long before it drilled the well. Range is appealing the DEP’s order to “fix it” to a special environmental court.
The U.S. House of Representatives Subcommittee on Energy (of the Committee on Energy and Commerce) held a hearing yesterday called “Modernizing the Natural Gas Act to Ensure it Works for Everyone.” The Natural Gas Act of 1938 created the Federal Power Commission (FPC), giving the agency control over the regulation of interstate natural gas sales and pipelines. Later on, the FPC was dissolved and became the Federal Energy Regulatory Commission (FERC). One of the witnesses at the hearing, there to bash FERC, was (suprise!) THE Delaware Riverkeeper herself, Maya van Rossum.
We’ve reported on the divestment meme for years–the effort by anti-fossil fuel radicals to force banks and investment firms to withdraw funding and refuse to invest in (or lend money to) any company that produces “fossil fuels.” Most recently Jim Cramer from CNBC’s “Mad Money” said, “I’m done with fossil fuels. They’re done. They’re just done.” (see 
Yesterday Cabot Oil & Gas issued an operational update for 2019 that includes new guidance for 2020. Think of it as a sneak preview at the forthcoming quarterly update, due out Feb. 21. In the preview, Cabot says it will spend 27% less on drilling in 2020 than they did in 2019 due to the ongoing low price of natural gas.
Montage Resources provided a sneak preview yesterday for what to expect in 2020. You may recall Montage is the name of the company that resulted after the merger of Eclipse Resources with Blue Ridge Mountain Resources 11 months ago (see 
Last week MPLX (i.e. MarkWest Energy) issued its 4Q and full-year 2019 financial and operating update, along with guidance on what to expect in 2020. MarkWest (as we call them, old habits die hard) has major operations in the Utica and Marcellus–via gathering pipelines and processing plants. MarkWest reports “significant year-over-year growth” in the M-U region, but predicts a slowdown in that growth in 2020.
The Ohio Supreme Court, on Christmas Eve, threw a lifeline to an effort to overturn an Ohio law that provides corporate welfare in the form of $1 billion of ratepayer (taxpayer) money to FirstEnergy, which recently changed its name to Energy Harbor (see 
Listen up those interested in a new job working for the shale industry: JobNewsUSA.com is conducting an