With Condensate Near $0, Utica Drillers Shift Permits to Dry Gas
Last week MDN highlighted an article from the Pittsburgh Post-Gazette about the low low prices Marcellus/Utica condensate has fetched since the beginning of the year (see M-U Condensate Prices Briefly Go Negative, Down 91% from Jan 1). S&P Global is currently reporting prices for Utica condensate have not yet recovered, sometimes still dipping into negative territory. As a result, drillers are reducing their new permits and drilling in “wet gas” areas of the Utica and instead shifting gears to “dry gas” regions.
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Last year MDN told you about New Jersey-based Omni Energy Group and their application to build two new injection wells in Belmont County, OH near St. Clairsville (see 
In mid-March, MDN brought you the news that Chesapeake Energy had hired “restructuring advisers” to help the company navigate a $9 billion debt millstone hanging around its neck (see 
In February Williams official gave up on building a long-delayed project to flow natural gas from northeastern Pennsylvania into central New York, called the Constitution Pipeline (see 
Reuters is reporting a disturbing allegation that Big Banks, including JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup, are each in the process of setting up shell companies that can own shale oil and gas assets. Why? Because of a coming wave of bankruptcies. The banks, with big loans to a number of oil companies, plan to take ownership of the companies or their assets (foreclosure) as repayment of the loans owed. In other words, Big Banks are planning to get into the oil and gas business as a form of self-defense, so they don’t take a bath on the value of the assets they’ve helped underwrite.
To say that history (in the world oil market) was made this past week is an understatement. The United States of America, under the direction of Donald J. Trump, threw in its lot with both Saudi Arabia and Russia in order to salvage a deal to cut oil production worldwide by 9.7 million barrels per day. The fact that Trump leaned on/cajoled/pressured the Saudis and Russians is not the historical part. What is history is that the U.S. itself pledged to cut a portion of its production in cooperation with those bad actors–a pledged to cut 300,000 bbl/d, because Mexico wouldn’t. We’ll explain.
MARCELLUS/UTICA REGION: UGI Energy Services develops virtual food drives in partnership with area food banks; OTHER U.S. REGIONS: Texas Waha natgas forward prices to soar post coronavirus from negative now; Young shale CEO asks Texas to curb oil output as coronavirus cuts prices; Marathon will take frac holidays to cut spending; NATIONAL: Patterson-UTI Energy reports Mark Siegel, executive chairman, announces retirement plan; EIA’s weekly natural gas products provide timely natural gas information; Cliff’s edge a distant memory as rig count plummets ever lower, U.S. drops another 62 units; No resurrection for natural gas as storage, weather take down futures another notch ahead of Easter; Oligarchy and pestilence; Why are we destroying the economy for this?; Oil quotas and import fees? No, get America back to work; The biggest moves reverberating across oil, NGL and gas markets.
As we have in previous years, MDN will not publish today (Friday) in observance of Good Friday and the Easter holiday. We hope you enjoy this blessed time of year!
EQT and U.S. Well Services (USWS) have signed a deal for USWS to provide electric fracking for one-third of EQT’s completions operations over the next three years. Does USWS (and e-fracking) sound familiar? It should! Range Resources signed with USWS in January (see 
Remember that old Abbott and Costello comedy routine, “Who’s on First?” That aptly describes what appears to be happening at the Pennsylvania Dept. of Community and Economic Development (DCED). PA Gov. Tom Wolf issued an edict several weeks ago that bans businesses from working unless they appear on a list of “life-sustaining” activities, in an effort to halt the spread of the COVID-19 coronavirus. Companies can apply for a waiver if they’re not on the life-sustaining list. The DCED is in charge (if you can call it that) of reviewing and issuing the waivers. Yesterday the DCED issued waivers to Energy Transfer to button up some final bits of work on the Mariner East 2 (ME2) pipeline project in several locations near Philadelphia. A few hours later DCED rescinded/pulled those waivers. What’s going on?
A couple of weeks ago midstream giant Williams said it had swallowed a big, fat poison pill (see 
Quick: What’s the raw material used to make respirator masks, gloves, face shields and other high-demand products used by the medical community to combat the coronavirus pandemic? Correct, it’s plastics. And what is the primary feedstock used to make the plastic that in turn makes all of those live-saving products? Correct again: natural gas and natural gas liquids. Or another word for it, petrochemicals. The “Think About Energy” seminar series, usually held in-person, hosted its first virtual event yesterday. Four fantastic speakers spoke about how the coronavirus pandemic, among other things, may drive the expansion of petrochemicals in PA. Expanding the petchem industry in the Keystone State may literally be a life or death issue.
Nuverra Environmental Solutions (formerly Heckmann) is one of the largest companies in the United States that handles transportation and disposal of shale drilling wastewater and leftover rock and dirt from drilling. The company has major operations in the Marcellus/Utica region. Given that Nuverra’s customers, oil and gas drillers, are canceling work right and left meaning less work for Nuverra, the company announced it is laying off roughly 100 employees, cutting the salaries of everyone else, and slicing other non-essential expenses in an effort to ride out the coronavirus/oil price crash storm.
A recent column appearing in a Virginia newspaper shares what it believes is a revelation: When big energy/utility companies like Dominion Energy say they will achieve “net-zero carbon emissions,” they don’t mean they will stop using fossil fuels to create energy. Not by a long-shot. What “zero carbon” or “net-zero carbon” means is that all carbon dioxide (generated when burning natural gas to generate electricity, for example) is captured and used for something else. CO2 is not released into the atmosphere. Even though companies like Dominion are able to capture and reuse CO2, and prevent methane from leaking, it’s STILL not good enough for those who irrationally hate fossil fuels.
We’ve preached “lower for longer” for a long time now–the theory that natural gas prices are low and will remain low for the foreseeable future. Not because we want it to be that way, but because it is that way, and we want you, our beloved MDN readers, to know the truth. We live for the day when we can tell you natgas prices are heading higher. Are we finally beginning to see some hope in that regard? Maybe! We’ve outlined the latest thinking across several recent posts that given the crash in oil prices, less associated natural gas will be produced leading to less supply on the market and (eventually) higher prices for gas. When will that happen? We have some new speculation to share.