The State of Oil and Gas: August 15, 2020

It has been a while since we’ve posted on this website. A lot has happened, of course. You know about coronavirus and probably are aware that it has been bad for the natural gas industry. The effects seem to be tapering off just a little bit at this point.

What you don’t know is that we’ve been working to start an estate planning law practice. Oil and gas has just been so slow lately that we’re having to do something else to make ends meet. If you’re in West Virginia and would like to take a look at a will or a power of attorney, or if you are the guardian/parent of young kids, pop on over to wvestateplan.com and then give us a call. We’re awfully excited to be providing this service for our people!

In the meantime, oil and gas is still there.

Gas prices are $2.32/MMBtu (nice!) and rig counts are at 244 and still creeping down.

Now, for the really high points of the last few months.

The demand for natural gas in the U.S. went up last year, but only by about 3%. Production went up by 10%, hence lower prices.

COVID-19 has affected everything, including natural gas prices. It’s not a direct affect, though. The demand for energy, overall, has gone down. That drives down the price of oil. That drives down the production of oil. That drives down the supply of natural gas that is produced from oil wells. That reduces the supply of natural gas, which actually increases the price of natural gas. Of course, overall demand is down so the price of natural gas has gone down. It hasn’t gone down as much as oil has gone down, though, because of the inverse relationship between oil and natural gas. The result has been that natural gas prices hit a low of $1.52/MMBtu, but did not stay there.

There has been a plan to build a gas-fired power plant in West Virginia’s northern panhandle, in Brooke County, for years. Back in June, the Brooke County Commission passed a resolution in support of the plan. Apparently, that was a necessary step in the process.

The Atlantic Coast Pipeline won its appeal to the U.S. Supreme Court, which meant that the ACP could finally be built. Then a couple weeks later, Dominion cancelled the project entirely. Then, they sold all of their pipelines to Berkshire Hathaway, a/k/a Warren Buffett. Talk about mixed messages.

Antero Resoures sold some of its royalty rights to another company, a financial move which could mean a lot, or could just be business as usual. Then they did it again.

The Times West Virginian ran a pretty comprehensive article about how the natural gas industry in West Virginia has responded to the coronavirus.

One of the financial backers for the PTT Global Chemical cracker plant pulled out. That’s a hard blow, but not insurmountable. Clearly, as PTT turned around and signed a deal with Mountaineer NGL Storage to use their gas storage.

When banks aren’t loaning money to oil and gas producers, you know the industry is having hard times. Banks are currently selling off their previous loans to producers.

In a good sign that economic activity is picking back up after COVID-19, gas delivery to LNG exports and domestic consumption drove the price of natural gas futures up $.30 in one day.

And that’s that. We’ll probably post one of these once a month for the near future as we ramp up our estate planning offerings. Thanks to everyone who mentioned that they missed seeing these, it’s always gratifying to know that your work makes a difference to someone.