This edition of the State of Oil and Gas is a few days late. We apologize, with the explanation that we simply couldn’t get to it in time this month.
On September 15, natural gas prices were at $5.46/MMBtu, higher than they have been in seven years. Oil prices were at $72.61, a healthy price. Drilling rigs were at 503, the same level they were last month. They had bounced up to 508 and down to 497. We’d like to see this number going up a little. Storage levels were at 3,006 billion cubic feet, below last year’s level and the five year average.
The financial impact that oil and gas development has on the State of West Virginia is enormous.
West Virginia’s governor activated a dormant agency, the WV Public Energy Authority. This is new on our radar, so we’ll have to watch and see what happens with it.
A natural gas pipeline near Coolidge, Arizona, exploded, killing a dad and daughter, and leaving the mother with burns across half her body. The pipeline was over 50 years old. Based off what I’ve read over the years, it seems that pipelines start having random problems when they get that old. If you have an old pipeline near your house, you should do some investigating into the age, condition, and maintenance of it.
The price of natural gas just keeps going up, and Marcellus shale producers are benefitting.
Forbes has an excellent article about why LNG exports are increasing so much.
The Ohio cracker plant is on an indefinite hold. PTT Chemical is looking for a new partner before making a final investment decision. This is disappointing as an additional cracker plant would provide an additional and added-value use for all the natural gas produced from West Virginia. Anybody out there have a few billion dollars to invest?
Hurricane Ida shut down a lot of oil and natural gas production.
Natural gas production increased in the Marcellus shale area, thanks to new pipeline capacity.
OPEC+ decided to increase production of oil by 400,000 barrels per day, but that didn’t affect markets much.
Producers are moving back to drilling new wells instead of completing DUCs.
There’s a type of compressed natural gas vehicle that I hadn’t heard about, the near-zero emissions (NZE) natural gas vehicle (NGV). How new it is, I don’t know, but if it’s been around for a while it flew under the radar.
I’ve been saying this for years. West Virginia needs to process its natural gas before it gets sent out of state. Turn it into electricity, turn it into petrochemical feedstocks, separate and bottle propane, that kind of thing. It’s good to see someone else thinks so.
A week later, and most of the natural gas production in the Gulf of Mexico is still offline.
Southwestern Energy requested permits to build a well pad within the city limits of Weirton. They were denied. It seems most everybody who showed up at the meeting opposed it. I’ve got no problem with the decision. Well pads are noisy and really light up the night sky during drilling. However, if those issues could be mitigated during the drilling period, a well pad is a quiet unassuming spot afterwards. Seems like the neighbors could get SWN to mitigate sound and light issues. This probably won’t be the last we see of this.
Natural gas prices are up over $5.00/MMBtu and seem likely to stay up there. I would never have predicted that last year. Nobody would have.
LNG demand is likely to keep growing.
US natural gas consumption is likely to decline in 2022, due to the increase in price, according the the EIA. This is exactly why drillers are right to not significantly increase the number of wells they drill. Increase, yes, but not a lot.