Natural gas prices are at $5.41/MMBtu, after reaching a high of $6.31/MMBtu. Drilling rigs continue to climb steadily, now at 543, up from 512 on September 17. Gas storage levels have inched up a little closer to the five year average, at 3,369 Bcf. A hard winter will keep natural gas prices high.
A lot of the pipelines listed in this article are being built in the Marcellus/Utica region. That’s good, because we’re pushing the limits of what we can pipeline out of here right now.
Discipline is the word of the day in the oil and gas industry. It’s been imposed by horrible prices during the pandemic, investors realizing that oil and gas isn’t a cash tree, and shareholders demanding fiscal responsibility so they can get returns on their stock holdings. This article argues that this discipline will last.
Pipelines don’t have very good cybersecurity. You might remember that the Colonial Pipeline got hacked back in May, causing gas shortages in the southeast. Turns out the main security issues that pipelines have are the main ones that most humans have. They only use passwords, not 2 Factor Authentication and password managers. If you don’t have these set up for yourself, do it. It’s a little work on the front end, but it makes life a lot easier on the backend and also makes it so that you’re a lot less likely to get hacked.
RBNEnergy analyzes capital spending by oil and gas producing companies. While none of them are planning to make increases to spending before the end of this year, the two that have released figures for next year intend to increase spending next year. That makes a lot of sense. I am just hoping that the increases aren’t out of proportion. Lets stay out of the boom/bust cycle.
Remember when the Biden administration “banned fracking”. Now they are saying they will “restore balance“. This is what I think their end goal was all along. They admit that we can’t get rid of fossil fuels, but want to talk about using federal lands for green energy purposes.
An additional factor slowing down the current drilling “boom” is the cost of services, including both parts and labor.
An article in the Washington Examiner states that oil and gas drillers will start to increase drilling in response to higher oil and gas prices. I mean, that’s just common sense. The question to answer is “when?” We think it’s going to be around the beginning of the year.
This article from the Alaska Journal mentions a point I hadn’t thought about when analyzing the phenomenon of oil and gas prices going up and producers hesitating to drill more. Hedging. All of the producers are hedged at much lower prices than the market price, so they don’t have the motivation to produce more until their hedges run out.