Whew!  Five days later than usual.  I’ll stick with the “business is booming” story for now.

Libya says it has exceeded 800,000 barrels of oil per day recently, with the possibility of hitting 1MM in the near future if they can get some contractual issues ironed out.

The EIA expects the U.S. to produce more gas this year than it previously thought.

A new study suggests that re-fracking can bring so much new production online from an old well that it’s just like drilling a new well.  It doesn’t mention whether re-fracking makes it possible to extract gas that otherwise would remain trapped in the formation, or just speeds up the extraction of gas that would come out anyways.

Sabine Pass continues to increase exports of LNGs.  The plant took in 2.3 Bcf per day in the second week of May, up from 2.1 Bcf per day in the first week.

A recent trade deal will make it possible for the U.S. to export LNGs to China.  Nice.

Some think that OPEC can’t just extend their production cuts, they need to double down on them.  There’s no other way to chew through the surplus.

Mexico has been increasing its reliance on natural gas.  Interestingly, it has a shockingly small number or drilling rigs running.  Good for the U.S., weirdly bad for Mexico.

This article discusses what OPEC is trying to accomplish by cutting production.  It’s pretty interesting, but even more interesting is the fact provided in the article that U.S. oil production is expected to hit 9.3 million barrels per day this year, and 10 million barrels per day next year.  That’s a lot of new production, and all thanks to OPEC and Russia cutting production.  They’re playing a dangerous game, and at some point they’ll probably have to start producing at full speed or they’ll just create a behemoth in the U.S.

This article goes into just how much money OPEC has “lost” since their announcement in November of 2014 that they would flood the market with cheap oil.  It also briefly mentions that Saudi Arabia has explored using fracking in its own oil fields, with little success.

There aren’t enough frack crews.  This was one of the factors that I thought might slow down the growth of the oil and gas industry when the price of oil and gas started to recover.

On top of that, somebody crunched the numbers and decided that the Marcellus/Utica region needs an additional 45 drilling rigs (and corresponding frack crews, of course) to fill the new pipelines that are going to be completed in this area.  There are only about 50 rigs running in this area right now.  There used to be a lot more than those two number combined, back in the boom before 2014, so if the crews could be found the rigs could be run and the gas produced.

Both oil and gas prices are down again.  Oil is down in spite of OPEC and Russia extending the production cuts for another nine months.  This article says the extension is going to have the desired effect and oil prices will go higher again.

Natural gas prices have gone down in part because some power producers are switching back to coal.  This leads me to think that we’ll probably be pushing the limits of natural gas storage at the end of injection season this year, just like last year, with the associated low price of natural gas.

Marcellus drillers aren’t drilling a lot of new wells compared to other oil or natural gas plays.  They’re completing DUCs.  There’s a lot of drilling that needs to be done in the near future, and they’ll have to bring on some new rigs soon.

The EPA issued a report last year that said the natural gas industry was leaking methane (natural gas) like crazy.  However, it was based off spreadsheets, algorithms, and estimates.  This year, the EPA has done a field test and found that last year’s report overestimated methane leakage by 97%.  Think about that for a minute.  Now, it’s just one test, and science needs to be repeatable to be reliable.  But when the numbers are that different it’s extremely likely that last year’s report is wildly incorrect.

It’s been quite a while since anything has been said about the possible cracker plant in Parkersburg, WV.  The Parkersburg News and Sentinel has a very short editorial which we link to here because we’d like to see more people talking about it.  A cracker plant would help West Virginia avoid the problem that it’s had for over 150 years of pulling natural resources out of the ground and shipping them out of the State as raw materials.

The price of oil has taken a real dip lately, today’s bump up in price notwithstanding.  The reason for that dip?  American frackers have been ramping up production like mad.

Rig counts dropped by one each in West Virginia and Pennsyvlania in the first week of May.  Hopefully that means drillers are slowing down a bit on purpose, which means they think that we’re producing as much gas as we can get out of the region and into storage for this year.  That’s healthy, smart thinking, if it’s on purpose.  If.

We’re on course to put record amounts of gas into storage again this year.  If you’ll remember, we did this same dance last year.  In the end, producers cut back and we ended up with less storage (still record highs) than what most experts predicted.  I imagine the same thing will happen this year.

Saudi Arabia is saying it will do whatever it takes to rebalance the oil market.  There’s dancing in the streets in Texas.

OPEC has been reduced to begging–begging American frackers to slow down production, that is.  If there was any question left as to who controls oil’s top end, it has been settled.

OPEC and Russia have reached a deal to extend the production cuts they agreed to six months ago.  Oil prices are pushing $50/bbl again for the first time in almost a month.

The FERC has a new date for review of the Atlantic Coast Pipeline EIS.  The final EIS will be made available on July 21, 2017.  After that, there will be 90 days for other federal agencies to make comments on the project.  The final approval will be on October 19, 2017.

The EIA expects natural gas to produce more electricity this summer by way of burning natural gas than by any other means.

North Sea oil output is expected to begin to fall in 2018.  This is probably one of those factors that the Saudis have been saying would happen because of decreased capital expenditures in traditional oil drilling project.

Iran is ready to join OPEC’s production cut.  This news ought to drive oil prices up.  Iran had previously expressed interest in producing well over 4 million barrels per day, but has not reached that point.  Perhaps Iran has more infrastructure issues than it had previously realized, and is willing to take a higher price for its oil in exchange for a larger share of the market.

Speaking of production cuts, Russia reduced its daily oil production by 1.6% by mid-April.

The scuttlebutt is that OPEC will extend production cuts and even cut more in an effort to offset U.S. production increases.

Citi expects OPEC to extend production cuts and predicts that consequently oil prices will push $65/bbl by the end of the year.

The U.S. Geological Survey has “discovered” the latest largest continuous natural gas deposit in the country.  It stretches across Texas and Louisiana.  It includes the Haynesville and Bossier shale formations.  The word discovered is in quotes above because this reserve was already known, it’s just that new technologies have made a lot more of it recoverable.  It’s also just the most recent; as continued exploration and technological innovation occur, others will be “found”.  Not meaning to downplay it–it’s still an awful lot of natural gas.  Here’s to being energy independent!

Energy demand will grow in 2017, but not as much as it has previously.  That will probably keep the price of oil down a bit.

The Washington Post sees a murky future for oil prices.  However, the murkiness is focused on a way up to $60/bbl oil, not doom and gloom.

India’s economy is growing like mad, and India’s government wants to make natural gas a larger percentage of the energy used in the country.  Most of that gas will be imported.  Most of that gas will come from the U.S.

Production of both oil and gas is expected to increase in May due to healthy prices for both products.  That will drive the price of both products down.

A survey of oil and gas borrowers and lenders shows that there’s going to be more money flowing around the oil patch this year.  Confidence in oil and gas is back.  Lets just hope it’s not over-confidence.  Too much spending will lead to too much drilling will lead to too much gas/oil will lead to low prices again.

The 2016-17 heating season is over and we have almost 15% more gas in storage than the five year average.  This cold snap we’ve had the last few days will not be enough to make a big dent in that number.  We still have quite a bit less gas in storage than last year so we should see reasonable natural gas prices through the rest of the year.  Those prices will hopefully not be reasonable enough to encourage over-drilling.

Coal executives have warned the natural gas industry that it’s next on the environmentalist’s hit list.   As long as natural gas is ridiculously inexpensive compared to renewables, it’s safe.  But once renewables become competitive with natural gas we’ll see a shift to renewables.  That could be a long way down the line.

May 1, 2017: Oil prices are at $48.74 per barrel, and natural gas prices are at $3.23/MMBtu.  Not bad for natural gas, not great for oil.  Those are good prices to keep us out of a boom but in reasonable drilling activity.

And some people are saying that OPEC will extend its agreement to cut production.  The next meeting is May 25th.