Natural gas prices are at $3.88/MMBtu, having hit a low of $3.66 on December 6, and a high of $5.45 on November 26. Rig counts are at 576, up 13. Slow and steady is great! Gas storage numbers are from December 3, but seem to be trending toward the five year average. With some warm weather in the near-term forecast, we could see gas prices drop closer to $3.00 in the next week or so.

A lot of people that I talk with wonder whether oil and gas are going to be needed in the future, and based off what you see in the news and on social media you can be forgiven for thinking that they won’t be. However, the more rational number crunchers at the United States Energy Information Agency (a government agency, not some oddly named private organization) show that in 30 years the amount of energy provided by solar generation will only make up 20% of our energy needs. If you take a close look at that graph, you will notice that the total amount of energy produced by other sources (including wind) will be greater than the total amount we use today. So while solar generation will grow, it’s not going to actually cut in to oil and gas. Combined with wind it probably will, but not enough to make oil and gas properties obsolete. Don’t sell your oil and gas mineral rights just because you think renewables are going to take over energy production.

A Reuters article stating that drilling activity will have to pick up next year.

President Biden is putting pressure on OPEC+ to increase oil production. He should be putting that pressure on American producers. However, he’s trying to look like a good environmentalist at home, and after his federal land development ban back in the first part of this year he needs to not flip-flop, so he’s not. Seems a little short-sighted to me. Additional drilling here in America would put Americans to work and reduce the cost of gasoline and electricity. There are a lot of wins there.

West Virginia’s legislature really messed things up when they changed the law on how to value natural gas production for taxation purposes. There’s some talk of throwing the law out completely and starting over from scratch.

COVID was the driving factor in last year’s ridiculously low natural gas prices. We haven’t had to mention COVID for a few months, but there’s a new variant emerging in South Africa that has the stock market spooked, and that’s usually a sign that it’s serious. So keep an eye on the Omicron variant of COVID. UPDATE on Dec. 15: Omicron has emerged as a well publicized concern, but it’s full effects are not yet known.

The Biden administration has ordered the release of oil from the Strategic Oil Reserve. This will drive down the price of gasoline, at least temporarily. Drilling is the only thing that will drive the price down long term. UPDATE on Dec 14: The release was supposed to be coordinated with releases by other countries, which have not complied so far.

There is an interesting court case ongoing in Ohio. It pits a farm that is owned by an agricultural easement against a pipeline company. The pipeline is trying to use eminent domain to force a right of way onto the farm. The farm is arguing that the agricultural easement protects it from all uses other than agricultural. Interestingly, a nearby city tried to use the farm for a sewer pipeline at one point, and was denied. Also interestingly, the State of Ohio Department of Agriculture actually owns the agricultural easement, but is not helping to defend this suit in spite of the fact that it has defended other agricultural easements. There are other agricultural easements in Ohio, and their “owners” are watching.

Here’s an article that makes the argument for why a release of oil from the Strategic Petroleum Reserve is not going to drive gasoline prices down.

Producers have been using up their Drilled but UnCompleted (DUC) wells, but the supply is dwindling and at some point producers have to lean more toward drilling new wells. When that happens, profits will drop. How that plays out will be interesting to watch.

Crude oil drops below $65/bbl, but it’s not likely to last. Take predictions with the usual grain of salt.

The State of West Virginia ran a budget surplus last month, in large part because of high oil and gas prices. Now remember, State-officials-in-charge-of-spending, that we have lean times coming up. Put that money into a rainy day fund, because if there’s one thing we know it’s that oil and gas prices go down after they go up.

We’re exporting more gas, with deliveries to LNG facilities hitting a record high in November.

RBNEnergy explains that we are running out of pipeline capacity in the Appalachian region (West Virginia, Ohio, and PA) even if the Mountain Valley Pipeline gets built. MVP will make a difference, but only for a short period of time. Trouble is, I don’t see new pipelines getting built after ACP got the ax. The same problems that plagued it and still plague MVP will be problems for every other pipeline project. That’s going to lead to reduced royalty payments for West Virginia mineral owners, and higher natural gas prices for everybody.

Wegmans is shifting its trucking fleet from diesel to compressed natural gas.

Gas prices are at $5.02, down from a high of $6.20. Still, that’s a good price. Oil prices are at $80.80, down from a high of $84.65. That’s very healthy for the oil and gas industry. If oil prices continue to creep down we’ll see a reduction in gasoline prices before Christmas, but maybe not before Thanksgiving.

Natural gas storage levels are at 3,644 billion cubic feet, below last year’s high and the five year average, but creeping closer to that five year average. Rig counts are up to 556, up from 543 last month. This slow, steady build is the way to go. No boom means no bust, hopefully.

Most of the production from most oil and gas companies is hedged, or in other words, presold. The price it’s sold for is the price it’s expected to sell for at a future date. You can presell production far in advance, and most companies are hedged out at least a year. EQT hedged at a much lower price than today’s actual price. Most producers did. EQT is also buying back those hedges so that it can take advantage of the higher prices we are currently seeing. There’s some risk there, as it’s possible that oil and gas prices could plummet below the hedge price, but right now it seems EQT thinks oil and gas prices are going to remain high for a while.

Winter weather will determine whether natural gas prices go up or down. Here’s what NOAA and the Farmer’s Almanac are saying. Taken together, I’m not expecting a ridiculously cold winter, but anybody pretending to be semi-accurate about weather more than a couple days out is trying to sell you something.

Natural gas prices seem to be coming back to earth, mainly because weather predictions are showing a warmer than average winter coming up.

Well, this doesn’t happen very often! OPEC+ failed to produce as much oil as it allows itself to.

And so it begins. This is the first official report I’ve seen that banks are going to start lending more money to oil and gas producers. When this happens, things are going to start to boom. Booms are always followed by busts. For the moment, though, I’m happy to see a little more money flowing into the industry. We need a little more oil and gas produced to keep up with demand, so prices don’t jump like crazy. Hope and pray that bankers don’t go crazy.

Landowners on the Atlantic Coast Pipeline are in limbo. They don’t own the property they sold to the pipeline, and the pipeline is going to be built, so nobody’s sure what will happen with the property. My clients don’t have to worry about this issue though, as we took care of it when we were negotiating our agreements.

Range Resources intends to produce about the same amount of natural gas in 2022 that it did this year. This is surprising. All the signs indicate that producers are going to ramp up production next year, and Range is bucking that trend. Keep in mind that Range is not a small producer. Not the biggest, but definitely not small, so if they’re doing this maybe some others will, too. The reason, if you dig into the earnings call linked above, is that they expect natural gas prices to fall back to $3/MMBtu next year. That’s the kind of reason that, if other producers agree, will keep everybody from adding money to their budget.

West Virginia passed a bill that changes the way oil and gas production is taxed. It seems nobody understands the bill. We suggest that you keep back a little more of your royalty check than you have in the past to pay for any additional tax that might come due, just in case your tax bill goes up.

Did you know that natural gas could be converted into gasoline? I did not until I read this article about plans to build an enormous plant in NE Pennsylvania that will do just that.

Antero’s 3Q earnings call transcript is a little interesting, but not as interesting as in some other years. They mention that they’re not serious about Utica development, that they’re very serious about paying down debt, and that they are not growing much and don’t intend to.

Chevron and Exxon are going to increase drilling next year, but not by a large amount, and OPEC+ is being slow to increase production as it attempts to keep prices up.

Tug Hill, a West Virginia natural gas producer, had an incident with gas escaping from its Knob Creek Pad in Marshall County. We support the natural gas industry, but you have to be aware that there are dangers involved with natural gas infrastructure, just like everything else in life.

David Messler wrote a succinct piece over at Oilprice.com on oil prices and the market forces driving the industry.

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.

It was kind of a slow news cycle this month. Natural gas prices are down a bit, to $3.84/MMBtu. They had gotten as high as $4.16/MMBtu very recently, but are coming back down, probably on speculation about the new COVID-19 variant making the rounds. Drilling rigs are up to 500, an addition of 26 new rigs this month. That’s still healthy growth, not a signal that we’ll be moving into a boom/bust cycle. DUCs are down to 5,957, a drop of 258. That’s still a lot of DUCs, but they are continually dwindling.

Oil and gas pipelines don’t explode often, but they do explode. This time it was in Kansas, and was in the middle of a pasture, so thankfully it didn’t hurt anybody. They’re currently trying to figure out what made it explode.

The TETCO pipeline transports a lot of natural gas out of our area down to the Gulf Coast. It’s been operating at reduced pressure due to three separate explosions. After providing documentation to PHMSA which supposedly demonstrates that inspections have been done and the pipeline is safe, it is expected to resume normal operations.

Higher oil and gas prices are tempting oil and gas producers to start drilling more. Smaller, private companies are the most likely culprits, as they’ve already almost returned to pre-pandemic levels. We sincerely hope that they’ll continue to exercise restraint, as yo-yoing prices make it hard to run a business.

It’s important to think ahead when you’re signing any kind of agreement with an oil and gas company. The Atlantic Coast Pipeline has been given permission to leave downed trees in place, and leave installed pipeline in place. It’s also unclear whether the easements are going to continue to affect the property. Our clients’ agreements with ACP dealt with all these issues. Most did not.

Fracking is a noisy undertaking. Up in Brooke County, WV, it’s hard to put a well down in an area that’s not close to somebody’s house. The noise is not just bothersome, it keeps people from getting enough quality sleep, as fracking is a 24-hour activity. Whoever is drilling in Brooke County (ahem, SWN) should be more neighborly, but since they didn’t take steps on their own, the County Commission is going to revisit the noise ordinance and do what it can to make sleeping a possibility.

Demand for oil is keeping prices up.

DUCs (Drilled but UnCompleted wells) are dwindling in number, according to this Forbes article. More concerning to us is a quote in that article indicating that virtually all investors are unwilling to give money to oil and gas companies. We’ve been encouraged by the lack of investment capital in the past–forcing drillers to be more efficient–but a complete lack of investment capital will result in a lack of production which will result in a spike in energy prices. The old boom/bust cycle would return, at least for one cycle. That’s not good for anyone.

The EIA is predicting that we’ll enter the winter heating season with below-average natural gas storage levels. That means strong prices for natural gas through the rest of the year, most likely, which translates to good royalties for our clients.

Natural gas prices are $3.61/MMBtu, which is a healthy price. They got up as high as $3.79/MMBtu. Drilling rigs are at 484, a jump of 23 since last month. With the price of both oil and natural gas going up, it’s likely that this number will rise sharply soon. Natural gas storage levels for July are at 2,629 Bcf, a little under the five year average, and quite a bit under last year’s number.

Whoa! The big news comes right at the top this month! The Biden administration’s moratorium on oil and gas drilling permits has been overruled by a federal judge! Well, “overruled” is a little strong here. An injunction has been issued which delays enforcement of the moratorium until the lawsuit challenging it has wound its way through the courts. That’s a little different from being overturned, but it’s a sign that the lawsuit at least has some merit. You can only get an injunction if there’s some chance that the lawsuit would have success.

Based off headlines found around the news world, one would think that renewables have been making significant progress in producing larger and larger portions of the world’s energy. A recent study shows that’s not the case. In 2009, fossil fuels produced 80.3% of the world’s energy. In 2019 they produced 80.2%. That .01% is a big number, but the proportion is what’s most important.

On the other hand, oil and gas companies have severely cut back their exploration budgets. This could have powerful effects in the near term, such as much higher energy prices and yet another boom in the oil and gas sector. And here I was thinking the boom/bust cycle might be over. Not to put too much stock in an oilprice.com article–I haven’t often agreed with what I read there–but the numbers are hard to argue against.

The rumblings across the oil and gas industry are that supply is not keeping up with demand, which is forcing the price of natural gas up. That’s great news for our clients, as royalty checks should start going up.

Oil prices have also been going up. The rumor is that OPEC+ will start producing more oil. That rumor immediately drove the price of oil down.

The number of frack crews dropped precipitously during the pandemic, but they’re on the rise again. With 235 crews working, we’re just keeping production numbers level.

RBNEnergy does a good review of how wind power is ramping up in the U.S.

Just like that, RBNEnergy puts out another interesting article. This one details how carbon dioxide (you know, the main greenhouse gas) can be used for enhanced recovery of oil (getting more oil out of the ground than usual). You ever hear about carbon sequestration? This is carbon sequestration with an economic purpose.

Well, isn’t this interesting? There’s a pretty long article on Seeking Alpha which makes the argument that we’re in a long bull run on oil and gas stocks. For those who don’t invest, that means that oil and gas companies are a good value, which means that oil and gas prices are likely to stay up because that’s what makes an oil and gas company valuable. My how the times have changed, and quickly, too. That’s the oil and gas industry for you, though.

This is great news for any of our clients who are royalty owners. The price that buyers will pay for gas coming out of our area is going up. So not only is the price of natural gas in general going up, the price that West Virginia producers get is going up, too. That should show up as an increase on the bottom line of your royalty checks!

An “operational event” happened at the Mobley plant in West Virginia, shutting down production from the area. Basically, there’s no natural gas flowing out of West Virginia right now. This will probably affect royalty checks negatively.

A pipeline from a deep water drilling rig in the Gulf of Mexico ruptured and caught fire, resulting in video that looks like something you would see in a movie.

OPEC+ can’t seem to agree on anything right now, which seems to mean that nobody is going to start pumping/selling more oil, which means oil prices are going up.

Natural gas is flowing away from West Virginia again, now that the “operational event” (a leak) was fixed.

OPEC+ has now reached an agreement to increase oil production. This will probably help keep oil prices stable, which will keep prices at the gas pump from rising any higher than they already are.

Natural gas prices are at $3.25, down off today’s high of $3.35, but up from a low of $2.89 a few weeks ago. It’ll be interesting to see what happens with drilling rigs now that prices are going up. Storage levels are at 2,411 BCF, 55 BCF below the five year average, and right about where they have been compared to the five year average for months. Drilling rigs are at 461, up a little from 453. Slow and steady…..

I ran across an interesting article about some companies building sailing vessels as commercial transport again. It’s an interesting read, just for the subject. It’s also interesting to see that it’s practically impossible to replace modern ships with sailing vessels, if we want to keep our economy.

Jude Clement does a dive into energy use over at Forbes.com and makes an educated guess as to what the future might hold for natural gas and oil.

European utilization of natural gas is also interesting to read up on.

Xiaomi, a cell phone company, has announced that they can charge a cell phone battery in eight minutes. This doesn’t directly affect the oil and gas industry, but it’s a precursor of things to come. The real barrier to switching from fossil fuels to renewables is battery tech, and if fast charging technology like this can be applied to cars, it will change the industry. It’s not time to jump on that train yet. One demonstration device doesn’t mean the tech will make it to cell phones. The fact that it can be done with cell phones doesn’t mean it can be done with cars. But if it can be done with cell phones it most likely will eventually make its way to cars.

Oil and gas companies have exercised restraint in the first quarter of this year, but natural gas prices continue to creep up. Will banks start lending more money to them? It’s still too early to tell.

As natural gas prices go up, energy companies are switching to coal and renewables. Mostly coal. There still aren’t enough renewables to make up the difference.

The large international oil and gas company, Royal Dutch Shell, was ordered to cut carbon emissions by 45% by a Dutch court. While that ruling only applies in the Netherlands, it will be interesting to see what happens in other European courts.

Pew did a poll which showed that 2/3 of Americans don’t want to completely phase out fossil fuels. That 1/3 must be pretty noisy, because I wouldn’t have guessed those numbers. Of course, that’s a poll, and you know how polls are.

This could become worrisome in the future. We currently use about 90% of our natural gas storage capacity. Natural gas demand doesn’t have to grow much for us to hit full capacity. There was some rumbling before COVID last year that we might hit full capacity last year. It bears keeping an eye on.

Pressure on the TETCO pipeline has been reduced. The TETCO pipeline moves a lot of gas from the Marcellus down to the Gulf Coast. This will reduce royalties paid to most West Virginia royalty owners as the price to move the gas through the pipeline will increase, reducing the price that companies can get for the gas.

The price of natural gas is going up, but so is the cost of doing business. Shale drilling requires steel, and steel prices are skyrocketing.

Libya is planning to raise oil output from 1.3 million barrels per day (currently) to 2.1 million barrels per day in the next few years. I’m sure OPEC+ will eventually want to have something to say about that.

The price of natural gas is $2.97/MMBtu, and the price seems to be going up. Gas storage levels are just under the five year average, pretty much like they have been for the month. Drilling rigs are up to 453, up 21 from last month.

A “groundbreaking” study looked at whether oil and gas wells had the potential for integrity issues (leaking). Using raw data, they determined that 14.1% of oil and gas wells drilled before 2018 had the potential for integrity issues. Testing around wells showed that 3% of wells in Colorado and 0.1% of wells in New Mexico exhibited characteristics that made them susceptible to leakage outside the well. No testing was done to see whether there was actual leakage. They should really follow up with an actual field test for actual leakage instead of just making allegations.

According to the EIA, last winter was warmer than average, until the cold snap in late January and early February, which made up for the rest of the winter. In fact, withdrawals from storage for last winter ended up being 10.6% more than average.

Some landowners who signed easements with the Atlantic Coast Pipeline are now requesting that the FERC force ACP to release those easements. Since the land is no longer needed for the pipeline, that’s a sensible thing to request. I’m going to brag here: our clients don’t have to worry about this issue because we got language in their easements allowing them to request a release once a specific amount of time has passed after cancellation. Of course, if the FERC agrees with the landowners and a release can be acquired sooner, we’ll do that.

Producers are exercising restraint in drilling. I think it’s mostly because they’re having a harder time getting money from banks.

Libya is having budget troubles which may keep them from producing as much oil as they have been.

West Virginia’s Treasurer spoke out against the Biden administration’s push to get banks and lenders to not give money to the oil and gas industry. Honestly, that may not be an awful thing. Banks have historically overlent to the oil and gas industry, leading to boom/bust cycles. A little less money flowing in to the industry should create stability. No money would, of course, be a bad thing.

LNG terminals are running at full capacity.

Oil production from Alaska has been declining since the late 80s. I was generally aware of this, but I wasn’t aware of how much it has declined from its peak. This last decade it’s been pretty flat, which is why it hasn’t made news.

Moody’s predicts a pretty stable oil and gas industry for the next 12-18 months. Predicting stability in oil and gas seems like a reputation destroyer. Moody’s does have a pretty good reputation, though. Guess we’ll see.

Europe won’t get to net-zero carbon without natural gas. Until battery tech advances far enough, renewables aren’t going to replace fossil fuels.

We’re importing less energy, but exporting about as much as we used to.

The semi-truck of the future is self-driving and powered by natural gas. Of course, we all know how “the X of the future” works out most of the time.

Permitting proceeds ahead on a methanol plant in Pleasants County, WV.

The Colonial Pipeline got shut down because it was hacked. UPDATE: It’s back up and running, and the fuel shortage will be alleviated soon.

EQT is just getting bigger. They’ve now bought a bunch of property in Northeast PA.

A liquefaction plant in Jacksonville, FL is going to triple it’s capacity.