The Energy Information Agency is in the U. S. Department of Energy

From an Article by David Bradley, Natural Gas Intelligence, October 17, 2017

Henry Hub natural gas spot prices this year and next will be lower than previously forecast, according to the Energy Information Administration (EIA), which now predicting an average of $3.03/MMBtu for 2017 and $3.19/MMBtu next year.

Those price forecasts, included in EIA’s latest Short-Term Energy and Winter Fuels Outlook, are both down from last month, when EIA was forecasting prices would average $3.05/MMBtu this year and $3.29/MMBtu in 2018.

Expected growth in natural gas exports and domestic consumption next year contribute to the forecast increase between 2017 and 2018 Henry Hub natural gas spot prices, EIA said.

In September, the average Henry Hub natural gas spot price was $2.98/MMBtu, up 8 cents/MMBtu from the August level.

New York Mercantile Exchange contract values for January 2018 delivery traded during the five-day period ending Oct. 6 suggest a price range of $2.28-4.63/MMBtu, encompassing the market expectation of Henry Hub prices in January at the 95% confidence level, EIA said.

“Futures prices declined in early September, largely because of reduced demand related to Hurricane Irma in Florida,” EIA said. “Most electricity generation in Florida is natural gas-fired, and electricity generation in Florida on Sept. 11 was 41% lower than the average of the first seven days of September.

“Injections of working natural gas into underground storage exceeded market expectations and historical averages for the first three weeks in September, which further contributed to lower prices.”

EIA expects domestic dry natural gas production to average 73.6 Bcf/d this year, a 0.8 Bcf/d increase from 2016, and is forecasting 2018 production to reach a record 78.5 Bcf/d.

“As rising natural gas production keeps pace with increasing consumption and demand for exports — particularly for liquefied natural gas (LNG) — EIA projects a balanced market from the last quarter of 2017 through 2018,” the agency said. “LNG export capacity is expected to increase, with LNG exports projected to exceed 3 Bcf/d in 2018, 66% higher than in 2017. Increased takeaway capacity out of the Marcellus and Utica shale plays is expected to help boost production.

The United States was a net importer of natural gas last year, averaging 0.6 Bcf/d, but it is expected to be a net importer this winter.

Increased pipeline capacity to Mexico and LNG export capacity on the Gulf Coast will help push net exports to an average 1.4 Bcf/d through the winter, EIA said.

Earlier this month, the EIA released its Natural Gas Monthly report that revealed that U.S. dry natural gas production increased year/year in July to 2.28 Tcf, a 0.5% increase from July 2016.

The July data also revealed that the largest importer of natural gas from the United States was Mexico via vessel at 14.4 Bcf.

Turning to storage, the government agency said inventories should total 3.8 Tcf at the end of October.

“During the first three months of the 2017 injection season, which starts in April, the rate of natural gas inventory builds was lower than the five-year average,” the agency said. “However, cooler-than-average temperatures in August reduced the use of natural gas for electricity generation, which contributed to builds that were above the five-year average during August 2017 and September 2017.”

Tribes Seek Justice at DAPL

‘Pipelines Leak’: Expert Finds Government Downplayed DAPL Impact on Tribe and Water

From an Article by Lauren McCauley, Common Dreams, November 4, 2016

An independent pipeline expert has concluded that the U.S. Army Corps of Engineers’ environmental assessment (EA) of the Dakota Access Pipeline (DAPL) is insufficient and fails to account for the impact on tribal members, prompting the Standing Rock Sioux to demand that the federal agency “revisit” its approval of the controversial project.

The review, commissioned by the tribe, found that the Army Corps’ EA “understates the risk of pipeline failure and related oil release from this pipeline impacting Lake Oahe and the Missouri River,” determined (pdf) Richard Kuprewicz, a pipeline engineer with the consulting firm Accufacts, Inc..

Earthjustice, which is representing the Standing Rock Sioux in its litigation against the Corps, outlined additional “areas of deficiency” identified in the review:

1. Shoddy pipeline construction
2. The risks posed by landslides were underestimated
3. Lack of proper safety constructions to contain spills
4. Failure to review impact to residents and environment downstream of the site
5. A risk review of industry spills and containment at similar sites that document problematic regulatory oversight of the industry in North Dakota

In a letter (pdf) sent late last week to Jo-Ellen Darcy, assistant secretary of the Army for Civil Works, Standing Rock Sioux chairman Dave Archambault II presents Kuprewicz’s findings in contrast to the EA’s determination that building a pipeline across Lake Oahe “will not affect members of the Standing Rock Sioux Tribe or the Tribal reservation.”

“Mr. Kuprewicz’s findings reflect the common sense point that was somehow lost in the Final Environmental Analysis—that pipelines leak, and that when they do so there are often devastating consequences, particularly when the leak contaminates water.”
—Dave Archambault II, Standing Rock Sioux

The review, he said, “underscores one of the fundamental deficiencies of the Final Environmental Assessment—it assumes, without foundation, that placing a massive oil pipeline just upstream from the Reservation presents no risk to the Tribe.

Alternately, “Mr. Kuprewicz’s findings reflect the common sense point that was somehow lost in the Final Environmental Analysis—that pipelines leak, and that when they do so there are often devastating consequences, particularly when the leak contaminates water,” he noted.

“This raises the question,” Archambault continued, “if the Dakota Access pipeline is so safe that it presents no risk at all when situated on the Tribe’s doorstep, why isn’t the pipeline safe enough to cross the river north of Bismarck, as originally proposed? The Final EA provides no answer.”

Earthjustice staff attorney Jan Hasselman, who represents the Tribe, said, “The law requires a full and transparent analysis of risks like oil spills prior to issuance of a federal permit. It’s clear that never happened here.”

Indeed, as recent news events have shown, and as Archambault himself pointed out in the letter, “the public record is filled with examples” of pipeline failure. The past two weeks alone have seen a deadly gasoline pipeline explosion in Alabama, and successive pipeline leaks in Oklahoma and Pennsylvania, respectively discharging crude oil and gasoline.

According to data from the Pipeline and Hazardous Materials Safety Administration, an average of over 59 oil spills occur each year while the average amount of oil spilled from pipelines topping 47,000 barrels. North Dakota alone had 1238 reported incidents of spills of oil or oilfield wastewater in the 12-month period from July 27, 2015 through July 25, 2016.

Referencing these “sobering” statistics, as well as many of the documented instances, Archambault concluded that the Army Corps should deny the easement for the Lake Oahe pipeline crossing.

See also: www.FrackCheckWV.net

U.S. Shale Production Areas (E.I.A.)

EIA oil & gas productivity report: Is it all downhill from here?

From an Article by Marissa Hall, Shale Plays Media, June 10, 2015

Although the U.S. shale revolution has maintained impressive momentum over the course of the last year, depressed oil prices have taken their toll. The Energy Information Administration released its monthly drilling productivity report this week, and it has confirmed what many industry experts saw coming. With the exception of the Permian Basin, the U.S. has seen a drop in oil and gas production across the board in the major shale regions.

According to Oilprice, the major shale plays in the U.S. will have decreased a projected 208,782 barrels of oil per day (bpd) by July, down from April’s peak of 5,694,580 bpd as production decreases took root shale by shale. Now, the last holdout is the Permian, where production has yet to decrease but has seriously “plateaued” (leveled).

The biggest factor in the downward trend is the decrease in legacy oil production, which the EIA report asserts is largely due to well depletion rates.

The nation’s strongest areas saw the most troubling declines. The Bakken decreased 29,000 bpd from the previous month. The area’s peak point was at 1,311,703 bpd in March but will have decreased roughly 74,763 bpd by July.

In related news, Utica and Marcellus well activity in Ohio.

The Eagle Ford shale play has taken a massive hit as well. The region’s oil production has dropped 49,000 bpd from last month. The Eagle Ford peaked at 1,711,376 bpd back in March, but by July production will drop by 117,971 bpd.

Although the Niobrara region isn’t the strongest oil producer in the country, it also saw a sharp decrease of 17,000 bpd from the previous month. With a peak of 459,861 bpd in March, the 49,712 bpd fall by July is perhaps even harder hitting for the smaller area.

The lone wolf among the oil producers, the Permian shale play will actually see a 3,000 bpd increase month over month, and the EIA projects that the area will produce 2,059,851 bpd in July. However, production has been levelling out since the beginning of 2015. It is only a matter of time before the Permian caves to the trend and shows a decrease in production levels.

Natural gas hasn’t evaded the trend, either. The Haynesville and Marcellus areas will both show decreases month over month in natural gas production. The EIA report shows a dip of 26 million cubic feet per day (mmcf/d) for the Haynesville shale and a 28 mmcf/d decrease for the Marcellus region.

Natural gas production in the oil-focused areas dropped without exception. The only shining star amid natural gas producing shale plays is the Utica region. Contrary to the trend, the EIA reports a 42 mmcf/d increase month over month for the area, despite a stark decreased in legacy gas production that started in 2014.

To view the EIA’s full report, click here.  See also:  www.FrackCheckWV.net

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Natural Gas Prices in Dollars per Thousand Cubic Feet (Million BTU)

The NYMEX price for natural gas today was $2.82.  The average spot Henry Hub price for May of 2015 was $2.85.   This price was over $13.00 in October of 2005 and over $12.00 in June of 2008, but shale gas drilling & fracking have seen a balloon in production since that time, although production is now slipping as described above.

Note: One report today out of western PA  indicates a private  lease royalty payment now down to $10 per acre per month with a single Marcellus well on a large drilling unit. These figures vary widely across the region. The royalty payments sink fast when the production declines and the price continues to remain low.

Whither Shale Gas? Certainty and Uncertainty Abound!

Commentary by S. Tom Bond, Retired Chemistry Professor & Resident Farmer, Lewis County, WV

What can be said about projections for natural gas from shale? Other than generally over-estimated, a more accurate statement cannot be made – yet. The first item to consider is the reserve. Perhaps the most accurate figures are available from research done for the Post-Carbon Institute by David Hughes. His article in Nature, one of the two top scientific journals of the world, titled Natural Gas: The Fracking Fallacy, published December 3, 2014, is a further development of the theme and is a classic. It compares estimates by the U. S. Energy Information Agency and smaller, more limited but more detailed estimates. The EIA was found wanting, which was verified by their own publication, cited in the Nature article, published the 14th of October in 2014.

The article by Hughes referred to above is titled “Drilling Deeper“, subtitled “A Reality Check on U. S. Government Forecasts for a Lasting Tight Oil and Shale Gas Boom,” is a further development of the theme. It lists EIA reductions in reserve estimates and gives reasons to doubt they have it correct yet. Page 5 shows graphics of reductions of estimates of one of the Marcellus which estimate has been reduced from 410 Trillion cubic feet to 84 tcf, a factor of 80% by 2011. The same graphic shows reduction of Poland’s shale gas by 99%. The estimate of oil availabe from the Monterey Tight Oil was reduced by 96%.

Hughes survey involves seven tight oil plays and seven shale gas plays, involving 89% of current oil production and 88% current gas production from shale. The primary source of data for this analysis is Drillinginfo, a commercial database of well production data widely used by industry and government, including the EIA. Hughes concludes ” Tight oil production from major plays will peak before 2020. (That’s 5 years.) Also “Shale gas production from the top seven plays will likely peak before 2020.

He makes estimates of production for 2040, based on present drilling methods and without regard for price – essentially what can be, rather than what will be (see more below). His average first year field decline rate for Marcellus is 32% and average 3-year well decline rate is given as 74-82%. See page 11, where all seven fields are listed.

Hughes’ implications for the future of gas are hugely important, i.e. the EIA’s rosy forecasts have led policymakers and the American public to believe a number of false promises:

• · That cheap and abundant natural gas supplies can create a domestic manufacturing resurgence and millions of new jobs over the long term.
• · That abundant domestic oil and natural gas resources justify lifting the oil export ban (imposed 40 years ago after the Arab oil embargo)and fast- tracking approval of liquefied natural gas (LNG) export terminals.
• · That the U.S. can use its newfound energy strength to shift geopolitical trends in our long-term favor.
• · That we can easily limit carbon dioxide emissions from power plants as a result of natural gas replacing coal as the primary source of electricity production.

David Hughes report is chosen here because of that author’s expertise and because the analysis is more “fine grained,” it uses data from individual wells.

Hughes deals with the characteristics of individual wells and fields based on them. There are other influences he cannot deal with, however. I shall address some of them here. One is the decline of production as the drilling is forced out of “sweet spots.” These are areas of relatively high production. They were actively sought out at the beginning of production, because they bring the highest return on money and effort invested. That is the way all mineral development is done. It is sometimes expressed as “the easy stuff is taken out first.”

Because of rapid decline of shale wells, new wells must be drilled constantly. How available will the necessary capital be? That depends on the availability and the attitude of potential investors. Availability depends on the general economy. A crash would tighten up investment money. It also depends on the perception of reward (magnitude of profit), which will certainly be declining due to the fact these wells do not last; to increased public opposition and active campaigns of disinvestment from fossil fuels; to the continuing increase in efficiency of solar and wind; and to the inevitability of failures of companies due to low oil prices.

I think fracking will become less popular with the public as time passes by and the devastation it causes becomes better known – that is certainly the trend now, witness the extensive advertising the industry must put out to influence public opinion.

The biggie is how will the price of oil affect the demand for fracked gas. There is a world-wide slowdown in the economy, while the over-production of oil and gas in the U. S. is a factor, but decline in demand, is often forgotten.  Lower growth than expected has occurred in Europe and Asia.

More about this here and here. To paraphrase some college textbooks, “The Author leaves as an exercise for the reader,” the resolution of this video which shows both Senator Shelly Moore Caputo (R – WV) and Martin J. Durban, President of America’s Natural Gas Alliance, saying or implying the reserve estimates are increasing.

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Here is something for you to worry about, as I am –

Commentary by S. Tom Bond, Jane Lew, Lewis County, WV

The current dust-up in Iraq is more than an insult to the nation whose leader proudly proclaimed “Mission Accomplished” on May 1, 2003. It wasn’t the end of major combat operations, which dragged on for years, with troops still in Iraq in an advisory capacity, many of them within the walls of the huge embassy constructed in Bagdad, the largest in the world. The unrealistic goals and incompetent subsequent management continue today.

The group calling itself the “Islamic State of Iraq and Greater Syria,” represents the Sunni faction of Islam in a war against the Shiite branch. The United States deposed Saddam Hussein, who controlled the Sunni branch which subdued the numerically larger Shiite segment of the Iraq population. What the United States did was set up a Shiite government in Iraq, reversing the historical arrangement. Iran, much larger and next door, is also Shiite, and this brought Iraq and Iran much closer together. Then the Iraq duly elected parliament voted in 2011 to have the United States leave.

Both Iraq and Iran are considered an oil and gas powerhouse. Lots of very high grade petroleum. Iran is a current hate object not only for Israel and the United States, but also for the other Gulf States, which are Sunni.

It occurs to many observers that the Islamic State of Iraq and Greater Syria is no longer conducting a terrorist attack, but a full scale war. The group has the reputation of being too violent even for al-Qaeda, which kicked it out.

Who pays? According to this article in The Economist, in Mosul ” The jihadists seized huge stores of American-supplied arms, ammunition and vehicles, apparently including six Black Hawk helicopters and 500 billion dinars ($430m) in freshly printed cash.” (Incidentally this Economist article is great for events leading up to its publication on June 14th.)

Labor is cheap. Part of the supply is from Saddam’s underground resistance still fighting, and part is from Islamic idealists streaming in from all over the Mid-east. At one time war was largely a matter of courage, but today war is industrialized and it takes money. Where does it come from? Some would have you believe it just grew.

This looks more reasonable to me. “Supporters in the region, including those based in Jordan, Syria, and Saudi Arabia, are believed to have provided the bulk of past funding.” You have to read the original paragraph carefully – it does not included Iran, which supported al-Qaeda in Iraq, although that crosses sectarian lines. (This is another very helpful article.)

In short, this is our payments to the Mid-east for oil coming back to us from the oil sheiks.

Now, back to the oil supply. For this section I am indebted to the Energy and Capital Newsletter. Iraq has huge proved oil reserves, 143.1 billion barrels according to the U. S. Energy Information Administration. Iraq is currently pumping out 2.9 million barrels a day. (E&C) Production is falling. If the ISIGS continues, production will fall further, causing a world wide price shock. This is because the world supply is delicately balanced, and decreased supply will increase the price sharply because more can’t be produced to meet demand. Lybia’s output has fallen because of disruption there. Mexican oil is running out.

The North Sea (between the United Kingdom and Denmark) will fall by 22% this year. Nigerian and Venezuelan production is declining. Sanctions cut off Iran, and Russia is a big question mark. Demand is rising.

OPEC (the Organization of Petroleum Exporting Countries) appears willing to keep its production constant, at least this year. So an oil price shock seems to depend in part on the advance and control of the Islamic State of Iraq and Greater Syria fighters. The “inelastic” nature of supply and demand for oil suggests one should be prepared for a substantial increase in price if supply goes down.

How will this affect natural gas prices? If oil goes up, where ever possible energy demand will be shifted to natural gas. This is especially important in the US Northeast, rapidly shifting to natural gas anyway, and in industry and electrical generation. This will tend to increase the price of natural gas, even if it is being over produced. And, more fracking means much more environmental impacts in our Region.

World conditions will particularly boost the worth of the “wet” part of wet gas, because the ethane, propane and butane extracted from wet gas can serve as a source of olefins, used to make plastics, i.e. petrochemicals. Much of this also comes from the lowest boiling fraction of oil, called naphtha. Less oil, particularly the light oil from the Mideast, less naphtha. It appears then the environmental impacts will almost certainly continue for years to come, as continued reliance on fossil fuels means more greenhouse gases, more global warming and more climate change.

>> Tom Bond is a retired chemistry professor and resident farmer in central West Virginia, and a member of the Guardians of the West Fork and the Monongalia Area Watersheds Compact <<

Rig Count Down, Gas Output Up

Marcellus Region Leading in Output per Gas Well and Total Production 

From the Article by Laura Legere, State Impact – PA, October 24, 2013

Improvements in drilling efficiency and increasing productivity from new wells are driving the recent growth in oil and gas production across six key shale regions in the country, including the Marcellus.

In the first of what will be a monthly report on drilling productivity, the U.S. Energy Information Administration noted this week that “new technologies for drilling and producing natural gas and oil have made traditional measures of productivity, such as a simple count of active rotary drilling rigs, obsolete.” So the agency is using different measures to record productivity, especially an estimate of how much gas or oil is produced from new wells in a month per average rig operating in the region. The estimate indicates both the time it takes to drill a well and the well’s production, the agency said.

A graph captures the trend in the Marcellus: fewer rigs are drilling new wells in the shale since a peak in early 2012, but the wells they drill are producing more gas at the start.

The report held surprises for energy experts who did not expect the Marcellus Shale to reach its current output of more than 12 billion cubic feet of natural gas per day this year, or even for several years.

According to the Associated Press:

Federal energy experts are surprised by the rapid Marcellus growth, since the number of drilling rigs has fallen over the past two years.

“A year ago, we were not expecting the Marcellus to be at 12 billion cubic feet,” said Sam Gorgen of the EIA, which is a part of the Department of Energy.

The current Marcellus production is even higher than the predictions of Terry Engelder, a Penn State University geologist who has drawn praise and criticism for his estimates of how much gas the region holds. Engelder had predicted that the Marcellus wouldn’t reach the 12 billion cubic foot rate until 2015, and some critics said that was overly optimistic.

The report also shows production from the Marcellus and Haynesville shales diverging from a point of parity a year ago. Both shales were producing about 9.1 billion cubic feet of gas a day in November 2012, according to the EIA. Now, the Marcellus is expected to produce 12.6 billion cubic feet a day next month, while the Haynesville, which underlies parts of Louisiana, Texas and Arkansas, is expected to produce 6.6 billion cubic feet a day.

See the new Drilling Productivity Report from the Energy Information Administration (EIA) here.

Pam Kasey, writing for the State Journal, has described the recent estimate for the Marcellus technically recovered reserves of natural gas. Here is her description:

West Virginia’s Marcellus shale resource is estimated at 8.9 trillion cubic feet in the June 25 release of the U.S. Energy Information Administration’s Annual Energy Outlook. In July 2011, the EIA published an estimate of the remaining technically recoverable resource, or TRR, in the Marcellus of 410 trillion cubic feet. TRR includes proved reserves — volumes expected to be produced under existing technological and economic conditions — and unproven resource that it is believed existing technology could extract.

That 410 tcf came into question in August, when the United States Geological Survey refreshed its estimate of the Marcellus TRR at a mean value of 84 tcf, with a range of 43 to 144 tcf. Then, in its January early look at the Annual Energy Outlook 2012 reference case, based on the USGS figures but also extrapolating from more recent production data from Pennsylvania and West Virginia, the EIA’s  new estimate of the TRR came in right at the top of the USGS range: 141 tcf.

The EIA provided details of that estimate in the full AEO2012. The EIA uses almost all of the USGS’s assumptions; the difference is that the EIA’s “estimated ultimate recovery” in the core of the Marcellus is higher: 1.95 billion cubic feet per well, compared with the USGS’s 1.15 bcf.

The EIA is specific in its estimates of the TRR for various portions of the Marcellus and for each of the eight states it encompasses. Of the 141 tcf it estimates as technically recoverable, more than 60 percent is in Pennsylvania and almost 30 percent is in New York — totaling more than 90 percent. About 8.9 tcf, or a little over 6 percent, is in West Virginia.

For scale, the state’s total gas production in 2010, not only Marcellus but all gas, was 265 billion cubic feet, according to the EIA. If 8.9 tcf of Marcellus were recoverable, it would represent more than 33 years’ worth of the state’s total 2010 production.

Background information to the estimates shows that the Marcellus region is 99 percent to 100 percent “untested” — that is, there’s no data. So even while being quite specific, the EIA was cautious about its estimates. “The estimation of Marcellus shale gas resources is highly uncertain, given both the short production history of current producing wells and the concentration of most producing wells in two small areas, Northeast Pennsylvania and Southwest Pennsylvania /Northern West Virginia,” the AEO2012 reads.