“Fractured Land” by Lisa Peters (2014)

From an Article by Christopher M. Matthews, Wall Street Journal, June 15, 2018

As companies step up oil production, the natural gas byproduct is weighing on already low gas prices and on gas producers. Higher oil prices are helping many American shale drillers. But they are hurting companies that frack for natural gas.

As companies respond to rising oil prices by drilling more for it, they often unearth gas as a byproduct. That has further weighed on already low gas prices, pressuring shale frackers in regions that primarily produce gas.

The average share price for the five top companies focused on the oil-rich Permian Basin in Texas and New Mexico are up more than 16% over the past year. Share prices for the top five producers focused on the Marcellus Shale in Appalachia, the country’s largest deposit of natural gas, are down more than 9%.

“It’s going to be tough for the Marcellus for a while,” said Brian Lidsky, managing director at oil-and-gas research firm PLS Inc. “There is just a tidal wave of gas coming out of the Permian.”

Like most shale drillers, those focused on natural gas in the Marcellus— a group that includes Cabot Oil & Gas Corp., EQT Corp., Range Resources Corp., Antero Resources Corp. , and Southwestern Energy Co. — have been under investor pressure to live within their means, curtail excessive spending and improve returns. And they have come closer to doing that.

As a group, those companies spent about $106 million more than they made in the first quarter of 2018, according to a Wall Street Journal analysis of S&P Global Market Intelligence data. That is down from outspending cash flow by more than $274 million in the previous quarter and more than $735 million in first quarter of 2017.

The shares of the top five shale drillers in the Marcellus region have lagged behind their peers that drill mostly for oil in the Permian Basin.

Still, investors have been reluctant to put more money into gas drillers, and the reason is simple: Gas has been cheap for years and doesn’t look primed to go up soon.

Demand for natural gas is predicted to rise globally over the next decade as many countries switch from coal-fired power plants to gas-powered ones. However, that isn’t expected to solve gas drillers’ problems in the short term. U.S. gas production will outpace domestic consumption through 2019, according to the Energy Information Administration.

Natural-gas futures for July delivery closed at $2.939 a million British thermal units on Tuesday and have been below $4 since 2014. Prices passed $10 in 2008 and had stayed above the $4 mark before 2012. Many banks and analysts predict average prices will be below $3 for years. Meanwhile, U.S. oil prices have climbed to more than $65 a barrel for the first time since 2014.

“We are mostly a gas company, so it is fair that we are judged on the price of gas,” said William Way, the chief executive of Southwestern Energy, which was the third-largest gas producer in the contiguous U.S. in 2017, after Exxon Mobil Corp. and Chesapeake Energy Corp. EQT is now poised to be the largest gas producer this year, following its acquisition of Rice Energy Inc. at the end of 2017.

Southwestern Energy’s strategy has been to cut costs and squeeze out efficiencies over the past two years while weathering the storm, according to Mr. Way. The road has been painful.

The company’s share price is about a 10th of what it was in 2010. The company was burdened with debt when Mr. Way became CEO in 2016— $4.6 billion in debt in December 2016 — following an ill-timed acquisition of Marcellus acreage from Chesapeake in 2014 for nearly $5 billion, just before gas prices sank. That debt represented more than 83% of its total capital.

After he took the top role, Mr. Way quickly laid off 40% of the company’s staff and shut down all of its drilling rigs. “We had to reinvent ourselves as a $2.75 gas company instead of a $4.50 gas company,” he said.

Southwestern Energy is now seeking to sell all its assets in the Fayetteville shale in Arkansas, which analysts say could be worth more than $2 billion. The company will use a significant portion of that to pay down debt, now about $3.4 billion, and reinvest in the Marcellus, where it has begun drilling again, albeit with modest growth targets.

Some hold a measure of optimism

Todd Heltman, a senior energy analyst at Neuberger Berman Group LLC, an asset-management firm that owns shares in shale producers, noted that prices for gas-focused shale companies have rebounded a bit since earlier this year, with investors having potentially seen a bottom for gas producers.

“They’re no longer growing for the sake of growing, and buying for the sake of buying,” Mr. Heltman said. “And I do think investors have gotten too bearish on natural gas.”

>>>>>>>>>>>>>>>>>>>>>>>

Reagan’s EPA chief was forced to resign amid scandals. Why not Scott Pruitt? (Opinion) – CNN

PA Gov. Tom Wolf with Students in Harrisburg

How many jobs has Marcellus Shale drilling really created?

From an Article by Candy Woodall, PennLive.com, January 22, 2016

The shale boom hit as the country was reeling from the worst financial crisis since the Great Depression.

Lawmakers and regional chambers of commerce were eager to tout Pennsylvania’s growing oil and gas industry as the solution to rising unemployment numbers. Former Gov. Tom Corbett and trade groups were known to quote 250,000 as the number of state residents working in the industry.

The state Department of Labor & Industry published a monthly report – the Marcellus Shale Fast Facts – full of numbers to support those claims. Among the job count were six core industries and 29 supporting industries.

To reach 250,000 workers, Corbett’s labor department counted the regulators overseeing the industry as gas jobs, truck drivers, and those working in highway construction, steel mills, coal-fired power plants, sewage treatment plants, and others. Not all of the jobs in those industries were involved in Marcellus Shale development, which led to an overestimation of actual employment numbers, according to the new guard at the Department of Labor & Industry.

Gov. Tom Wolf’s labor department has significantly decreased previous estimates and is no longer counting gas jobs as those who work for the U.S. Environmental Protection Agency, Department of Environmental Protection, Department of Conservation and Natural Resources, and the Fish and Boat Commission. Those regulators are now counted as state workers.

The new number is 28,926. That’s 0.5 percent of the nearly 6 million workers employed in Pennsylvania as of the second quarter of 2015, according to the most recent data from the state labor department.

By comparison, during that same time frame, nearly 1 million state residents were working in healthcare, about 490,000 jobs were in education and more than 134,000 were in state government. Of those state jobs, more than 4,000 are liquor store employees. Those sectors have all been a big part of budget negotiations.

The nearly 29,000 workers in the oil and gas industry include those involved in drilling, extraction, support operations, and pipeline construction and transportation. That figure grows to about 80,000 if you factor in suppliers and service providers, such as architects, engineers, restaurants and physicians who care for workers.

Even if you count the numbers like the current administration, shale drilling added 20,000 jobs in eight years, up from 9,000 in the second quarter of 2007.

The Marcellus Shale Coalition, the industry’s largest trade group, says the number is 243,000, citing 2014 data from the previous administration. The coalition doesn’t have a breakdown of the numbers, a spokeswoman said. Another way to gauge true employment figures is to look at a county breakdown, but those numbers aren’t available for Marcellus Shale jobs.

The Quarterly Census of Employment and Wages is a U.S. Bureau of Labor Statistics program, which is bound by confidentiality regulations that ensure individual employers’ data can’t be identified, Goulet said. “The confidentiality covers all data produced, not just specific industries,” she said.

Data is suppressed if there are less than three employers in a specific industry or area, or if one employer makes up more than 80 percent of the employment in that industry or area, due to the likelihood that a specific employer’s data could be derived, Goulet said.

The disclosure of that protected data is a felony punishable with up to five years in prison and a $250,000 fine, according to the Bureau of Labor Statistics. But the bureau does track county unemployment rates, which can give certain clues, according to state analysts.

While the state labor department numbers count people working in Pennsylvania, regardless of where they live, the county unemployment rates track Pennsylvania workers who live in those counties.

An analysis of the federal data shows counties where the most wells were drilled, such as Washington and Bradford, had slightly lower unemployment rates than counties without drilling during the recovery period after the recession. For example, Dauphin County had a 7.5 percent unemployment rate in November 2010, compared to 7.3 percent in Washington County.

But state labor analyst Jeff Newman said many things can affect those numbers, and if the industry is a little more than 20,000 workers statewide, it wouldn’t be enough to create huge swings in employment numbers. Also, those thousands of workers weren’t added all at once. It happened over time.

According to newly calculated state data, 2012 was the peak time of employment for the industry when more than 31,000 people were working in the industry.

Now that the industry is shedding jobs amid the biggest oil bust since the 1980s, unemployment should increase in certain counties with high well counts. As of the most recent data available from the Bureau of Labor Statistics, that proved true.

The Washington County unemployment rate was 5 percent in November, up from 4.8 percent the same month a year earlier. And the Bradford County unemployment rate increased to 5.1 percent in November, up from 4.4 percent a year earlier.

Other counties with high well counts, such as Susquehanna, Greene, Lycoming and Tioga, also had unemployment rates at about 5 percent or higher. During the same time frame, counties without drilling had unemployment rates at about 4 percent or lower. Lancaster County, for example, had a 3.8 percent rate in November, and Cumberland County was at 3.7 percent.

The unemployment rates in well towns could grow higher this year, as rig counts and oil and gas prices reach new lows. Analysts say many drillers will be facing bankruptcy this year after cutting spending and jobs.

Most recently Southwestern Energy on Thursday said it is cutting 1,100 jobs. Of those, 200 are in northeastern and southwestern shale corners of Pennsylvania. Will 200 jobs throughout the state have a big impact on unemployment rates? Probably not, according to analysts.

So what does this all mean? “It’s an industry that has created thousands of  jobs, but it’s not one of the biggest in the state,” Newman said.

#   #   #   #   #   #   #

NOTE: The WV Legislature passed the “Natural Gas Horizontal Well Control Act” on December 14, 2011.  This Act requires the WV Workforce Investment Council to report each November 1st thru 2016 on the jobs created in WV by “horizontal well” activities, i.e. the drilling and fracking of Marcellus shale for natural gas production.  However, this has not been done so far I can determine, because of the difficulty of collecting the data and lack of dedication to the tasks involved.  See the Comment(s) below.   DGN