Natural gas futures dipped into the red early Tuesday and remained there on demand concerns tied to mixed weather forecasts and diminished natural gas exports. The July Nymex contract settled at $1.767/MMBtu, down 2.2 cents day/day. August was down 2.9 cents to $1.863.

Spot gas prices hovered in narrow ranges in most regions, but NGI’s Spot Gas National Avg. advanced 1.5 cents to $1.600.

Intense summer heat across swaths of Texas and the Southwest, along with forecasts for higher temperatures elsewhere later in June, have fueled optimism for increased gas demand to run air conditioners. However, projections for weaker weather systems next week and strong rains over much of the country, along with cooler temperatures in the East, chilled enthusiasm some on Tuesday.

NatGasWeather expects conditions to drive moderate overall demand most of this week, but expectations for showers over Texas, the South and Mid-Atlantic coast next...

Capital spending by global oil and natural gas explorers has collapsed to levels not seen in 15 years and could decline on average by 27% in 2020, a 3,000 basis point turnaround from the 2% increase predicted in December, according to a new survey.

Evercore ISI’s mid-year exploration and production (E&P) spending outlook update one completed in December. The latest survey’s results revealed the end of three straight years of modest growth in capital expenditures (capex), analysts said.

“Expectations for a fourth year of modest improvement in 2020 has completely reversed course, and we now forecast global E&P spending to establish new lows that are 16% below the 2016 trough and 55% below the 2017 peak.” This year now is tracking to be the second worst in the survey’s 35-plus year history, “behind only 2016’s 32% decline,” which followed the oil price collapse in late 2014 that led E&Ps to curtail capex and activity for almost two...

Edge Gathering Virtual Pipelines 2 LLC has been selected to capture and liquefy natural gas from Exco Resources Inc.’s remote assets in Pennsylvania’s Marcellus Shale.

Pennsylvania-based Edge said Wednesday that work has already started to capture production from a stranded well and is expected to continue doing so through 2022, which would provide Exco with another way to monetize its gas at a time when prices remain low and demand has declined due to the Covid-19 pandemic.

Edge, which has recently signed deals with other producers in the state, said it would deploy equipment to the site, including three portable liquefaction units. After purchasing the gas from Exco for liquefaction, it would then be moved to customers in the Northeast via trucks. Edge also said that it expects surplus liquefied natural gas (LNG) from its arrangement with Exco and intends to market it to new customers.

Exco has assets in central and northeast Pennsylvania,...

Texas oil and gas activity suffered a bloodbath of sorts in April as the state began to register the full effects of the Covid-19 lockdowns, with upstream jobs tumbling to the largest monthly decline on record, the Texas Alliance of Energy Producers said Wednesday.

The statewide oil and gas association’s benchmark Texas Petro Index (TPI) fell to 172 in April from nearly 181.9 in March, the second largest monthly decline on record. The worst month/month decline was September to October 2015, when the TPI fell by 11 points during the 2014-2016 oil price collapse.

“The Texas upstream oil and gas economy was already in a state of decline when Covid-19 came along, with drops in the number of working rigs and industry employment, but the rate of decline has obviously accelerated sharply in March and April,” said the Alliance’s petroleum economist Karr Ingham, who created the TPI.

“The worst of the demand contraction is clearly behind us at this...

Oil and natural gas investment will shrink by as much as 25% in Canada’s top producer province this year, the Alberta Energy Regulator (AER) said in its annual review.

The AER forecasts that Alberta exploration and production (E&P) capital spending in 2020 will fall into a range of C$14.6-16.4 billion ($11-12.3 billion) from C$18.9 billion ($14.2 billion) in 2019.

The diminished Alberta E&P investments would still be up to 70% of the C$23.3 billion ($17.5 billion) national total that the Canadian Association of Petroleum Producers (CAPP) projected in its revised 2020 forecast.

Alberta still produces around 66% of Canadian natural gas and 80% of the country’s oil, according to AER. However, CAPP records show that the dominant provincial role is being played out on a shrinking national stage.

Since peaking at C$81 billion ($60.8 billion) in 2014, total Canadian oil and gas investment has plunged by 71%, or C$57.7 billion ($43.3...

Demand for natural gas is expected to increase next winter and production is expected to decline, causing upward pressure on prices and resulting in Henry Hub spot prices averaging $3.08/MMBtu in 2021, according to the Energy Information Administration (EIA).

Henry Hub prices this year, on the other hand, are expected to average just $2.04/MMBtu, according to EIA’s latest Short-Term Energy Outlook (STEO), which was released Tuesday.

EIA’s 2020 price forecast is down a dime from the previous STEO, while the 2021 price forecast is up 19 cents.

“EIA forecasts that relatively low natural gas demand will keep spot prices lower than $2/MMBtu through August,” the agency said. “However, EIA expects prices will generally rise through the end of 2021. EIA expects that natural gas price increases will be sharpest this fall and winter when they rise from an average of $2.06/MMBtu in September to $3.08/MMBtu in January.”

Rising demand heading into...

Massachusetts Attorney General (AG) Maura Healey last Thursday asked the state’s Department of Public Utilities (DPU) to open an investigation into phasing out natural gas amid the transition toward alternative fuels by 2050.

Should the legally binding statewide limit of net-zero greenhouse gas emission by 2050 be achieved, the AG acknowledged considerable fossil fuel usage reductions may be necessary. With the significant reductions in fossil fuels, gas distribution companies in the state would need to take steps to change planning processes and business models. Likewise, the DPU would need to develop policies and structures.

The petition from Healey urged the DPU to work with stakeholders to develop a regulatory and policy roadmap to protect customers.

The DPU petition comes two years after a series of gas explosions in the Merrimack Valley, served by NiSource Inc. subsidiary Columbia Gas of Massachusetts (CMA), killed one person and...

The Permian Basin in May reported the largest monthly decline in oil and gas permits ever, down 47% from April, as applications by large-cap operators fell to their lowest levels in history, off by almost three-quarters, Evercore ISI said Tuesday.

In Evercore’s monthly permit report covering U.S. activity across the country and in the Gulf of Mexico, analyst James West and his team said domestic activity plummeted to 1,072, off by 53% month/month and 63% year-to-date.

Only 102 natural gas permits were issued in May, down by 40% from April and the “lowest count in a decade,” Evercore analysts said.

The gas permit decline primarily came from the Marcellus Shale at 52, which was 41 fewer than in April. In the Utica Shale, only 14 permits were issued. The Haynesville Shale’s permit count dropped to 49, driven by a slowdown in Louisiana, down 34 from April, while activity in the Texas portion of the play was flat at 18.

Year-to-date,...

Global oil demand has begun to recover from the impacts of a still raging pandemic, but Lower 48 upstream activity is unlikely to return to pre-Covid levels anytime soon, if at all, according to ConocoPhillips CEO Ryan Lance.

“If I were a betting man, today I would say it would be pretty difficult for us to return to 13 million b/d,” Lance said in an interview with IHS Markit Vice Chairman Daniel Yergin. Lance predicted the Lower 48 would get above 10 million b/d again, possibly above 11 million, “maybe encroaching on 12 as we go through. A lot depends on the shape of this recovery.”

The U.S. coronavirus death toll surpassed 110,000 this week, with Texas reporting a record 1,935 hospitalizations from the illness on Monday, indicating that the country is nowhere near out of the woods pandemic-wise, even as businesses reopen and stay-at-home measures are lifted.

ConocoPhillips, the world’s largest independent oil and gas company, has about...

Weatherford International plc, which exited bankruptcy in December, is facing more turmoil as CEO Mark McCollum was forced out days ahead of the annual meeting.

The oilfield services giant, considered the fourth largest in the world, has for years been on a rollercoaster, in part from internal turmoil and exacerbated by volatile and at times devastatingly low oil and gas prices.

On Monday, McCollum, also president and director, was sent packing “immediately,” the company said, only four days before the annual meeting on Friday.

The former Halliburton Co. CFO was lured away in 2017 to take over the troubled company, which through some self-made missteps had suffered sharp financial losses in recent years.

Long-time CEO Bernard J. Duroc-Danner had resigned in late 2016 after a 30-year career, offering little explanation. Weatherford also paid a $140 million fine in late 2016 to settle financial fraud charges, which the Securities and...

The U.S. Environmental Protection Agency (EPA) has issued a proposed order that it said would codify best practices for benefit-cost analysis in rulemakings and provide clarity for states, local communities and industry.

“As a part of a larger effort of regulatory reform under the Trump administration, EPA has taken a close look at how to improve the assessment of benefits and costs that underpin regulatory decision making,” EPA said Thursday. “Many EPA statutes, including the Clean Air Act, contain language on the consideration of benefits and costs, but there are no regulations that ensure that the public is provided an analysis of the benefits and costs in a consistent manner across offices. This proposal focuses on providing more consistent and transparent application of benefit cost analyses under the Clean Air Act.”

Industry groups were quick to voice their support for the proposed order, including the American Petroleum Institute (API) and the...

Facing a 13.3% national unemployment rate and the negative impacts of continuing Covid-19 mitigation efforts, President Trump on Thursday signed an executive order (EO) directing federal agencies to “take all reasonable measures to speed infrastructure investments and to speed other actions in addition to such investments that will strengthen the economy and return Americans to work,” including setting aside some Endangered Species Act and National Environmental Policy Act restrictions.

The order comes nearly three months after the Trump administration declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

“In the days between the national emergency declaration and May 23, 2020, more than 41 million Americans filed for unemployment, and the unemployment rate reached 14.7%,” Trump said. “In light of this and other developments, I have determined that, without intervention, the United States faces the...

The oil market may begin to recover next month, but U.S. midstream companies still face a “challenging” environment as cash flow, low pipeline utilization and other factors may stall a return to financial health, according to Wood Mackenzie.

The consultancy recently indicated that even though June is widely expected to be when oil production bottoms out, “very little new drilling makes sense at $35/bbl.” In fact, on a basin-wide average, Wood Mackenzie sees the Permian Basin as the only region that can make money at that price level.

“In order to see a meaningful recovery in drilling and completion activity, we need to see prices north of $45/bbl,” said Wood Mackenzie’s Alex Beeker, upstream corporate research analyst.

On Monday, West Texas Intermediate prompt-month oil traded around $38.

As a result of the exploration and production (E&P) response to the macro environment, oil production is expected to decline by 1.4 million b/d...

The Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, on Saturday agreed to extend collective May and June oil supply cuts of 9.7 million b/d for another month to continue rebalancing an oversupplied global crude market.

After modest gains Monday morning, the July West Texas Intermediate (WTI) contract was trading at $38.25/bbl around midday, off $1.30 from Friday’s close.

Saturday’s agreement “was expected and priced in already since Friday, and that is why the price rise this morning was only marginal,” said Rystad Energy analysts.

Another bearish factor for prices was that Saudi Arabia, the United Arab Emirates and Kuwait opted to halt an additional set of voluntary cuts adding up to 1.18 million b/d, the Rystad team said.

“It would be too good to be true to have a total of nearly 11 million b/d in voluntary cuts extended for a month at times when we see supply deficits,” the Rystad team said,...

Reduced oil and gas production in the Permian Basin, combined with record-low levels of completions activity, should lead to historically low levels of gas flaring in the last half of 2020, according to Rystad Energy.

In March, the Permian saw the first signs of activity slowdown caused by the implications of coronavirus and the oil price wars, evidenced by shut-in wells and reduced activity.

The carbon dioxide (CO2) equivalent emission intensity associated with wellhead flaring is predicted by Rystad to average 4-5 kilograms (kg) of CO2/boe produced in 2H2020. For reference, the peak level of CO2 emission intensity occurred in 4Q2018 at 11-12 kg of CO2/boe. In March, Rystad estimated  wellhead flaring emission intensity was 8 kg of CO2/boe.

According to Rystad, flaring-driven emission intensity will be at even lower levels of 3.9 kg of CO2/boe in November.

“In 2Q2020 a material part of Permian oil production is being curtailed,...

U.S. crude futures rallied on Friday amid recovering demand and reports of an impending agreement by the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, to extend May and June output cuts through July.

West Texas Intermediate (WTI) added $2.14 on Friday to close the week at $39.55/bbl.

For context, the WTI spot price at the Cushing hub in Oklahoma hasn’t breached $40 since March 6, when OPEC-plus talks to slash output broke down, sparking a price war between Saudi Arabia and Russia that flooded the market with crude at the same time  Covid-19 was becoming a global pandemic.

In April, the alliance pledged to collectively reduce supply by 9.7 million b/d for May and June, adjusted to 7.7 million b/d for the remaining six months of 2020.

Whether such an agreement would be reached, and the extent to which signatories would comply with the cuts, remained open questions as of Friday.

“The more...

The U.S. rig count dropped another 17 units to fall to 284 for the week ending Friday as the latest Baker Hughes Co. (BKR) numbers showed domestic drilling activity still searching for a bottom even after months of retrenchment.

The domestic declines included 16 oil-directed rigs and one natural gas-directed, with the combined U.S. total ending the week 691 units behind the 975 rigs active at this time last year. The U.S. count has plummeted more than 500 rigs since March 13, BKR data show.

Land drilling fell by 18 rigs for the week, while one rig was added in the Gulf of Mexico. The addition of one directional rig partially offset the departure of 18 horizontal units, according to BKR.

The Canadian rig count increased by one oil-directed rig to end at 21 for the week, off from 103 in the year-ago period.

The combined North American count ended at 305, down from 1,078 a year ago.

Among major plays, the Eagle Ford Shale saw the...

Hydraulic fracturing expert BJ Services said Thursday it is ready to deploy a next-generation pump in the Permian Basin and Eagle Ford Shale after completing a 1,000-hour field trial in the Haynesville Shale fueled by natural gas.

The Tomball, TX-based oilfield services provider completed the field trial at the end of April for the 5,000 hydraulic hp direct-drive turbine pump with Haynesville explorer Aethon Energy Management LLC.

"The successful field trial confirms our decision to deploy our first contracted Titan fleet by the end of 2020 and initiates our long-term disciplined fleet enhancement strategy,” BJ CEO Warren Zemlak said.

Under a four-year contract with the private equity-sponsored Aethon, BJ installed the first Titan system this year within the gassy Haynesville, which straddles Texas and Louisiana.

Aethon’s Mike Warren, vice president of Completions, said BJ delivered on each of its commitments “and we are excited to...

The first pilot leveraging blockchain technology was successfully completed on five Equinor ASA wells in North Dakota’s Bakken Shale, the Offshore Operators Committee (OOC) Oil & Gas Blockchain Consortium said Wednesday.

In the pilot, which focused on water hauling, the technology reduced the workflow process from 90-120 days to one-to-seven days, while eliminating nine steps. Further, it automatically validated 85% of all the water volume measurements.

Blockchain technology, which also bolsters bitcoin and other digital currencies, is a distributed ledger that can initiate and verify transactions on a network as they occur. The OOC Oil & Gas Blockchain Consortium said the technology could help to reduce financial risk, reduce process workflow and cut costs.

The consortium consists of a group of explorers that include ConocoPhillips, Equinor, ExxonMobil, Hess Corp., Marathon Oil Corp., Noble Energy Inc., Pioneer Natural Resources Co.,...

Black Stone Minerals LP said Thursday it has two agreements to sell certain mineral and royalty interests in the Permian Basin for about $155 million.

Combined oil and natural gas production from the properties to be sold stands at an estimated 1,800 boe/d, Black Stone said.

Proceeds are to go toward paying down the Houston-based firm’s revolving credit facility, with total debt expected to be under $200 million once the transactions are closed.

One agreement in West Texas, which Black Stone expects to complete in July, involves selling interests in Midland County to a private buyer for about $55 million gross.

The other entails the sale of a 57% undivided interest across parts of Black Stone’s Delaware sub-basin position and a 32% undivided interest across its Midland position to Pegasus Resources LLC, for about $100 million gross.

Pegasus is a portfolio company of EnCap Investments LP, a Houston-based venture capital firm.

Oil and natural gas exploration and development (E&D) is predicted to decline in line with lower crude prices, which in turn would ding the value of proved reserves, the Energy Information Administration (EIA) said Thursday.

Financial reports analyzed by the federal agency regarding global spending found E&D climbed in 2019 from 2018 by 13% to $361 million for 102 publicly traded operators.

“As a result of significant crude oil price declines in 2020, however, global proved reserves will likely be revised downward, and E&D expenditures will also likely decline,” said EIA researchers led by principal contributor Jeff Barron. “Several companies have already announced large budget reductions.”

EIA based its analysis and its recently published 2019 Financial Review primarily on the reports of the publicly traded operators, but the conclusions may not represent the sector as a whole as private operators are not required to issue...