NEW YORK, Oct 30 (Reuters) - The number of rigs drilling for natural gas in the United States climbed by three this week to 728, according to a report on Friday by oil services firm Baker Hughes in Houston.
The U.S. natural gas drilling rig count has gained in 13 of the last 15 weeks after bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 gas rigs operating.
But the rig count is still down sharply since peaking above 1,600 in September of last year, standing at 824 rigs, or 53 percent, below the same week in 2008.
Many gas producers have scaled back drilling operations with credit still tight and natural gas prices around $4 per million British thermal units (mmBtu), off nearly 70 percent from July 2008 highs above $13.
The steep declines in drilling this year have started to slow production and tighten supplies, but most traders agreed it has not been enough yet to offset record high inventories and steep recession-related cuts in demand, particularly in the industrial sector. (Reporting by Joe Silha; Editing by Lisa Shumaker)
Saturday, October 31, 2009
Friday, October 30, 2009
Storage High for Natural Gas
By DEBORAH JIAN LEE (AP) – 7 hours ago
NEW YORK — Natural gas stockpile levels rose last week to a new high, the government said Thursday.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states grew by 25 billion cubic feet to about 3.78 trillion cubic feet for the week ended Oct. 23.
Analysts had expected a boost of between 27 billion and 31 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The inventory level was 12.4 percent above the five-year average of about 3.35 trillion cubic feet, and 11 percent above last year's storage level of about 3.39 trillion cubic feet, according to the government data.
Natural gas 3 cents to $5.036 per 1,000 cubic feet on the New York Mercantile Exchange.
NEW YORK — Natural gas stockpile levels rose last week to a new high, the government said Thursday.
The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states grew by 25 billion cubic feet to about 3.78 trillion cubic feet for the week ended Oct. 23.
Analysts had expected a boost of between 27 billion and 31 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The inventory level was 12.4 percent above the five-year average of about 3.35 trillion cubic feet, and 11 percent above last year's storage level of about 3.39 trillion cubic feet, according to the government data.
Natural gas 3 cents to $5.036 per 1,000 cubic feet on the New York Mercantile Exchange.
Thursday, October 29, 2009
Chesapeake Says No to New York Watershed
NEW YORK, Oct 28 (Reuters) - Chesapeake Energy (CHK.N) has decided not to drill for natural gas in the New York watershed, following pressure from environmentalists who say drilling could contaminate water supplies to the New York City area.
The U.S. natural gas producer said on Wednesday that it will not develop its leases in shale gas plays in upstate New York ahead of hearings on state rules on the drilling Wednesday.
"[Chesapeake] has no intention of drilling natural gas wells within the New York City watershed," the company said in a statement.
Extracting natural gas from shale formations involves a process called hydraulic fracturing, or fracking, in which a mixture of water, chemicals and other materials like sand are pumped into the shale formation to split the rock and free the trapped gas. Environmentalists say the process contaminates groundwater.
"It has become increasingly clear to us over the past few months that the concern for drilling in the watershed has become a needless distraction," said Aubrey K. McClendon, Chesapeake's Chief Executive Officer, in the statement.
Chesapeake is the largest shareholder in the massive Marcellus Shale gas formation which extends across much of Pennsylvania and parts of West Virginia, Ohio and New York. It is likely the nation's largest shale reservoir and geologists say it could satisfy U.S. natural gas demand for a decade or more.
Chesapeake said that drilling in shale gas is still safe, though environmentalists see this as a victory against shale development in New York.
"We've said all along that drilling in the New York City watershed is a terrible idea," said Deborah Goldberg, Managing Attorney at environmentalist group Earth Justice which has been campaigning against the development.
"We're glad to hear that Chesapeake Energy understands the risk and has promised not to drill in this area," she added. (Reporting by Edward McAllister)
The U.S. natural gas producer said on Wednesday that it will not develop its leases in shale gas plays in upstate New York ahead of hearings on state rules on the drilling Wednesday.
"[Chesapeake] has no intention of drilling natural gas wells within the New York City watershed," the company said in a statement.
Extracting natural gas from shale formations involves a process called hydraulic fracturing, or fracking, in which a mixture of water, chemicals and other materials like sand are pumped into the shale formation to split the rock and free the trapped gas. Environmentalists say the process contaminates groundwater.
"It has become increasingly clear to us over the past few months that the concern for drilling in the watershed has become a needless distraction," said Aubrey K. McClendon, Chesapeake's Chief Executive Officer, in the statement.
Chesapeake is the largest shareholder in the massive Marcellus Shale gas formation which extends across much of Pennsylvania and parts of West Virginia, Ohio and New York. It is likely the nation's largest shale reservoir and geologists say it could satisfy U.S. natural gas demand for a decade or more.
Chesapeake said that drilling in shale gas is still safe, though environmentalists see this as a victory against shale development in New York.
"We've said all along that drilling in the New York City watershed is a terrible idea," said Deborah Goldberg, Managing Attorney at environmentalist group Earth Justice which has been campaigning against the development.
"We're glad to hear that Chesapeake Energy understands the risk and has promised not to drill in this area," she added. (Reporting by Edward McAllister)
Wednesday, October 28, 2009
Natural Gas Storgage Facilities Rising
his Dutch Company Is Taking the Natural Gas Sector by Storm
By Christian A. DeHaemer
Tuesday, October 27th, 2009
The greatest — and most ironic — thing about Chicago Bridge & Iron is that they aren't in Chicago. . . don't build bridges. . . and have very little to do with iron.
What the company does do, however, is all the rage. The Netherlands-based engineering company makes infrastructure for natural gas storage and transportation. This sector is so hot that they've picked up six contracts since September — including one just yesterday.
Gas is Expanding
Around the world, the total known reserves for natural gas are expanding rapidly. In the United States, known reserves have increased 48% over the past three years, due to new drilling techniques called fracting. A natural gas consortium is running television ads saying that we have a 100 year supply of this clean plentiful energy.
China has entire city fleets of buses and taxis that run on compressed natural gas. China also has massive amounts of coal-based methane — methane that sits on top of coal fields. Again, new technology is allowing China to utilize their resources.
Russia's Gasprom (OGZD.IL) has more BTU's in natural gas than Saudi Arabia has in oil, and is now exporting natural gas to California from Siberia.
T. Boone Pickens and his Clean Energy Fules Corp. (CLNE) are running port facilities where every vehicle is based on natural gas. He has had meetings with President Obama and Al Gore on the subject.
Honda has a natural gas car available for sale today that you can plug into a gas pipe in your garage.
Peterbuilt is selling natural gas long haul trucks because it makes fiscal sense to run on NG, as it's cheaper and cleaner. . .
The U.S. has too much natural gas. . . so much, in fact, that the price has dropped to ten-year lows — from $14 to $2.80, while oil went from $35 to $80 a barrel. (I should note, there's been a recent suckers' rally that pushed it back above $4).
"That's great," you say. . . "Cheap, clean energy for everyone. . . but how does this make me money?"
You can't buy the explorers; you can't buy the producers or the service guys; rig counts have fallen through the floor. . .
But what you can buy is the one company that builds storage and transfer stations.
Chicago Bridge and Iron (CBI:NYSE) is an engineering company that produces the infrastructure for natural gas storage and transportation. I mentioned earlier that the company has picked up six new contracts since September — these include a $70 million deal they picked up last week to build a facility in Siberia, and another $100 million deal on Friday.
According to Yahoo:
Chicago Bridge & Iron Co. NV, an energy-infrastructure construction company, on Friday said it received a contract worth more than $100 million from UGI LNG Inc. to engineer and construct the expansion of a Temple LNG peak shaving facility near Reading, PA.
Under the contract, CB&I will be responsible for the addition of a new 50,000 cubic meter liquefied natural gas storage tank and related processing facilities designed to provide 150 million cubic feet of natural gas per day during peak demand periods.
As you can see in the chart below, they have sliced through all resistance and appear to have none until they hit $30. They have a decent balance sheet, a P/E of 11, and should continue to grow with the expansion of the natural gas industry:
EAC_2
The company has a conference call today, and I think the sentiment will be bullish.
Sincerely,
Christian DeHaemer
Editor, Energy & Capital
By Christian A. DeHaemer
Tuesday, October 27th, 2009
The greatest — and most ironic — thing about Chicago Bridge & Iron is that they aren't in Chicago. . . don't build bridges. . . and have very little to do with iron.
What the company does do, however, is all the rage. The Netherlands-based engineering company makes infrastructure for natural gas storage and transportation. This sector is so hot that they've picked up six contracts since September — including one just yesterday.
Gas is Expanding
Around the world, the total known reserves for natural gas are expanding rapidly. In the United States, known reserves have increased 48% over the past three years, due to new drilling techniques called fracting. A natural gas consortium is running television ads saying that we have a 100 year supply of this clean plentiful energy.
China has entire city fleets of buses and taxis that run on compressed natural gas. China also has massive amounts of coal-based methane — methane that sits on top of coal fields. Again, new technology is allowing China to utilize their resources.
Russia's Gasprom (OGZD.IL) has more BTU's in natural gas than Saudi Arabia has in oil, and is now exporting natural gas to California from Siberia.
T. Boone Pickens and his Clean Energy Fules Corp. (CLNE) are running port facilities where every vehicle is based on natural gas. He has had meetings with President Obama and Al Gore on the subject.
Honda has a natural gas car available for sale today that you can plug into a gas pipe in your garage.
Peterbuilt is selling natural gas long haul trucks because it makes fiscal sense to run on NG, as it's cheaper and cleaner. . .
The U.S. has too much natural gas. . . so much, in fact, that the price has dropped to ten-year lows — from $14 to $2.80, while oil went from $35 to $80 a barrel. (I should note, there's been a recent suckers' rally that pushed it back above $4).
"That's great," you say. . . "Cheap, clean energy for everyone. . . but how does this make me money?"
You can't buy the explorers; you can't buy the producers or the service guys; rig counts have fallen through the floor. . .
But what you can buy is the one company that builds storage and transfer stations.
Chicago Bridge and Iron (CBI:NYSE) is an engineering company that produces the infrastructure for natural gas storage and transportation. I mentioned earlier that the company has picked up six new contracts since September — these include a $70 million deal they picked up last week to build a facility in Siberia, and another $100 million deal on Friday.
According to Yahoo:
Chicago Bridge & Iron Co. NV, an energy-infrastructure construction company, on Friday said it received a contract worth more than $100 million from UGI LNG Inc. to engineer and construct the expansion of a Temple LNG peak shaving facility near Reading, PA.
Under the contract, CB&I will be responsible for the addition of a new 50,000 cubic meter liquefied natural gas storage tank and related processing facilities designed to provide 150 million cubic feet of natural gas per day during peak demand periods.
As you can see in the chart below, they have sliced through all resistance and appear to have none until they hit $30. They have a decent balance sheet, a P/E of 11, and should continue to grow with the expansion of the natural gas industry:
EAC_2
The company has a conference call today, and I think the sentiment will be bullish.
Sincerely,
Christian DeHaemer
Editor, Energy & Capital
Tuesday, October 27, 2009
Natural Gas Play from Shale
Vincent Fernando|Oct. 26, 2009, 11:39 AM
Production of natural gas from shale has been surprising both industry players and analysts on the upside, which clearly isn't helpful for natural gas prices either now or into 2010.
Dozens of companies are drilling shale or other unconventional sources due to what they see as the potential for very high returns, even despite the relatively low gas prices of late.
Thus the era of ultra-cheap natural gas could be upon us, which would be bad news for gas ETFs such as United States Natural Gas (UNG). Natural gas prices are currently down over 5%.
The Barrel: One recent example of just how jaw-dropping the US shale gas story has become came from big independent Newfield Exploration. Houston-based Newfield said in a conference call this week that its production from Oklahoma's Woodford Shale today is 308,000 Mcfe/d, versus about 240,000 Mcfe/d at June 30 -- up nearly 30% in less than four months. Moreover, the company has an inventory of 28 drilled but uncompleted Woodford wells waiting to be put online by early 2010, signalling the potential to boost production still higher.
The astounding output jump prompted a comment from analysts at investment bank Wells Fargo, who in an October 22 report called Newfield's gushing Woodford production trend "disturbing." They noted the company's output had "reached recent highs despite (a drilling) slowdown and deferred completions."
But Newfield, and the Woodford field, are hardly the only purveyors of über-volumes of gas. Despite cutbacks in activity elsewhere, dozens of companies both large and small are drilling away at shale and other unconventional plays which they claim continue to offer towering economic rates of return. Their efforts have resulted in huge gas volumes flowing around the US and also recently in Canada. But with just a week left in the refill season, US gas storage bins are brimming over with the commodity. And current demand is not enough to use it all, which could continue the surplus into next year.
...
While prices are now teetering at the $5/Mcf level, many industry observers look at storage figures and scratch their heads. Says one: "Given the amount of gas sitting around out there, it's a mystery why prices are so high."
Read more here.http://www.businessinsider.com/shale-is-really-screwing-natural-gas-investors-2009-10
Production of natural gas from shale has been surprising both industry players and analysts on the upside, which clearly isn't helpful for natural gas prices either now or into 2010.
Dozens of companies are drilling shale or other unconventional sources due to what they see as the potential for very high returns, even despite the relatively low gas prices of late.
Thus the era of ultra-cheap natural gas could be upon us, which would be bad news for gas ETFs such as United States Natural Gas (UNG). Natural gas prices are currently down over 5%.
The Barrel: One recent example of just how jaw-dropping the US shale gas story has become came from big independent Newfield Exploration. Houston-based Newfield said in a conference call this week that its production from Oklahoma's Woodford Shale today is 308,000 Mcfe/d, versus about 240,000 Mcfe/d at June 30 -- up nearly 30% in less than four months. Moreover, the company has an inventory of 28 drilled but uncompleted Woodford wells waiting to be put online by early 2010, signalling the potential to boost production still higher.
The astounding output jump prompted a comment from analysts at investment bank Wells Fargo, who in an October 22 report called Newfield's gushing Woodford production trend "disturbing." They noted the company's output had "reached recent highs despite (a drilling) slowdown and deferred completions."
But Newfield, and the Woodford field, are hardly the only purveyors of über-volumes of gas. Despite cutbacks in activity elsewhere, dozens of companies both large and small are drilling away at shale and other unconventional plays which they claim continue to offer towering economic rates of return. Their efforts have resulted in huge gas volumes flowing around the US and also recently in Canada. But with just a week left in the refill season, US gas storage bins are brimming over with the commodity. And current demand is not enough to use it all, which could continue the surplus into next year.
...
While prices are now teetering at the $5/Mcf level, many industry observers look at storage figures and scratch their heads. Says one: "Given the amount of gas sitting around out there, it's a mystery why prices are so high."
Read more here.http://www.businessinsider.com/shale-is-really-screwing-natural-gas-investors-2009-10
Monday, October 26, 2009
Pennsylvania Natural Gas Industry Update
http://www.philly.com/inquirer/local/20091025_How_Marcellus_Shale_gas_came_to_be_tax-exempt_in_Pa_.html
How Marcellus Shale gas came to be tax-exempt in Pa.
By Mario F. Cattabiani and Amy Worden
Inquirer Staff Writers
HARRISBURG - All through Pennsylvania's 101-day budget impasse, Gov. Rendell spoke of pain.
A recession-weary state had to tighten its belt. Revenues had to rise - income tax, sales tax, new taxes on whole industries. "We can't get this budget resolved," Rendell said, "without everyone feeling some pain."
But when the budget was finally signed Oct. 9, one industry came away pain-free.
The natural-gas industry's leaders and lobbyists beat back Rendell's proposal to tax gas as it is pulled to the surface from the rich black-rock reservoir known as the Marcellus Shale.
So, as drilling rigs are sprouting in the state's northern tier and southwestern corner, the gas those rigs are extracting still isn't taxed. That makes Pennsylvania unique among the 15 states that produce the most natural gas.
What's more, the industry persuaded Harrisburg to lease more public land to gas drillers - even as the state's budget for environmental protection was being sharply cut.
What happened to Rendell's gas-tax proposal?
He says the industry made good arguments for staving it off. He did not want to slow the "gold rush," as he called it, of jobs and commerce the drillers would bring.
One legislator came away with a more cynical view.
"The same old influential interest groups getting their way," said State Rep. Greg Vitali (D., Delaware). "It was just another day in Harrisburg."
What follows is a closer look at some key moments in the short life of Rendell's proposal to help balance the budget by taxing natural gas.
Tapping "the gold rush." As Rendell prepared his Feb. 4 budget address, a boom was under way. Natural-gas industry representatives were fanning out across the state, securing leases and drilling wells at twice last year's pace.
Rendell, a policy wonk, did his homework. He spoke with Gov. Joe Manchin III of West Virginia, a state that also sits atop the Marcellus Shale and has taxed natural gas for years.
In his budget address, Rendell proposed to tax gas extracted in Pennsylvania.
Rendell said Manchin, a fellow Democrat, had assured him that West Virginia's tax did not "inhibit gas extraction and that it is continuing at a record pace, and it's reaping critically needed revenues so the state can provide services to its citizens."
Rendell's plan matched West Virginia's - a 5 percent tax on the value of natural gas at the wellhead, plus 4.7 cents per 1,000 cubic feet of natural gas extracted.
By Rendell's estimates, such a tax could raise $107 million for Pennsylvania in its first year, helping fill a billion-dollar budget gap.
In a recent interview, Manchin described what he said to Rendell months ago.
"The Marcellus Shale is a tremendous producer. A severance tax will not deter" the drillers, Manchin said. "Believe me, if we didn't have the gas, they wouldn't be here."
Manchin said he had faced industry complaints in 2005 when he proposed to expand the tax, with some companies threatening to leave.
How Marcellus Shale gas came to be tax-exempt in Pa.
By Mario F. Cattabiani and Amy Worden
Inquirer Staff Writers
HARRISBURG - All through Pennsylvania's 101-day budget impasse, Gov. Rendell spoke of pain.
A recession-weary state had to tighten its belt. Revenues had to rise - income tax, sales tax, new taxes on whole industries. "We can't get this budget resolved," Rendell said, "without everyone feeling some pain."
But when the budget was finally signed Oct. 9, one industry came away pain-free.
The natural-gas industry's leaders and lobbyists beat back Rendell's proposal to tax gas as it is pulled to the surface from the rich black-rock reservoir known as the Marcellus Shale.
So, as drilling rigs are sprouting in the state's northern tier and southwestern corner, the gas those rigs are extracting still isn't taxed. That makes Pennsylvania unique among the 15 states that produce the most natural gas.
What's more, the industry persuaded Harrisburg to lease more public land to gas drillers - even as the state's budget for environmental protection was being sharply cut.
What happened to Rendell's gas-tax proposal?
He says the industry made good arguments for staving it off. He did not want to slow the "gold rush," as he called it, of jobs and commerce the drillers would bring.
One legislator came away with a more cynical view.
"The same old influential interest groups getting their way," said State Rep. Greg Vitali (D., Delaware). "It was just another day in Harrisburg."
What follows is a closer look at some key moments in the short life of Rendell's proposal to help balance the budget by taxing natural gas.
Tapping "the gold rush." As Rendell prepared his Feb. 4 budget address, a boom was under way. Natural-gas industry representatives were fanning out across the state, securing leases and drilling wells at twice last year's pace.
Rendell, a policy wonk, did his homework. He spoke with Gov. Joe Manchin III of West Virginia, a state that also sits atop the Marcellus Shale and has taxed natural gas for years.
In his budget address, Rendell proposed to tax gas extracted in Pennsylvania.
Rendell said Manchin, a fellow Democrat, had assured him that West Virginia's tax did not "inhibit gas extraction and that it is continuing at a record pace, and it's reaping critically needed revenues so the state can provide services to its citizens."
Rendell's plan matched West Virginia's - a 5 percent tax on the value of natural gas at the wellhead, plus 4.7 cents per 1,000 cubic feet of natural gas extracted.
By Rendell's estimates, such a tax could raise $107 million for Pennsylvania in its first year, helping fill a billion-dollar budget gap.
In a recent interview, Manchin described what he said to Rendell months ago.
"The Marcellus Shale is a tremendous producer. A severance tax will not deter" the drillers, Manchin said. "Believe me, if we didn't have the gas, they wouldn't be here."
Manchin said he had faced industry complaints in 2005 when he proposed to expand the tax, with some companies threatening to leave.
Sunday, October 25, 2009
Natural Gas Meetings in New York
http://www.farmanddairy.com/news/marcellus-shale-summit-set-in-ny/13395.html
OWEGO, N.Y. — Cornell Cooperative Extension, in collaboration with a number of local and statewide partners, will host a Marcellus Shale Natural Gas Summit at the Owego Treadway Inn, in Owego, N.Y., Nov. 30 from 8:30 a.m. to 5 p.m.
Local government officials, landowner coalition representatives, citizens seeking more information, industry representatives, environmental advocates, and researchers and educators are encouraged to attend.
Objectives
“The summit’s goals and objectives are to inform and educate; prepare for challenges and opportunities; gather information for ongoing research; and promote networking among multiple stakeholders,” said Rod Howe, assistant director of Cornell Cooperative Extension.
The summit coincides with the end of the NYS Department of Environmental Conservation’s comment period for the supplemental Generic Environmental Impact Statement (sGEIS) which is currently set for Nov. 30.
That document is available at www.dec.ny.gov/energy/58440.html.
Legislative and regulatory controls are being scrutinized as intensive gas drilling of the Marcellus Shale has the potential to transform the fabric of many-especially rural-communities in New York state in ways that are both positive and negative.
Intensive natural gas development in other states has been accompanied by substantial changes in population, land use, environment, community, and economy.
Questions
The summit will address two key questions: Where do the people and the communities of New York State go from here in addressing the myriad issues associated with gas drilling? What strategies can be implemented to protect the environment and help the regional economy?
“When concerned parties are proactively engaged in education and dialogue, they are better prepared to anticipate, shape, and respond to changes,” said Howe. “And the more likely it is that negative impacts will be minimized and positive aspects realized.”
Topics
Cornell faculty and educators will join with other professionals to address such educational workshop topics as the geology of the shale; municipalities and the Marcellus shale; environmental, water and regulatory issues; local government preparation; workforce development and small business application; landowner management; legal issues; water and wells; community development; taxation, revenues, and property valuation; state and national energy plans.
The summit is open to the public and will cost $40. Summit information, including a registration link, may be found at http://gasleasing.cce.cornell.edu.
OWEGO, N.Y. — Cornell Cooperative Extension, in collaboration with a number of local and statewide partners, will host a Marcellus Shale Natural Gas Summit at the Owego Treadway Inn, in Owego, N.Y., Nov. 30 from 8:30 a.m. to 5 p.m.
Local government officials, landowner coalition representatives, citizens seeking more information, industry representatives, environmental advocates, and researchers and educators are encouraged to attend.
Objectives
“The summit’s goals and objectives are to inform and educate; prepare for challenges and opportunities; gather information for ongoing research; and promote networking among multiple stakeholders,” said Rod Howe, assistant director of Cornell Cooperative Extension.
The summit coincides with the end of the NYS Department of Environmental Conservation’s comment period for the supplemental Generic Environmental Impact Statement (sGEIS) which is currently set for Nov. 30.
That document is available at www.dec.ny.gov/energy/58440.html.
Legislative and regulatory controls are being scrutinized as intensive gas drilling of the Marcellus Shale has the potential to transform the fabric of many-especially rural-communities in New York state in ways that are both positive and negative.
Intensive natural gas development in other states has been accompanied by substantial changes in population, land use, environment, community, and economy.
Questions
The summit will address two key questions: Where do the people and the communities of New York State go from here in addressing the myriad issues associated with gas drilling? What strategies can be implemented to protect the environment and help the regional economy?
“When concerned parties are proactively engaged in education and dialogue, they are better prepared to anticipate, shape, and respond to changes,” said Howe. “And the more likely it is that negative impacts will be minimized and positive aspects realized.”
Topics
Cornell faculty and educators will join with other professionals to address such educational workshop topics as the geology of the shale; municipalities and the Marcellus shale; environmental, water and regulatory issues; local government preparation; workforce development and small business application; landowner management; legal issues; water and wells; community development; taxation, revenues, and property valuation; state and national energy plans.
The summit is open to the public and will cost $40. Summit information, including a registration link, may be found at http://gasleasing.cce.cornell.edu.
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