Editor’s Note: This is one of a 14-piece series NGI undertook as the energy industry readied for the new year, with Lower 48 natural gas and oil supply continuing to surge in an uncertain environment as liquefied natural gas exports ramp up, Mexico markets remain shrouded and stakeholders demand more value. Get your complimentary copy of NGI’s 2020 Special Report today.
As the year winds to a close, NGI’s Shale Daily took a look at the stories that shaped the shale industry in 2019.
Amid growing pressure to act on the climate crisis, multiple Democratic presidential candidates have pledged to ban or restrict hydraulic fracturing (fracking). The rhetoric appears to have captured the industry’s attention, as two of the 10 most-read stories in NGI’s Shale Daily for 2019 relate to proposed fracking bans at the federal and state levels.
The oil and gas industry has sought to regain some control of the narrative, warning of the devastating impact that a ban could have on the economy and energy prices, and highlighting the vital role of natural gas in the transition to a low-carbon economy. The Global Energy Institute (GEI) published analysis in December that found that if a nationwide fracking ban were implemented, by 2021 it would eliminate 19 million jobs and reduce national gross domestic product by $7 trillion.
GEI President Marty Durbin told reporters that while an outright ban was unlikely, there are “many other actions” that could be taken to severely restrict the practice, including a drilling ban on federal lands.
In New Mexico, a state that would be especially hard-hit by a fracking ban on government land, a freshman lawmaker introduced a proposal to put a four-year moratorium on the practice statewide. The New Mexico Oil and Gas Association warned lawmakers that the bill would be a “disaster” for the economy.
Natural Gas Oversupplied, Under Priced
The current oversupply of U.S. natural gas, and the outlook for extended low prices for the fuel, weighed heavily on the industry in 2019. Bankruptcies in the upstream sector showed a sharp uptick during the year, according to Haynes and Boone LLP, with depressed commodity prices showing no signs of an impending rebound.
Nowhere was the pricing pressure felt more acutely than the Permian Basin, where natural gas prices dipped into the negatives on multiple occasions.
Moody’s Investors Service warned that natural gas liquids (NGL) pricing also could remain under pressure for the next three or four years, due to a lack of sufficient pipeline and fractionation capacity.
Although many operators in the mighty Appalachian Basin have been scaling back operations, the nation’s largest gas-producing basin continued to generate substantial interest from NGI’s Shale Daily readers in 2019.
The most-read Appalachian-focused stories included the rebranding of junior independent Huntley & Huntley Energy Exploration LLC to reflect the array of challenges facing the shale industry, the assertion from Ascent Resources LLC CEO Jeff Fisher that the Utica Shale had not yet reached its full potential, and a story on a horizontal drilling campaign planned for two conventional oilfields in West Virginia.
As always, expansion efforts and new projects by upstream operators proved to be tantalizing fare for readers in 2019. The most popular stories in this vein included Apache Corp.’s plans to expand its Permian gas operations beyond the Alpine High into more liquids-rich areas. There also was strong interest in the ongoing approval process for the 5,000-well Converse County oil and gas project proposed by a consortium of heavyweights in Wyoming’s Powder River Basin.
Also cracking the Top 10 most-read stories was one about pipeline exports of Argentine unconventional gas to neighboring Chile, showing that the shale revolution is no longer contained to only North America.
In Canada, where the politics around oil and gas development have often led to bitter disputes between the producing provinces and the rest of the country, conservative former legislator and People’s Party of Canada founder Maxime Bernier of Quebec led a push in 2019 to reform the country’s equalization scheme, which redistributes government income from wealthy provinces to poorer ones.
Bernier, who lost his seat in the October federal election, has sought to promote oil and gas development in Quebec, Nova Scotia and New Brunswick, thereby reducing those provinces’ dependence on income generated by hydrocarbon production in Alberta, Saskatchewan and British Columbia.
Although Bernier is no longer in parliament, the inter-provincial tensions that led to the creation of the People’s Party, a splinter faction of the Conservative Party, show no signs of waning in 2020.