Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits
Very interesting article about the downward spiral of drilling and exploration, From the New York Times.
Any opinions?
A decade ago, natural gas was heralded as the fuel of the future. In shale fields across the country, hydraulic fracturing uncorked a lucrative new source of supply. Energy giants like Exxon Mobil and Chevron snapped up smaller companies to get in on the action, and investors poured billions of dollars into export terminals to ship gas to China and Europe.
The boom has given way to a bust. A glut of cheap natural gas is wreaking havoc on the energy industry, and companies are shutting down drilling rigs, filing for bankruptcy protection and slashing the value of shale fields they had acquired in recent years.
Chevron, the country’s second-largest oil and gas giant after Exxon, said on Tuesday that it would write down $10 billion to $11 billion in assets, mostly shale gas holdings in Appalachia and a planned liquefied natural gas export facility in Canada. The move was an energy company’s clearest acknowledgment yet that the industry has been far too optimistic about the prospects for natural gas.
While cheap natural gas continues to take market share from coalin the electricity sector, supply of the fuel has far outstripped demand. As a result, once-booming gas fields in Arkansas, Louisiana and Texas have become quiet backwaters. The number of gas rigs deployed nationwide has dropped to 132, from 184 last year.
https://www.nytimes.com/2019/12/11/business/energy-environment/natu...
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Replies to This Discussion
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Permalink Reply by Bluflame on
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The oil & gas market has always been wildly cyclical. No question we are on a down cycle right now. It always appears as if it will never recover, but somehow always does. E&P’s are fleeing the Utica/Marcellus in droves, including some very big names.
I think ultimately this will create terrific opportunities for survivors. EQT with the Rice boys in charge could be a huge beneficiary. They and others can pick up valuable assets/acreage at bargain basement prices. I speculate they will be heavily criticized for stepping in at the wrong time. But if investors will be patient, they will be vindicated.
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Permalink Reply by farmgas on
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I think EQT will emerge from this downturn in good shape. How about CNX Gas? Do they have the financial strength to survive too?
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Permalink Reply by 28clr6acuhbmv on
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Coal Plants were shut down in 2011 in the North East due to the EPA requirements for 2016. Natural Gas fired plants have been built and are planned to take the place of the Coal Fired Plants which has and will increase demands on Gas. This means Our Nations electricity is running on Nuclear, Gas and what is left of Coal Plants. Solar and Wind won't get er done.
These boys are dropping their holdings and heading for he hills for reasons other than profitability. It's called Corruption and they have seen the writing in the Executive Orders and know they are finished.
Dark to Light - 6 days 0 hours and counting.
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Permalink Reply by Bill Simpson on
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Corruption.....can't be
We have the best Politicians money can buy.....
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Permalink Reply by william Allen. Ladd on
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And to Bill Simpson,...…………………..The rest of us are providing the DOLLAR BILLS, SWEAT and GRUNT WORK and getting little in return!
On top of that, to cloud the entire situation, it seems as if every little word or motion is almost guaranteed to spark someone to explode into some sort of personal vendetta against someone else. Does not seem to matter how innocent it might be, someone takes offense!
Granddad Ladd
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Warm up coming thru the Midwest 10 to 20 degrees above normal
Does not look good for Nat Gas
I see a lot of people putting faith in the Rice Boys
Has anyone on this site ever taken a look at the Rice Boys past business activities
SEC investigation things of that nature
I find it odd anyone would trust these hucksters
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Permalink Reply by Mike h on
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Some more analysis from Barron's - https://www.barrons.com/articles/u-s-shale-drillers-are-booming-a-tidal-wave-of-debt-could-threaten-the-sector-51576262556.
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Hmm, this is a production glut of methane, and the pipelines were not built quickly enough to distribute supply. These types of infrastructure projects, i.e. gathering, midstream, not to mention fractionation, compressors, crackers, etc. are a 20 year endeavor, and always part of a 50 year plan. The product is not being abandoned, just the typical consolidation of debt heavy E & P, the decison of some to place focus elsewhere, and our STUPIDITY for allowing Thai, Indian, and Chinese companies to steal this technology and take it back to their home countries. This is a seismic shift, but there aren't any natural gas power generating plants being retrofitted for steam coal instead. There is just a lot of methane, its harder move at this date than hoped, and many E & Ps. financed drilling via debt. Not now, as there are proven, completed laterals snaking the App Basin. Decade 2 of the Shale boom.
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Permalink Reply by farmgas on
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Brent - How do you see decade #2 of the shale boom? How will E&P`s survive and who are the likely ones?
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The lowest cost producers will survive ...............
Production growth will come to a halt in the next few years ........
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Permalink Reply by farmgas on
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Ralph - I think as OT recently said, the E&P`s will only be doing maintenance budgeting for new production. In other words, only drill as needed to sustain their budgets. Does this mean no more over producing waiting for the market, pipelines, etc to catch-up to them? Is this how other gas plays have been managed too?
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