Wednesday, January 29, 2014

US Natural Gas Prices Impacted by Extreme Cold

U.S. natural gas prices have been soaring recently, up to about $5.50 per 1,000 cubic feet, the highest level since February 2010, and compared to about $4.00 around this time last year. Cold weather has taken a huge hit on natural gas storage, and according to Reuters, natural gas storage is expected to fall to the lowest level in six years due to the extreme cold weather experienced by much of the nation. The cold resulted in the largest ever weekly natural gas storage withdrawal for the week ending December 13 and the extreme cold disrupted production in several shale basins (EIA).

So while many in Ohio are braving the frigid temperatures and paying a higher price to heat their homes, others, including Ohio tax authorities and many land owners in the heart of the producing wells, will be collecting a bit extra due to the recent natural gas price spike.

The April to October season, the time when natural gas stockpiles are replenished, will have a larger hole to fill to return levels back to average storage seen in recent years. The increase in natural gas prices should encourage a corresponding increase in production and storage replacement, and prices should then fall, at least somewhat.

This winter we are all reminded of how large a role that the weather plays in driving natural gas prices. For the sake of the average consumer, let's hope that prices come down, at least somewhat.

Friday, January 17, 2014

Ohio DNR Report - Jan 11, 2014 - Highlights

Highlights of the report dated Jan. 14, 2014 from the Ohio DNR,  reporting activity up to Jan. 11th.

1042 total permits issued in total, adding six additional permits so far this year, five for Chesapeake, four in Lee Township, Carroll County, and one in Franklin Township Columbiana County. Tria Hunter was issued one permit in Aurelius Township, Washington County. Maps of new permits is below.

Chesapeake, Peterson 36 wells (permit pad location for four wells)

Chesapeake Briceland Trust 24-14-4 5H (permitted & drilling)

Triad Hunter Farley 1306 AH (permit location)

In addition, the report showed 100 wells drilling (down slightly from end 2013), 309 wells drilled and not yet producing, and 270 wells classified as producing (up 21 from end 2013, a nice bump).