Foremost we want to share a Happy New Year to All. Expressing the hope that 2021 will truly be a year of recovery and one filled with positive endeavors. As to 2020, as reported throughout the year it was a challenging time in so many aspects including energy and the natural gas sector.
Recapping, in 2020 after a mild winter, combined with the general shut down of the national economy in March as a repercussion of the global response to COVID—19, natural gas prices plummeted. Gas demand along with prices stayed low through the summer. Led by EQT, major gas producers in the Marcellus and Utica region curtailed production to help bolster price.
At the local level beyond the impact of lower prices several Marcellus producers saw their gas deliveries restricted by the continued closure of an Energy Transfer pipeline by the DEP due an explosion in Beaver County in late 2019. This limited the gas produced and shipped by Edgemark wells in Butler County and Laurel Mountain wells in Clarion County. This curtailment caused Edgemark to seek bankruptcy protection, which has not yet been resolved and Laurel Mountain to delay drilling additional wells. The combination of all the elements of fallen demand, lower pricing and local disruptions decreased significantly interest and entry of new exploration and production companies in our part of the Marcellus / Utica Shale play.
However by late 2020 a shift could be seen, the underlying demands for natural gas for the heating season, and increased amount of gas needed for electric power generation began to stabilize the market. Liquid natural gas exports had recovered and been consistently increasing. LNG exports reached all-time monthly highs in November. Similarly the covid pandemic also greatly reduced the overall production of oil, depressing the price of oil, to under $50 dollars a barrel. The global down turn meant less oil produced in the Permian Basin in Texas and New Mexico and less companion gas in the marketplace. This became conversely added good news for Marcellus and Utica producers going forward in 2021, as the demand for gas increases, their gas will be needed to fill in the market gaps.
Potentially this could all lead to renewed interest in expanding and developing new leasing efforts in the Marcellus and Utica region including The Progress News area. Paradoxically the administration in Washington, if it holds to true to the promise, will restrict hydraulic fracturing on Federal lands, which could direct more production activity to private land causing additional leasing in western Pennsylvania.
However this is not to say the gas outlook is predictable and positive. The new administration’s over simplification in exhorting and embracing renewables could easily dissuade and retard renewed development. Reinstatement of pro longed and exaggerated permitting requirements are entirely possible. Continued obstructions for suspect reasons to gas pipeline construction and extensions are likely tactics. Supporting opposition to shipping of Liquid Natural Gas by rail is now the new NIMBY battle cry. Taking a wait and see attitude is one course, however active engagement and communication with our state and federal representatives on these important energy matters, could be a community resolution for 2021. No matter ones perspective, 2021 promises to be a dynamic and perhaps dramatic time, with the optimistic hope, that as a nation we can come to embrace and advance a prudent and sustainable balanced energy strategy.