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Market Update - Natural Gas Prices

  

·         Natural gas spot prices posted declines at most market locations east of the Rockies since Wednesday, June 24, as a result of relatively moderate temperatures in the Lower 48 States and robust levels of natural gas in storage. On a regional basis, natural gas prices decreased by up to 36 cents per MMBtu, or 10 percent, in most regions east of the Rockies, since last Wednesday, June 24. Outside of Florida, price decreases were largest in the East Texas and Northeast regions, where prices declined by more than 8 percent on the week. The Rocky Mountains, California, and Arizona/Nevada regions posted gains ranging between 16 and 18 cents per MMBtu since last week. The Rocky Mountain region also posted the lowest average price in the Lower 48 States, at $2.64 per MMBtu.

(From Energy Information Administration – Official Energy Statistics from the U.S. Government)

 

       For historical price information, please see http://tonto.eia.doe.gov/dnav/ng/hist/n9190us3M.htm .

 

 

Industry Updates

 

·Pennsylvania Rig Count for the week of July 3, 2009 

                 

(From Baker Hughes Incorporated)

 

·More than 75 people attended a luncheon hosted by Chief Oil and Gas for the unveiling of a new drilling rig in Chest Township, Clearfield County.  http://www.theprogressnews.com/default.asp?read=18160.

 

 

·Houston-based National OilWell Varco opens distribution services center in Montoursville, PA with hopes of supplying the gas industry.  http://www.sungazette.com/page/content.detail/id/528231.html?nav=5011.

 

 

·Williams Cos. Signed a $33 million deal to acquire a 50% stake in Rex Energy Corp.’s leases in Westmoreland, Clearfield, and Centre counties.  http://online.wsj.com/article/BT-CO-20090622-703184.html.

 

 

·Fortuna Gas Co. has eight producing wells in Tioga County and is permitted for 49 more and intend to drill as soon as possible.  http://www.sungazette.com/page/content.detail/id/528550.html?nav=5011.

 

 

Legislative & Policy Updates

 

·PA Senator E. Eugene Yaw (R-Loyalsock Township), sponsors bill that would limit rollback taxes in Clean and Green parcels to areas where gas or oil wells or supporting facilities are constructed. The Senate Ag Committee has approved the bill.  http://www.sungazette.com/page/content.detail/id/528376.html?nav=5011.

 

 

·The House Environmental Resources and Energy Committee approved a modified version of Rendell’s plan to tax the extraction of natural gas from PA’s Marcellus Shale.  HB 1489 calls for a 5% tax on the gross value of gas extracted and 4.7-cents for every thousand cubic feet of gas produced. An amendment details how severance tax revenues would be shared. http://www.gantdaily.com/news/43/ARTICLE/55136/2009-06-24.html.

        House Bill 1489 can be found at: http://www.legis.state.pa.us/cfdocs/billinfo/BillInfo.cfm?syear=2009&sind=0&body=H&type=B&bn=1489.

 

 

·      The following website, which supports the taxation of natural gas, provides information about drilling impacts, makes a case for severance tax and, urges visitors to contact their state senators and representatives.  http://landandwater.org/index.html.

 

 

 

 

Environmental Updates

 

·The New York State Department of Environmental Conservation extends environmental impact study, further delaying of natural gas drilling in New York.  http://news10now.com/content/all_news/475762/dec-extends-marcellus-shale-study/?RegionCookie=1013.

 

 

Research Update

 

·The Marcellus Shale Education and Training Center has released a report focused on the expanding workforce of the natural gas industry and the education and training needs of this expanding workforce.  The report can be found at:  http://www.pct.edu/msetc/.

 

·A social networking website has been launched with the goal of networking landowners across state lines in the Marcellus Shale play. According to the site, its mission is to discuss “All people, places, and things related to the Marcellus Shale.” http://gomarcellusshale.ning.com/.

 

 

Process Highlight 

 

Distribution 

• Large industrial and commerical consumers of natural gas receive gas directly from interstate and intrastate pipelines, but most users receive their supply from a local distribution company (LDC). LDCs, either investor owned or public gas systems owned by local governments, deliver gas to individuals at distribution points along the interstate and intrastate pipelines. From the ‘citygates,’ where ownership is transferred to the LDC, the gas is distributed through an extensive network of small-diameter distribution pipe.

 

• For a typical redisdental consumer, distribution costs represent a large part of the gas bill:

 

From NaturalGas.or 

 EXTRA - Did You Know?

 

PFC Energy, a global energy consultancy, suggests that global natural gas resources could be more than quadrupled if the world adopted US technology and expertise to tap unconventional sources. PFC says that global unconventional natural gas resources, based on 1997 geological estimates that could rise with new technologies, total 3,250,000bn cubic feet. To contrast, the world's conventional natural gas reserves are 620,000bn cubic feet. http://www.ft.com/cms/s/0/bb637bde-5556-11de-b5d4-00144feabdc0.html?nclick_check=1. For more about PFC Energy, see http://www.pfcenergy.com/.

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Prepared by Barbara L. Schramm, Project Research Assistant, Department of Agricultural Economics and Rural Sociology