At the Well Weekly (v.7.24.2020)


Oil + Gas Update | Mid-Summer Roundup.


After two months off, we're back at the well for our mid-summer roundup. The oil and gas industry has faced challenges over the past several months, battling the effects of the COVID-19 outbreak on the U.S. and global economies, dealing with depressed markets, and defending an ever increasing number of suits sponsored by environmental organizations that are waging war on natural gas development nationwide. The headlines since our last report:

  • Oil prices tanked and then "rebounded" to just above $40/bbl as of last week.

  • The rig count hit a record low in early July.

  • Gas prices on the spot market haven't consistently exceeded $2/MMBtu for some time. The monthly average for the first half of the year lingered around $1.80/MMBtu and prices in June averaged around $1.60/MMBtu. Prices in Appalachia fared no better, dropping to $1.15/MMBtu at one location as of last week.

  • Chesapeake Energy, a pioneer in shale gas development, filed for Chapter 11.

  • The Atlantic Coast Pipeline project is no more after project sponsors pulled the plug due to significant cost overruns and regulatory/litigation expenses, calling into question the future of other projects like the Mountain Valley Pipeline and PennEast Pipeline, although those companies have vowed to move forward.

  • Federal judges have issued decisions affecting major pipelines like Dakota Access and Keystone XL based on alleged shortcomings in the environmental protection category.

  • The Pennsylvania Office of Attorney General has taken an aggressive approach towards the industry by issuing a Grand Jury Report on the alleged failures of regulatory oversight in the Commonwealth and pursuing criminal prosecutions against gas companies for conduct traditionally regulated by DEP.

Meanwhile, courts in Appalachia and elsewhere have grappled with the usual oil and gas lease issues, regulatory issues, climate change, and a blend of other types of cases.


Here's your mid-summer roundup...


Rig Counts, Spot Prices + Oil Prices


  • Rigs: National (-251); Marcellus (-25); Utica/Point Pleasant (6)


  • Brent Crude: -$43.34/bbl


  • West Texas Intermediate: -$41.29/bbl


  • NYMEX: August 2020 @ -$1.681/MMBtu.


  • Spot Prices: Henry Hub (-$1.64/MMBtu); Dominion South (-$1.24/MMBtu); Tenn. Zone 4 (-$1.15/MMBtu)


("+" or "-" or blank denotes increase, decrease, or flat. )


WOPL - Appalachia


In our new section, WOPL ("waiting on pipelines"), we provide the latest news on the status of various pipeline projects in Appalachia.


  • Adelphia Project (Greater Philadelphia Region): FERC issued a certificate of public convenience to construct the pipeline company's expansion project, and the federal court in Philadelphia issued condemnation orders for properties along the route to begin construction.


  • Atlantic Coast (W. Va. to Va. and NC): Following a win at the U.S. Supreme Court and ensuing attacks by environmental groups alleging that agencies should conduct further environmental impact reviews, the Atlantic Coast Pipeline sponsors cancelled the project, citing significant cost overruns and delays engendered by legal, litigation, and regulatory challenges.


  • Atlantic Sunrise (Northeastern PA to SE Pennsylvania): Nothing new to report.


  • Constitution (Northeastern PA to NY): Nothing new to report.


  • Dakota Access (Northwest US): A federal court ordered that Dakota Access shut down pending additional and more rigorous environmental reviews. The company managed to secure a stay pending appeal from the circuit court such that the pipeline can operate while the appellate court hears the appeal.


  • Empire Pipeline (NY to PA): Nothing new to report.


  • Keystone Pipeline (Canada/US): A federal court enjoined the Army Corps' Nationwide Permit that many pipeline project sponsors secure for water crossings, holding that the longstanding permit doesn't adequately protect endangered species. The U.S. Supreme Court stayed the order as it relates to existing projects but not as to Keystone.


  • Leidy South - Benton Loop Expansion (PA): FERC approved Transco's Leidy South expansion in Northeastern Pennsylvania.


  • Mariner East (Western PA to Eastern PA): Sunoco faces more challenges as sinkholes emerged along the Mariner East pipeline route this month.


  • Mountaineer XPress (WV): The Mountaineer XPress pipeline in West Virginia returned to service and boosted gas production.


  • Mountain Valley Pipeline (Northern WV to Southern Va. and NC): Despite the challenges facing many pipeline projects, MVP is moving forward with construction and planned operations.


  • NEXUS (Ohio to Michigan): Nothing new to report.

  • NFG (PA): The Pennsylvania Attorney General filed criminal charges against NFG and its sub for a spill that previously only led to a $6K penalty from the Pennsylvania Department of Environmental Protection.