.The Texas Energy Report

U.S. production of associated-dissolved natural gas, or associated natural gas, increased 7.9% in 2023 compared with 2022, averaging 17.1 billion cubic feet per day (Bcf/d) last year, according to data from Enverus Drillinginfo. Associated natural gas production, which is natural gas produced by wells that predominantly produce oil, comes mainly from five major oil-producing regions in the United States—the Permian, Bakken, Eagle Ford, Anadarko, and Niobrara.

Record U.S. crude oil production in 2023 generated large volumes of associated natural gas. The Permian Basin in West Texas and southeastern New Mexico accounted for 46% of U.S. crude oil production in 2023 and was the largest source of U.S. associated gas production last year at 11.5 Bcf/d. In 2023, around two-thirds of total U.S. associated natural gas production came from the Permian region, similar to 2022.

In 2023, 2.3 Bcf/d of associated gas was produced in North Dakota’s Bakken region, which accounted for 70% of the region’s total natural gas production—the largest share among the five oil-producing regions. The Eagle Ford region in southern Texas was the source of 1.8 Bcf/d of associated…
 

By Alex Mills

Donald J. Trump’s victory is welcome news to many companies including those in the energy business.

There is no doubt that Trump supports a strong domestic oil and gas industry. His “drill, baby, drill” slogan was believed to signal to the industry and others that he support policies that will keep the U.S. as the largest oil and natural gas producing country in the world.

Even though crude oil prices remained relatively flat at $71 per barrel, the stock market surged the day after the election. It was the fifth-best one-day on U.S. stock markets, according to the Wall Street Journal. The Dow rose some 1,500 points a 3% increase for a record high. The Nasdaq and the S&P 500 both exceeded 2% gains, while the Russell 2000 jumped 4%.

Energy sector stocks increased an average of 3%. The stocks of integrated oil companies ExxonMobil and Chevron rose 5% and 7% respectively and refiner Valero witnessed a 10% rise while midstream pipeline operator Kinder Morgan’s stock was up 8% during the week ending on Nov. 6.

Utility stocks also had gains. NRG had a 2% rise and CenterPoint was…
 

By Alex Mills

Fifty years ago, America’s economy and national security was thrown into chaos following the oil embargo. As a major importer of oil, the United States suffered from higher oil prices, shortages of petroleum products form coast-to-coast, gasoline lines, and inflation.

Much has changed since 1974. Today, the U.S. is a net exporter of oil and other energy sources, according to a report from the Energy Information Administration at the U.S. Department of Energy.

“In 1974, the United States consumed more energy than it produced domestically and was a net importer of energy from other countries,” EIA stated in its recent Monthly Energy Report. “Today, the United States produces more energy than it consumes domestically and is a net exporter of energy to other countries.”

EIA said U.S. energy production increased 68% from 1974 to January-June 2024 (the most recent data available).

“Increased crude oil and natural gas production, brought about by improvements in drilling techniques such as hydraulic fracturing and horizontal drilling beginning in the 2000s, drove much of the growth in total energy production,” EIA said.

“The increase in energy production over the last two decades has turned the United States into the world’s largest crude oil and natural gas producer today and from a net energy importer to a net energy exporter starting in 2019,” EIA said. “U.S. net energy imports in the…
 

Natural gas produced from the three largest tight oil-producing plays in the United States has increased in the last decade. Natural gas comprised 40% of total production from the Bakken, the Eagle Ford, and the Permian compared with 29% in 2014.

Combined crude oil and natural gas production from these plays more than doubled over this period as hydraulic fracturing—also known as fracking—and horizontal drilling have allowed producers to access and extract more crude oil and natural gas from tight formations. However, production of associated natural gas, which is natural gas produced from predominantly oil wells, has increased more rapidly from these tight oil plays. Natural gas production from these plays more than tripled—an increase of 22 billion cubic feet per day (Bcf/d)—over the period compared with crude oil output, which more than doubled—an increase of 4 million barrels per day (b/d).

We define oil wells as those with a gas-to-oil ratio (GOR) of less…
 

October 22, 2024 — The University of Texas says it has a “new cooling technology could change how heat is managed in electronic devices—from tiny semiconductors to massive data centers.”

The university writes that “a team led by scientists and engineers at The University of Texas at Austin have created a new “thermal interface material” that could organically remove heat from high-powered electronic devices, reducing or even eliminating the need for extensive cooling. The new material, made from a mix of liquid metal and aluminum nitride, is much better at conducting heat than current commercial materials, making it optimal for cooling.

“The research is published in the journal Nature Nanotechnology.

“The power consumption of cooling infrastructure for energy-intensive data centers and other large electronic systems is skyrocketing,” said Guihua Yu, professor in the Cockrell School of Engineering’s Walker Department of Mechanical Engineering and Texas Materials Institute. “That trend isn’t dissipating anytime soon, so it’s critical to develop new ways, like the material we’ve created, for efficient and sustainable cooling of devices operating at kilowatt levels and even higher power.”

Cooling accounts for about 40% of data center energy usage, or 8 terawatt-hours annually. The researchers estimate their technology could shave 13% off that cooling requirement—or 5% off overall data center energy usage—a significant savings if applied across the industry. The heat dissipation capabilities also allow for significant growth in processing power.

The new discovery is part of a larger effort to realize the potential of thermal interface materials. These materials are designed to dissipate heat generated by electronic devices, reducing the need to cool those devices.

However, a gap exists between how much cooling these materials should theoretically be able to achieve and what they’ve done in real-world tests.

By Alex Mills

As winter approaches, forecasters predict the weather in the U.S. will be a little colder this year, but energy costs will be about the same as last year.

The Energy Information Administration (EIA) at the U.S. Department of Energy issued its winter forecast recently stating most U.S. households will spend about the same or less on energy than they did last winter.

“Generally, retail energy prices in our forecast are less than they were last winter, but temperatures across much of the country are set to be colder this year, meaning homes will use more energy for space heating,” EIA stated. “The combination of lower prices and colder weather results in relatively little change in expenditures.”

Natural gas is the largest energy source to generate electricity and heat homes and businesses. EIA said the Henry Hub natural gas spot price will average around $3.10 million British thermal units (MMBtu) in 2025.

EIA estimated the cost of energy across the U.S. and said the South will have the lowest cost at $487 followed by the West at $573 and the Midwest at $586. The Northeast had the highest estimated cost at $772.

Fuel inventories are an important source of winter supply and natural gas and propane currently have high inventories compared with their previous five-year (2019–2023). “These relatively high inventories have helped keep prices for those fuels below year-ago levels,” EIA stated.

“We assume this winter will be colder than the last winter…
 

Refinery margins for petroleum refiners across the world are shrinking, indicating reduced profitability from refining crude oil and selling petroleum products. Declining margins are the result of relatively weak demand for petroleum products even as global refining…
 

October 9, 2024 — CenterPoint Energy is going even more high tech in predicting extreme weather problems.

The multistate natural gas and electricity utility headquartered in Houston has a new agreement to work with Technosylva, a company specializing in extreme weather risk mitigation solutions as well as wildfire science, with a plan to utilize predictive analytics and artificial intelligence for preparation of CenterPoint’s infrastructure and assets in “extreme weather prone regions.”

The two companies on Tuesday announced a Memorandum of Understanding that allows CenterPoint constant monitoring of extreme weather risks, including analysis that can lead to predictions and mitigation solutions throughout CenterPoint’s network, which includes Texas, Ohio, Indiana, Louisiana, Mississippi and Minnesota.

The company says it’ll focus on “an all-weather hazards approach.”

The collaboration is part of CenterPoint’s previously-announced …
 

October 8, 2024 — Some new research from The University of Texas at Austin highlights the powerful — and sometimes counterproductive — role that very strict regulatory standards and stakeholder pressure can play in driving environmental improvements within the oil and gas industry. The certified market, a place where only firms who meet environmental criteria can sell gas (at a premium price), had the biggest single impact on environmental outcomes in the oil and gas industry.

The energy industry, particularly oil and gas companies, is under increasing pressure to decarbonize due to the increase in extreme weather events associated with climate change. Some of these companies have begun to voluntarily reduce their greenhouse gas footprint, motivated by social responsibility, pressure from activists, market opportunities or simply copying efforts of peer firms.

According to UT, the study, produced by researchers from both the LBJ School and Cockrell School, reveals that “while firms can respond to external pressure by making changes that enhance environmental performance, the nature and type of pressure significantly impact the outcomes. Not all activist efforts yield the same results, even when operating under similar financial constraints, and markets with very high barriers to entry may unintentionally hinder progress. These findings emphasize the need for strategic, well-targeted actions to ensure lasting environmental benefits at both the firm and industry levels.

“Some firms have begun to address the issue of natural gas flaring– whether out of a sense of social responsibility, fear of environmental activists, search for new market opportunities, or an impulse to mimic peer firms,” said LBJ School professor and a study co-author Varun Rai. “However, studying such complex drivers in real-world settings and with highly detailed market and resource data is challenging. To address that, in this paper we formulate a general framework that captures each of these factors, apply it to build an empirically-grounded model, and provide insights into the distribution of outcomes in the oil and gas industry’s flaring performance in the US.”

“Researchers developed an agent-based model—an increasingly important computational modeling technique in the AI era that relies on resolving the components of a system rather than specifying its aggregate dynamics—to simulate the decision-making processes of energy firms…
 

September 27, 2024 –The preliminary winner of a shares auction for control of a Citgo Petroleum parent company is an affiliate of activist investing company Elliott Investment Management, with a bid consisting of cash and credit valued at $7.286 billion, a court filing reveals.

The Citgo parent company is PDV Holding.

That Elliott affiliate is Amber Energy, which is owned by a group of strategic US energy investors led by Elliott.

Among the chief rivals to Amber in the bidding process were US oil refiner CVR Energy and mining company Gold Reserve.

Citgo assets include the Texas and Louisiana refineries along with another in Illinois.

Citgo is known to refine and process more than 800,000 barrels of oil per day, the seventh-largest US refiner.

Amber said on Friday it expects to close the deal…
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By Alex Mills

Oil and gas activity declined slightly during the third quarter as the industry outlook turned negative, according to oil and gas executives responding to the Dallas Fed Energy Survey.

“The business activity index, the survey’s broadest measure of the conditions energy firms face in the Eleventh District, decreased from 12.5 in the second quarter to -5.9 in the third quarter,” the Dallas Fed stated.

The business activity index was 0 for the 91 exploration and production (E&P) firms interviewed compared with -18.1 for the 45 services firms surveyed, suggesting activity was unchanged for E&P firms but declined for service firms, the Dallas Fed stated.

“The company outlook index turned negative in the third quarter, plunging 22 points to -12.1, suggesting modest pessimism among firms,” the Dallas Fed stated. “The overall outlook uncertainty index jumped 25 points to 48.6, suggesting mounting uncertainty.”

Oil and gas production was mixed in the third quarter, according to executives at E&P firms. The oil production index increased from 1.1 in the second quarter to 7.9 in the third quarter, suggesting oil production slightly increased in the quarter. Meanwhile, the natural gas production index declined from…
 

By Alex Mills

Crude oil and natural gas prices were flat during the first half of September, but the Energy Information Administration expects prices to rise by the end of this year.

Crude oil prices on the New York Mercantile Exchange dropped below $70 per barrel briefly but bounced back to $73 on Sept. 19.

“More oil will be taken out of inventories in the fourth quarter of 2024 that we previously expected because OPEC+ announced that they will delay production increases until December,” EIA stated in its Short-Term Energy Forecast.

“Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed. We expect the Brent crude oil spot price to average $82per barrel in the fourth quarter of 2024.”

“We forecast natural gas prices will remain relatively flat in the upcoming shoulder season during September and October before prices rise through the end of 2025,” EIA stated. “Price increases in 2025 reflect U.S. natural gas production that does not keep pace with growth in U.S. liquefied…
 

From the Energy Information Administration:

September 18, 2024 — The heat content of dry natural gas delivered in Texas, which uses the largest volume of natural gas in the United States, was among the lowest nationwide in 2023, averaging 1,018 British thermal units per cubic foot (Btu/cf), or 1.7% below the national average (1,036 Btu/cf), according to our Natural Gas Monthly.

The heat content of natural gas is an indicator of its composition and quality and can vary greatly depending on the geology of the producing basin. Wet natural gas is composed primarily of methane, which has a heat content value of 1,010 Btu/cf, as well as other hydrocarbon gases, mainly ethane and propane. Ethane has a heat content of 1,770 Btu/cf, and propane has a heat content of 2,516 Btu/cf. When there is more ethane and propane, the average heat content of the natural gas stream is higher.

Processing plants in Texas use a cryogenic cooling process to recover natural gas liquids (NGLs) from the natural gas stream to make…
 

September 16, 2024 — The US Energy Information Administration said on Monday that it “recently implemented a new model for forecasting crude oil and natural gas production from the U.S. Federal Offshore Gulf of Mexico (GOM) in the Short-Term Energy Outlook (STEO). In our latest outlook, we forecast that GOM production will remain relatively flat with new fields offsetting the natural production declines from existing fields.

“We forecast that 1.8 million barrels per day (b/d) of crude oil will be produced in the GOM in 2024 and 1.9 million b/d in 2025, compared with 1.9 million b/d in 2023. We expect GOM natural gas production to average 1.8 billion cubic feet a day (Bcf/d) in both 2024 and 2025, compared…
 

September 16, 2024 — Energy Transfer says a fire along an LNG pipeline in the Houston area will take hours to burn off. It began with an explosion between 9:30 am (according to one eyewitness) and 10 am (according to Deer Park’s mayor) in Houston near Spencer Highway and has spread to the suburban towns of Deer Park and La Porte.

Firefighters are attempting to keep the fire from burning properties nearby, though some homes close to the pipeline have suffered some damage. Cause of the fire has not been officially determined.

Of primary concern earlier …
 

Against a backdrop of policies aimed at reducing greenhouse gas emissions, operators of a handful of natural gas plants have taken early steps to integrate hydrogen into their fuel streams. Hydrogen alone does not create CO₂ emissions when combusted.

A few natural gas power plant operators in the United States have taken or announced plans to take one of three steps:

• Testing cofiring hydrogen at existing facilities
• Upgrading existing turbines to use a blend of natural gas and hydrogen
• Including the capability to use a blend of natural gas and hydrogen when building new natural gas power plants

Natural gas is the single-largest source of energy used to generate electricity in the United States, making up 43% of electricity generation in 2023, but hydrogen use is not currently widespread or used regularly in the plants where it has been tested. The process of burning a blend of…
 

By Alex Mills

As natural gas production continues at a record pace, liquefied natural gas (LNG) exports are expected to double between 2025 and 2028.

The U.S. Energy Information Administration (EIA) reported this week that North America’s LNG export capacity is on track to more than double between 2024 and 2028 from 11.4 billion cubic feet per day (bcf/d) in 2023 to 24.4 bcf/d in 2028 “if projects currently under construction begin operations as planned.”

EIA says 9.7 bcf/d additions will come from U.S. facilities, 2.5 bcf/d from Canada, and 0.8 bcf/d from Mexico.

The Biden administration stopped all new U.S exports in January to key Asian nations and other countries that are not free-trade partners.

A federal court overturned the moratorium, which forced the Biden administration to grant the first LNG export license this year. The Energy …
 

September 6, 2024 — From the Railroad Commission of Texas:

“The final numbers have been tallied, and the Railroad Commission plugged 1,012 orphan wells in Fiscal Year 2024 using state funds. This exceeded the fiscal year’s goal of plugging 1,000 wells with state funds, making it the eighth year in a row in which the RRC has surpassed its legislative target!

“State funds that are used by the RRC to plug wells are from oil and gas industry revenue, including, but not limited to, well plugging reimbursements, fees and bonds or other financial securities paid by the industry.

“We continue to be a national leader in addressing orphaned wells,” said Danny Sorrells, RRC Deputy Executive Director. “Our extensive well…
 

September 3, 2024 — Note from the RRC: “The Railroad Commission of Texas continues to take public input on proposed rules to revamp the agency’s critical rules regulating waste management facilities in Texas.

“This is the first overhaul of RRC’s waste management rules in four decades. The proposed rules factor safety and groundwater protection as well as technological advancements in the energy industry’s resource development in Texas.

“The public comment period on the proposed rules opened on August 16 and will continue through September 30. This week the RRC will also hold two hearings for public input on the proposed rules.  One hearing will be held in-person on Thursday in Austin, and the RRC will hold a virtual hearing on Friday. More information on both hearings, including how they can be viewed via webcast, can be found on the RRC website.

“Persons who have requests for special communication or accommodation needs for the hearings can contact the RRC Rules Coordinator at rulescoordinator@rrc.texas.gov.

“Information on the proposed waste management rule amendments can be viewed on the RRC website at https://www.rrc.texas.gov/general-counsel/rules/proposed-rules/ under Chapters 3 and 4.”