.The Texas Energy Report

September 13, 2023 — From the US Energy Information Administration:

U.S. ethane production reached a new monthly record of 2.7 million barrels per day (b/d) in April 2023, continuing the upward trend that started in 2013, according to data from our Petroleum Supply Monthly. Increased natural gas and ethane production in the Permian Basin, which spans Texas and New Mexico, drove the national increase.

U.S. ethane production rose because of increased natural gas production. Ethane, which serves mainly as a petrochemical feedstock, is recovered along with other natural gas plant liquids (NGPLs) at natural gas processing plants as raw natural gas from wells is processed to meet natural gas pipeline specifications. Marketed natural gas production, in which we include both dry natural gas and NGPLs before they are separated out, also set records this year. For the first half of the year (1H23), U.S. marketed natural gas production averaged 111 billion cubic feet per day, a record high.

Ethane production in the Texas Inland region and New Mexico areas that include the Permian Basin accounted for 60% of U.S. ethane production during 1H23, slightly higher than the 58% share in 1H22. Ethane production in these two districts averaged 1.5 million b/d in 1H23, a 10.3% (0.1 million b/d) increase from 1H22. Ethane production during 1H23 in other U.S. refining districts…
 

September 12, 2023 — As researchers around the world race against time to develop new strategies and technologies to fight climate change, a team of scientists at the University of Houston is exploring one possible way to directly reduce the amount of carbon dioxide in the environment: Negative emissions technologies (NETs).

Mim Rahimi, assistant professor of environmental engineering at UH’s Cullen College of Engineering is leading the development of an emerging NET called electrochemical direct ocean capture (eDOC), which helps the ocean cleanse itself of harmful carbon dioxide. The concept is detailed in a paper published in the journal Energy & Environmental Science.

“Electrochemical direct ocean capture amplifies the ocean’s ability to absorb carbon, sidestepping the expensive sorption process typical in many current strategies,” Rahimi said. “The promise of eDOC is undeniable, but scaling it, optimizing costs and achieving peak efficiency remain challenges we’re actively addressing.”

Earth’s carbon dioxide is stored in the atmosphere and the terrestrial biosphere…
 

September 11, 2023 — The Railroad Commission of Texas issued a total of 820 original drilling permits in August 2023. The total includes 710 to drill new oil or gas wells, 8 to re-enter plugged wellbores and 92 for re-completions of existing wellbores.

The breakdown of well types for total original drilling permits in August 2023 is:  162 oil, 55 gas, 560 oil and gas, 30 injection, and 13 other permits.

In August 2023, Commission staff processed 876 oil, 264 gas and 399 injection completions for new drills, re-entries….
 

September 6, 2023 — ERCOT electricity demand versus supply reached a critical level about 7:45 Wednesday night when reserves dropped to below 1,750 MWs and the grid operator called an Energy Emergency Alert Level 2 (EEA 2) as ERCOT set a new September peak record on Wednesday of 82,705 MW.

The next step, Level 3, would have meant…
 

September 6, 2023 — ERCOT has issued a Conservation Appeal for today, September 6, from 6 p.m. – 9 p.m. Due to continued high temperatures, high demand, low wind, and declining solar power generation this evening, operating reserves are expected to be low into the evening hours.

This Conservation Appeal is part of ERCOT’s Texas Advisory and Notification System (TXANS), alerting the public of grid conditions.

ERCOT is not in emergency operations, and controlled outages are not needed at this time. Texans can monitor current and extended grid conditions, along with other dashboards, on the ERCOT website here….
 

September 6, 2023 — Houston-based Tellurian Inc. announced Wednesday an agreement with Baker Hughes to supply eight main refrigerant compression packages for Phase 1 of the Driftwood LNG project.

The agreement secures a delivery schedule for the eight LM6000PF+ gas turbines, main refrigerant compressors and control units required for Phase 1.

Tellurian said the action increases Driftwood’s ability to “achieve…
 

By Alex Mills

Production of crude oil, natural gas, wind, and solar are expected to set new records in the United States this year, and preliminary numbers indicate each sector is on course.

The Energy Information Administration (EIA) at the Department of Energy released data this week showing U.S. crude oil production averaged 12.5 million barrels per day (b/d) from January to July compared to 11.9 million b/d during the same period last year, the previous record. Add in natural gas liquids for total field production of 18.7 million b/d compared to 17.5 in 2022.

Dry natural gas production from January to May rose to average 15,462 billion cubic feet surpassing the previous record of 14,494 billion cubic feet during the same period in 2022.

Crude oil and natural gas have been net exporters since 2019, meaning the U.S has exported more product than it has imported.

LNG exports from facilities based in Texas and Louisiana continue to grow.

Global liquefied natural gas (LNG) import capacity is set to expand by 16%, or 23 billion cubic feet per day (Bcf/d), by the end of 2024 compared with 2022, according to EIA. In the first seven months of 2023, three countries—Germany, the Philippines, and Vietnam—began importing LNG for the first time. By the end of next year, EIA expects Antigua, Australia, Cyprus, and Nicaragua to start importing LNG.

“Over the past 10 years (2013–22), global LNG import capacity—called regasification capacity—has grown by 49% (45.8 Bcf/d) to reach 140.0 Bcf/d across 48 countries,” EIA stated. “By the end of 2024, we expect 55 countries to have LNG regasification terminals with a combined capacity of 163 Bcf/d.”

So far this year, fossil fuels account for 79% of the energy mix compared to 13% for renewables and 8% for nuclear.

Wind became the largest energy source in the renewable category in 2019 outpacing hydro-electric power, and it has been growing each year. Wind consumption in the U.S. during the first five months was 1,772 trillion British thermal units (Btu) compared to 962 trillion Btu for hydro-electric. Solar consumption was 826 trillion Btu compared to 743 during the same period in 2022….
 

August 29, 2023 — The American Petroleum Institute (API) is accusing the Joe Biden administration of using illegal means to target US energy workers, security and operators by cutting back the availability of acreage to be included in an upcoming offshore lease sale.

The administration has removed over 6 million acres that were planned to be part of offshore Lease Sale 261, despite the intentions of Congress in mandating the sale, the lobby group said on Tuesday.

“Congress’ directive is clear in the Inflation Reduction Act that the Department of the Interior must hold offshore Lease Sale 261 in the Gulf of Mexico in order to help…
 

Update Sunday: Crews have been working to suppress flareups as a fire at a Louisiana oil refinery continued to burn along the banks of the Mississippi River, while residents worried about health effects from fumes and smoke, AP reported

August 25, 2023 — The smoke plume is spectacular but Marathon Petroleum says a fire accompanying a naphtha spill at its refinery in Garyville LA has been confined by firefighters to company property about 35 miles northwest of New Orleans.

As a precaution, a mandatory evacuation was ordered for those residing or working within two miles of the refinery, WDSU-TV reported.

One nearby resident said the fire seemed to have started about 7:30 this morning.

No injuries have been reported; air monitoring is underway, but “no off-site impacts have been detected,” the company said.

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More energy was consumed in the commercial sectors of eight U.S. states in 2021 than in 2019, before the COVID-19 pandemic. The increases in commercial sector end-use energy consumption in those states bucked the national trend, in which total commercial energy use decreased by 3% in 2021 compared with 2019, according to our State Energy Data System.

Our commercial sector data include energy consumption by governments, businesses, and religious organizations. Most energy use…
 

August 21, 2023 — Permian Resources says it will increase its stakes in the Delaware Basin with the purchase of Earthstone Energy in an all-stock deal with a $4.5 billion valuation that includes debt, part of an arrangement set to close by year’s end, boosting the shale producer’s presence in the Delaware Basin, according to a Monday announcement.
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This Texas Energy Report database is published each quarter and is updated as earnings are released throughout the reporting period.

Click on the name of the company for more information about the quarterly earnings report, usually from the company’s own press release

AEP

American Electric Power (Nasdaq: AEP) reported second-quarter 2023 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $521 million or $1.01 per share, compared with GAAP earnings of $525 million or $1.02 per share in second-quarter 2022. Operating earnings for second-quarter 2023 were $582 million or $1.13 per share, compared with operating earnings of $618 million or $1.20 per share in second-quarter 2022.

Operating earnings is a non-GAAP measure representing GAAP earnings excluding special items. The difference between 2023 GAAP and operating earnings for the quarter was largely due to the mark-to-market impact of economic hedging activities and recent legislation in Texas regarding recovery of certain employee incentives. A full reconciliation of GAAP earnings to operating earnings for the quarter and year-to-date is included in the tables at the end of this news release.

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Amplify Energy

• Achieved average total production of 21.2 Mboepd, up approximately 9% compared to the previous quarter
• Generated net cash provided by operating activities of $4.9 million and net income of $9.8 million
• Delivered Adjusted EBITDA of $17.6 million
• Generated $6.1 million of free cash flow
• Reaffirmed our full-year 2023 guidance
• Entered into a new revolving credit facility with an initial borrowing base of $150 million and elected commitments of $135 million
• As of July 31, 2023, net debt was $113 million, consisting of $120 million outstanding under the revolving credit facility and $7 million of cash on hand
• Net Debt to Last Twelve Months (“LTM”) Adjusted EBITDA of 1.2x¹
  (1)  Net debt as of July 31, 2023, and LTM Adjusted EBITDA as of the second quarter of 2023

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APA

Reported second-quarter 2023 adjusted earnings of 85 cents per share, beating the Zacks Consensus Estimate of 66 cents. The outperformance primarily reflects lower operating expenses and strong production.

However, the bottom line dropped from the year-ago adjusted figure of $2.37 due to significantly lower oil prices.

Revenues of $2 billion missed the Zacks Consensus Estimate of $1.8 billion and were down 35.7% from the year-ago quarter’s sales.

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Archrock Inc.

• Revenue for the second quarter of 2023 was $247.5 million compared to $215.8 million in the second quarter of 2022.
• Net income for the second quarter of 2023 was $24.7 million compared to $16.7 million in the second quarter of 2022.
• Adjusted EBITDA (a non-GAAP measure defined below) for the second quarter of 2023 was $112.8 million compared to $99.5 million in the second quarter of 2022.
• Declared a quarterly dividend of $0.155 per common share for the second quarter of 2023, an increase of 3.3% compared to the prior quarter, resulting in dividend coverage of 2.1x.
• Repurchased 222,250 common shares at an average price of $9.33 per share for an aggregate of $2.1 million.
• Achieved record period-end utilization of 95% for the second quarter of 2023 compared to 87% in the second quarter of 2022.
• Raised 2023 Adjusted EBITDA guidance to a…
   

August 15 — The Railroad Commission of Texas (RRC) and the Texas Commission on Environmental Quality (TCEQ) submitted joint comments opposing the EPA’s proposed rule that would add regulations to fossil fuel-fired electric generating units in attempts to decrease carbon dioxide (CO2) emissions.

The likely outcome of this rule could result in the elimination of coal-fired units and a reduced ability to operate natural-gas fired power plants, which are critical for electricity supply in a state experiencing a booming population like Texas.

The comments also detail the unrealistic assumptions and artificially high metrics EPA used to estimate the climate benefits of the rule. Additionally, the supplemental costs involved, along with the additional infrastructure that would be necessary to implement the proposed requirements, would impose unreasonable costs in comparison to the anticipated benefits, all while placing reliable fuel supply for the electric…
 

August 14, 2023 — The Railroad Commission of Texas is accepting applications for membership on the Texas Hydrogen Production Policy Council (Council), which was created in House Bill 2847 passed by the 88th Legislature (Regular Session). The deadline to submit applications is Tuesday, September 5, 2023.

The Council’s duties include, but are not limited to:

• studying the development of hydrogen industries in Texas;
• monitoring regional efforts for the application and development of a regional clean hydrogen hub authorized under the federal Infrastructure Investment and Jobs Act;
• developing a state plan for hydrogen production oversight by the RRC; and
• making recommendations to the Legislature on legislative changes needed for the oversight and regulation of production, pipeline transportation, and storage of hydrogen.

The bill requires the RRC to appoint no more than 11 members to the Council, with at least three, but not more than five, representatives from the hydrogen industry. The chair of the Council will be the Chairman of the RRC or…
 

Financial results for 40 publicly traded U.S. oil exploration and production (E&P) companies show capital expenditure in the first quarter of 2023 increased from the fourth quarter of 2022, even though cash from operations declined. Previously, rising crude oil prices in the first half of 2022 had driven increased production and had helped companies post multiyear highs for cash from operations. Capital expenditure growth had been much slower over the past two years.

In the first quarter of 2023, lower crude oil prices reduced cash from operations for these companies, which declined 18% ($5.8 billion) compared with the fourth quarter of 2022, to $26.2 billion. At the same time, capital expenditure in the first quarter of 2023 was 12% ($1.8 billion) higher compared with the previous quarter, totaling $16.7 billion. As a result, capital expenditure as a share of cash from operations increased to 64%, the highest percentage since …
 

August 10, 2023 — The Railroad Commission of Texas issued a total of 772 original drilling permits in July 2023. The total includes 681 to drill new oil or gas wells, 6 to re-enter plugged wellbores and 73 for re-completions of existing wellbores.

The breakdown of well types for total original drilling permits in July 2023 is:  145 oil, 65 gas, 521 oil and gas, 35 injection, and six other permits.

In July 2023, Commission staff processed 740 oil, 208 gas and 499 injection completions for new drills, re-entries and re-completions.

Detailed data on drilling permits and well completions for the month can be found at this link:…
 

By Alex Mills

The demand for crude oil and natural gas around the world has created upward pressure on price even though production is rising.

Crude oil in the U.S. is approaching record levels, outpacing Saudi Arabia and Russia, the other leading producing countries.

The U.S. Energy Information Administration (EIA) expects U.S. crude oil production to surpass 12.9 million barrels per day for the first time in late 2023 and to exceed 13 million barrels per day in early 2024, according to its monthly Short-Term Energy Outlook (STEO) released this week. EIA forecasts U.S. crude oil production to average 12.8 million barrels per day in 2023, which is 200,000 barrels per day more than in its July forecast.

EIA expects sustained global demand for petroleum products will continue to rise.

The Brent crude oil price (which is on the international exchange based in London) was near $75 per barrel at the beginning of July and increased throughout the month to surpass $86 per barrel on August 4, EIA stated. EIA forecasts the Brent crude oil price to increase the rest of 2023 and to approach $90 per barrel in late 2023….
 

Texas Energy Report NewsClips Friday August 18, 2023 Asterisk (*) denotes news stories that may be inaccessible because portions are behind a paywall   Top Stories   Politico-E&E News – August 17, 2023 …

August 5, 2023 — Electricity is at the heart of modern life, and so it’s easy to assume that our reliance on electricity will increase or even accelerate. However, in many advanced economies the data reveals a surprisingly different story.

Electricity demand has increased by around 70% since 2000, and in 2017, global electricity demand increased by a further 3%. This increase was more than any other major fuel, pushing total demand to 22 200 terawatt-hours (TWh). Electricity now accounts for 19% of total final consumption, compared to just over 15% in 2000.

Yet while global demand growth has been strong, there are major disparities across regions. In particular, in recent years electricity demand in advanced economies has begun to flatten or in some cases decline – in fact electricity demand fell in 18 out of 30 IEA member countries over the period 2010-2017. Several factors can account for this slowing of growth, but the key reason is energy efficiency.

There have been a range of new sources of electricity demand growth in advanced economies, including digitalization and the electrification of heat and mobility. However savings from energy efficiency have outpaced this growth. Energy efficiency measures adopted since 2000 saved almost 1 800 TWh in 2017, or around 20% of overall current electricity use….
 

By Alex Mills

EDITOR’S NOTE: As publicly traded oil and gas companies begin reporting their second quarter financials, the Energy Information Administration released this week its financial analysis of first quarter 2023 of 40 exploration and production companies, which produced 31% (4 million barrels per day) of the oil in the U.S.  It does not include the smaller, privately held companies. Below is EIA’s analysis.

Crude oil prices have weakened since 2022 but remain relatively strong, which enhances cash flow as production in the U.S. sets records.

The West Texas Intermediate (WTI) crude oil price averaged $75.96 per barrel  in first quarter of 2023, a 20% ($19.21) decrease compared with first quarter 2022 and an 8% ($6.72) decrease compared with fourth quarter 2022.

Higher production resulted in cash from operations increasing 13% ($3.0 billion) compared with first quarter of 2022. Oil production nationwide has increased 1 million barrels per day in April (12.6 million barrels per day) compared to April 2022 (11.6 million barrels per day).

Capital expenditure in first quarter 2023 increased 26% ($3.5 billion) compared with first quarter 2022 to $16.7 billion and increased 12% ($1.8 billion) compared with fourth quarter 2022. Higher capital expenditure supported production increasing 9% (338,000 b/d) in first quarter 2023 from first quarter 2022 and 1% (59,000 b/d) from fourth quarter 2022…..