You may have heard the news about oil prices dropping, but natural gas prices are hitting highs that have not been seen in years.  On November 14, CNBC reported that natural gas prices hit a four-year high after “panicky” trading following a new, colder weather forecast.  Contracts for the delivery of natural gas in December, called “futures,” rose 18% in a day to reach $4.837 per million British thermal unit (MMBTU).  That price is the highest natural gas has been since February 2014, and trading volume also hit an all-time daily high.   
 
Natural gas always has two consumption peaks every year.  The most gas is used during the winter, when more is used to heat homes and businesses.  A much smaller peak occurs in the middle of summer when everyone turns on their air conditioners, and that uses more electricity, which then draws more natural gas.  These wild fluctuations are balanced out somewhat by storage.  In the slower months, particularly the months between April and October, a lot of natural gas is injected into natural geological formations that can hold the gas for easy retrieval later.  November and March are the months when the most gas is drawn from storage because usage is outpacing production.  
 
On November 16, Barrons wrote that natural gas prices could continue to rally.  Low prices over the past several years have led more consumers to rely on natural gas, while depressing exploration and production investments.  Storage is also about 16% lower than recent averages right now.  That said, production continues to climb ever higher. American producers are forecasted to produce 83.2 billion cubic feet per day (BCFD) of gas this year, up 8.5 BCFD from last year.  Sustained high prices could drive some switching to coal, but that switch is much harder to make today than it has been in the past because of environmental regulations.  
 
Record high prices and record high production is just the kind of thing that natural gas producers want to hear.  If you want to get your hands on acreage in the Marcellus Shale formation, you should call 412-212-7517 to speak to the experts at Cimmaron Land.  

Election day 2018 has been circled on the calendar for a long time for a lot of people.  The national media was fixated on the first ballot-box test for Pres. Trump since his election.  Would his coalition stand by him, or would “the resistance” against him strike a blow. It turned out to be a bit of a mixed bag.  
 
Democrats took control of the House of Representatives, meaning that now they will have the ability to launch investigations against the President.  On the other hand, Republicans slightly expanded their majority in the Senate.  As far as legislation, that means gridlock, and many commentators will tell you political gridlock is good for business, because it keeps the politicians from making trouble.  It is highly unlikely that a split Congress will be launching any new attacks against the energy industry, for example.  
 
In our region, Democrat Tom Wolf was reelected to serve as Pennsylvania’s governor.  He has generally said supportive things about the natural gas industry, but he has repeatedly tried to increase taxes on the gas industry.  A Democrat won in Ohio too, former Attorney General Mike DeWine, and he has at times sought more environmental regulation.  He has been aggressive in courting the natural gas industry, though, calling it an “essential part” of the state’s future.  
 
The energy industry did well across the map, actually.  In Washington State, voters rejected an effort to impose a carbon tax by a 56% to 44% margin.  A renewable energy mandate in Arizona got crushed 70% to 30%.  Colorado also had a ballot initiative directly aimed at either slowing or killing hydraulic fracturing, depending on who you ask.  It failed. Voters continue to see the value in natural gas, and abundant natural gas has already done more to reduce carbon emissions than any government policy.  
 
Overall, there seems to be no reason to expect significant changes in the booming Marcellus Shale gas production.  Call the experts at Cimmaron Land, (412) 212-7517, if your company wants to get involved.  

On October 19, the U.S. Energy Information Administration published a summary of some new data on U.S. manufacturers’ ability to switch fuels  The data began back in 1994, and at that time 28% of the natural gas used in manufacturing could easily switch to another fuel. That means that manufacturing plants could change the fuel being burned in their furnace in less than 30 days. Most commonly, this meant switching between coal, oil, or natural gas depending on whatever was cheaper to obtain at the moment.  
 
By 2014, surveys showed that only 11% of the natural gas consumption could be easily switched.  The EIA found the main reason for the lack of switchability is that manufacturers did not have the equipment onsite to support it.  Long-term contracts and environmental restrictions are also common concerns.  Natural gas steadily increased its market share in manufacturing during that time as well, up to 39% in 2014.  The EIA notes that manufacturers have dropped coal and oil because gas is more available, cheaper, and environmentally friendly.  That made manufacturers “discount the value that fuel-switching capability had provided in earlier years.”  In other words, a growing number of manufacturers do not really care about being able to switch to coal or oil anymore because gas is much better.  
 
The type of manufacturing going on in Ohio, Pennsylvania, and West Virginia is also changing.  The Ohio Valley has long been known for producing coal and making steel, but petrochemical manufacturing might be its future.  A recent study suggests that up to five ethane “crackers” could be built in the region (one is under construction in Beaver County and another may soon begin construction in Belmont County).  These massive plants break down natural gas into the components that make plastics, and it is probably not surprising that such plants are typically powered by natural gas as well.  
 
Manufacturing in Appalachia is boosting demand for natural gas in the region, and if you are interested in producing in the area you should call some of the best landmen in the business at Cimmaron Land at (412) 212-7517.