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From: Douglas Grandt answerthecall@mac.

com
Subject: Frack more for less return on investment—sustainable?
Date: September 14, 2019 at 2:56 PM
To: Lisa Murkowski senator_murkowski@murkowski.senate.gov, Joseph Manchin senator@manchin.senate.gov
Cc: Darren W. Woods Darren.W.Woods@ExxonMobil.com, Neil A. Hansen neil.a.hansen@exxonmobil.com, Theodore J. Wojnar
theodore.j.wojnar@exxonmobil.com, Suzanne M. McCarron Suzanne.M.McCarron@ExxonMobil.com, Max Schulz
max.schulz@exxonmobil.com, John Crowther (Senate ENR-R) John_Crowther@energy.senate.gov,
Renae Black (Senate ENR-D) Renae_Black@energy.senate.gov, Brian Hughes (Senate ENR-R)
Brian_Hughes@energy.senate.gov, Senator Bernie Sanders info_sanders@sanders.senate.gov, Katie Thomas (Sen.Sanders)
katie_thomas@sanders.senate.gov, Hinch, Ethan (Sanders) Ethan_Hinch@sanders.senate.gov, Alex Piper (Rep. Welch DC)
Alex.Piper@mail.house.gov, Andrew Bahrenburg (Sen. Leahy) Andrew_Bahrenburg@Leahy.senate.gov

Dear Chairman Murkowski and Ranking Member Manchin,

If you have your finger on the pulse of the sickly anemic oil and gas industry, it
would be much appreciated by those of us who self-identify as energy wonks to
understand what potential downside risk we are facing and what policies are in
place to protect and defend out families and friends, let alone the entire social fabric
that could disintegrate if energy company bankruptcies continue to rise.

Please call the CEOs to testify before the Senate Energy & Natural Resources
Committee how they will act in the Public and National Interest as their profits
diminish and they face debt default, insolvency and bankruptcy.

Will their Board of Directors exercise Fiduciary Duty to the corporation and
investors at the expense of the public’s best interest? It seems to me, We the
People have a right to know that you are on top of this. I have no confidence that
you or the professional staff are.

Seriously,
Doug Grandt

US natural gas prices to fall below $2/MMbtu in


2020

The oversupply of US natural gas—now being reinforced by a surge


in associated gas production from the Permian basin—will push the
average price at Henry Hub down below $2/MMbtu for 2020, IHS
Markit forecasts.
Oil & Gas ournal | Sep 12th, 2019 | Bit.ly/OGJ12Sep19
The oversupply of US natural gas—now being reinforced by a surge in associated gas
production from the Permian basin—will push the average price at Henry Hub down
below $2/MMbtu for 2020, IHS Markit forecasts.
That is the lowest prices have averaged in real terms since the 1970s. In nominal terms,
the last time that prices fell below $2/MMbtu was 1995.
Prices are expected to fall despite robust domestic demand—which has increased
annually by an average 14 bcfd since 2017—as well as rising levels of exports. The US is
annually by an average 14 bcfd since 2017—as well as rising levels of exports. The US is
expected to export an additional 3 bcfd of LNG in 2020.
However, it still will not be enough to absorb production that has risen by more than 14
bcfd since January 2018. IHS Markit expects production to average more than 90 bcfd in
2019 and 2020.
“It is simply too much, too fast,” said Sam Andrus, executive director of IHS Markit who
covers North American gas markets. “Drillers are now able to increase supply faster than
domestic or global markets can consume it. Before market forces can correct the
imbalance, here comes a fresh surge of supply from somewhere else.”
That next surge of production is expected to come from the Permian basin in West
Texas. Growth from the region will more than compensate for declines elsewhere—
sustaining the oversupply and the downward pressure on prices that it creates, IHS
Markit said.
“Nearly all the growth in US natural gas demand over the next few years will come from
LNG exported to other countries. The added supply from the Permian will match—if not
exceed—those volumes,” Andrus added.
Two key factors will drive the Permian surge. Associated gas—the source for much of the
region’s production growth—is a byproduct from oil well production, meaning that it is
less sensitive to natural gas price signals. And additional pipeline capacity is expected to
alleviate transportation constraints. The Gulf Coast Express pipeline, scheduled to come
online in October, will allow for an additional 2 bcfd production capacity. Overall, Permian
gas takeaway capacity is expected to increase 6 bcfd through 2022.
“In all events the gas is going to get produced out of the oil well. The real change here is
the transportation capacity,” said Michael Stoppard, chief strategist for global gas, IHS
Markit. “You go from a situation where producers, in many cases, were paying someone
to take their gas to having an economic means of getting it to market.”
Signs of the coming price shift can already be seen, IHS Markit said. Gas prices fell by
more than a 60¢/MMbtu between March and August as inventories climbed towards their
5-year rolling average—despite record use of natural gas to generate electricity and
growing LNG exports.
IHS Markit forecasts that the US Lower 48 storage inventory will come out of the winter at
2.1 tcf—or 263 bcf higher than the rolling 5-year average—and head towards 4 tcf in the
fall of 2020.
Eventually the downward pressure on prices from rapid growth of associated gas will
curtail drilling activity and bring the market back into balance. IHS Markit expects prices
to rebound and average $2.25/MMbtu for 2021, though that figure is still a downgrade
from previous estimates.
“Markets work in the end,” said Shankari Srinivasan, vice-president, energy, IHS Markit.
“Rising prices stimulate supply and falling prices curtail it. What is unique here is the
extent of reduction required. But signs still point to this coming price fall having a limited
shelf life rather than being the new normal.”
https://www.ogj.com/general-interest/economics-markets/article/14039822/ihs-us-natural-
gas-prices-to-fall-below-2mmbtu-in-2020

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