EQT, Giant Natural Gas Producer, Takes $1.8 Billion Write-Down, Admits it Can’t Succeed in Low-Price Shale-Gas Environment

Shares have collapsed 75% since 2017.

By Nick Cunningham, for Oilprice.com:

The largest natural gas driller in the United States just announced a massive write-down for its assets, offering more evidence that the shale sector faces fundamental problems with profitability.

In a regulatory filing on Monday, Pittsburgh-based EQT took a $1.8 billion impairment for the fourth quarter, as the natural gas market continues to sour. EQT said that the write down comes as a result of the “changes to our development strategy and renewed focus on a refined core operating footprint,” which is a jargon-y way of saying that some of its assets are now worth much less.

EQT also slashed spending for 2020 to between $1.25 and $1.35 billion, down by another $50 million compared to the guidance the company provided in the third quarter of last year.

Although not a household name, EQT is the largest gas producer in the country, and is a giant in the Marcellus shale. EQT purchased Rice Energy in 2017, growing into a huge gas producer and pipeline company, but it has posted disappointing results in the last few years. The poor performance led to an internal battle for control of the company. Toby Rice, who co-founded Rice Energy and maintained small ownership stakes in EQT after the tie up, wrestled control from management, convincing the company’s board that he could right the ship. He became CEO last year.

So far, the company’s problems continue. Natural gas prices slid sharply in 2019, and are at rock-bottom levels, particularly for the time of year. According to the FT, while Henry Hub natural gas prices for February delivery trade at $2.24/MMBtu, they are only trading at around $1.83/MMBtu at the Dominion South hub in Pennsylvania

EQT itself admits that it can’t succeed in this environment. “Gas prices are down. It has a big impact, the difference between $2.75 gas and $2.50 gas,” Toby Rice said in December “A lot of this development doesn’t work as well at $2.50 gas.”

EQT hopes to cut $1.5 billion in debt by selling assets and boosting cash flow. However, the cash flow part will be hard to pull off with prices stuck in the doldrums.

Moody’s cut EQT’s credit rating on Monday to Ba1 with a negative outlook, moving it into junk territory after the gas giant said it would issue new bonds to refinance debt. “EQT’s significantly weakening cash flow metrics in light of the persistent weak natural gas price environment and the company’s intent to refinance its 2020 maturities in lieu of debt reduction through repayment drives the ratings downgrade,” Moody’s senior analyst Sreedhar Kona said.

The agency also noted the “volatility associated with the cash flow of pure-play natural gas producers necessitate a higher retained cash flow to debt ratio threshold than EQT can deliver over the medium term even with significant debt reduction.”

“Additionally, EQT’s cash flow metrics compare poorly to other Baa3 rated oil producing companies, despite EQT’s size and scale,” Moody’s concluded

EQT’s share price is down by more than half since last spring, and it is also down by more than 75 percent since 2017.

These problems are obviously much larger than EQT. Range Resources recently slashed its dividend in order to pay off debt, while also taking out another $550 million in new debt in order to pay off maturing debt this year. Meanwhile, Chesapeake Energy, the second largest gas producer, is now trading at pennies on the dollar and faces the prospect of being delisted from the New York Stock Exchange.

EQT’s predicament reflects the broader financial questions that have long plagued the shale industry. Fracking can produce lots of oil and gas, but steep decline rates make profits elusive. If the largest gas producer in the country is struggling, and has a credit rating in junk territory, then something is wrong with the business model.

The problems endemic to the shale gas industry are starting to affect production. The decade-long boom in gas production from Appalachia may have finally come to a halt. By Nick Cunningham, for Oilprice.com

“The capital markets for oil and gas remain extremely difficult.” Read…  Dallas Fed Outlines Somber Oil & Gas Industry, “Flaring” of Natural Gas Comes into Focus

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  92 comments for “EQT, Giant Natural Gas Producer, Takes $1.8 Billion Write-Down, Admits it Can’t Succeed in Low-Price Shale-Gas Environment

  1. 2banana says:

    10 years of cheap and easy money. And near zero interest rates.

    Zombie companies. That can’t die.

    Supply doesn’t get reduced.

    Healthy companies cannot flourish.

    “then something is wrong with the business model.”

    • Jonas Grimm says:

      You know how you kill a zombie? You shoot it in the head. Or you set it on fire. Make of that what you will.

    • DanS86 says:

      Yes, blame the FED! More to come as core industrial dirty clothes are revealed.

  2. Jonas Grimm says:

    The faster all these shale oil and gas companies fail, the sooner we can get to the real issue of confronting peoples’ terror of nuclear energy (despite the fact that it, combined with other clean energy methods basically the only solution to climate change).

    • Bean farmer says:

      Wolf – election season is bad enough without the comments section being overrun with politics like climate fraud. People who can’t predict the weather next week are convinced they know the weather 100 years from now, and that ever higher taxes will somehow fix their problem. The sky is falling predictions from 20 years ago turned out to be dead wrong.

      Taxpayers now have to pay to replace signs in glacier national park fraudulently claiming that the glaciers would be all gone by 2020. Like countless other predictions, that was completely wrong.

      Stop the fraud. There is too much of it during elections without these scam artists filling comments with them.

      What happened to your promise to ban political commentary?

      • Bobber says:

        I’d comment, but I’m not a climate scientist, so my opinion would be garbage.

      • tom says:

        Thank You.

      • roddy6667 says:

        Call me old fashioned, but I’m sticking with The Coming Ice Age, caused by the same things that used to cause Global Warming and now Climate Change. I know it’s true because I saw it on a huge banner on the first Earth Day in 1970. Down by Mirror Lake at UCONN.

      • Don says:

        You’ve probably heard this many times and are most likely sick of hearing it, but weather and climate are NOT the same thing. The modeling involved in predicting next weeks weather is completely different than the modeling required to predict next century’s climate. As for the your comment: “The sky is falling predictions from 20 years ago turned out to be dead wrong”, the predictions that were being made 20 years ago have turned out to be overly conservative. Based on the models of 20 years ago, the climate change that you are seeing today is several decades ahead of schedule.

        • GolferDave says:

          Obviously true.

          The current desertification of the Northamerican west (by drought, insects then fire) is being repeated now in Australia… but the Australians will do something about it… like shutting down big carbon emitters like open pit mining.
          The ozzies can say Sh** when they have a mouthful.

        • Happy1 says:

          Climate predictions from government agencies and scientists the last 50 years have been spectacularly wrong. What makes you think they will be more accurate now? The last 20 years are not an exception, a UN panel predicted entire nations would be submerged by 2015. Here are a long list of apocalyptic predictions that are laughably incorrect in hindsight. It is clear the planet is warming, but the over the top predictions have consistently been garbage. And some of us are old enough to remember the “ice age” scare of the 70s, which you will also see here.


      • nick kelly says:

        Atmosphere change is the driver and the issue.

        Every week someone knowingly or not leaves their car running in a garage and dies. Every cold snap, if the power goes out, some dumb folks bring a barbecue in the house and kill themselves. Even low levels of CO or high levels of CO 2 can make people groggy. Right now there are folks wondering why they are tired who actually have furnaces not getting enough air ( check flame: should be blue not yellow)

        Agreed so far? OK, what if there was a minimum of 500 million cars, hundreds of thousands of coal- fired plants, hundreds of millions of cooking fires, thousands of ships and planes operating right now? And everything but the cooking fires have only been spewing for a little over 150 years. The US Founding Fathers were not warmed by coal.

        Is it conceivable that this could affect the makeup of the gases in the atmosphere? Where do the exhaust gases go and are they detectable ?

        If the answer is ‘yes’ it is possible, then how do we find out? Do we go to some old sage and ask him? Do we poll the man in the street?

        Or should we do what we do if we suspect CO in our house, get a tech to check it or buy a detector ourselves, i.e. ask science.

        When we get on air liner, we are going to do what looks very hazardous: go up 30,000 feet where there is not enough air for us, travel 500 miles an hour, at night, using all kinds of invisible electro-magnetic waves to know where we are and to find that tiny strip of concrete…

        Why would you put your precious butte in that seat if you think science is BS?

        Questions about the atmosphere on earth, or Mars, are not political, or religious, or questions of taste, they are questions for science.

      • Cad127 says:


        I’m a skeptic too but starting down the road of censorship is a bad idea – it is easy enough to skip through truly moronic political posturing when it crops up…and since a lot/most economic ruin finds its origin in moronic/corrupt political policies, I think it would be very, very hard to carve out political issues from these economic discussions.

        Truly bad actors in the comments tend to get ignored over time.

      • NBay says:

        “Most everyone’s mad here. You may have noticed that I’m not all there myself”.

        -The Cheshire Cat, from Alice in Wonderland

      • Keith says:

        I am always skeptical when power, money and politics meets at a confluence. Combine that with a special needs girl that is the spokeswoman, and you have a good case to be skeptical. And that is not even getting into the Green New Deal blended with MMT to turn the world into a fairytale kind of place.

        The world, including climate, is a dynamic place. We need to accept it for what it is. If you want to talk about pollution or overfishing, well, I will listen to that.

        • Lisa_Hooker says:

          This is 2020 America. Pretty much everyone is a special needs girl. At least everyone under…

      • rvette454 says:

        Bean farmer, perhaps I’ll fill in readers about Glacier National Park, having visited it two years ago. From the Parks information, and conversations with group leaders working in the park. Glaciers are glaciers when their size is above a mininium acreage, I believe it is 25 acres, they move, scientists have recorded their size and movement for well over 100 years. Glacier N.P. had 110 glaciers in the early 1900’s, all had deep ice 1000’s of years old. Two years ago their were 5 glaciers left. Climate changes first become apparent at higher altitudes, Glacier is at high altitude, scientific fact. So replacing signs, of which I saw none other then poster size, is the least of the Park’s or your worry. I also traveled from Arizona the same year to home in Indiana during late January. After leaving Vail, Co. from eastern Colorado, thru Nebraska, Iowa, Illinois and Indiana there was no snow on the ground, not even snow pack from snow removal. I can recall driving from Chicago to Arizona via the Rt.66 during the 70’s thru 2010. Most of the gulches, streams and waterways that had water were dry as a bone south of Missouri. Regards.

    • Unamused says:

      Because the world doesn’t have enough Chernobyls and Fukushimas.

      Was Radithor the original ‘energy drink’?

      • 2banana says:

        Well, which is it?

        1. We are all going to die in 12 years? Extinction of the polar bears? CAT5 after CAT5 hurricane putting Florida under water every year? Our children will never know snow? We must destroy the American economy, plus no planes or single family homes, in order to save the planet from global warming?

        2. Meh. Me no like a massive source of power, that adds not one drop of greenhouse gases, because there could be idiots at the control panel or a big wave might come.

        • Unamused says:

          You’re welcome to use my fusion reactor, no charge, but I want it back in the morning.

        • Nicko2 says:

          Only China is investing any significant amount of money into nuclear. Renewable energy tech is advancing so quickly, they are the cheapest.

        • rhodium says:

          Global warming is irrelevant to the economics of renewable energy at this point. The marginal costs of installing solar panels and wind turbines have fallen so low that they are favored when expanding grid capacity. Energy storage costs are still high enough to require peaker plants to supply base power, but costs are falling fast enough there too that the economically favorable percentage mix of renewables is rapidly headed to 100%. The sunk costs of already built natural gas and coal plants is partly why renewables aren’t a larger mix already. However, as these plants age and are decommissioned and electricity demand increases in many markets, renewables are increasingly the most cost effective option to supply electricity (no subsidies needed). Go look it up, it’s the pace of technological improvement.

        • Unamused says:

          I’m going to monetise the Sun and save the world. Maybe tomorrow. I’m busy today.

      • NBay says:

        BTW, when does the world have to pool it’s resources and replace the current cover over Chernobyl…..again?

    • Nicko2 says:

      Solar and wind + battery backup are now the cheapest sources of energy. ….and China owns 50% of the global market.

      • NBay says:

        The proximity of the Mojave and the Sierras is just begging for huge solar/wind farms and a short elect runs to many good places to put dams in the Sierras. Pumping water uphill beats batteries easily. (think Norwegians use it).
        Everything is off the shelf tech.
        Green New Deal has to start somewhere.

      • Happy1 says:

        This is flatly false. If it were true, India and Africa would be building solar and batteries. China is currently the leader for solar but is pivoting to coal because it’s cheaper. More coal power plants are planned in China at the moment than the rest of the world combined.


        • nick kelly says:

          Pivoting to coal? It never even wavered on coal. In 2018 ALONE China installed coal- fired generators equal to the entire US equivalent. This at the same time the CCP announcing it’s phasing out coal.

          We keep reading stuff like ‘China has most solar’ etc. Of course by dint of having 1.2 billion people China will have the most of all kinds of things, while having a low percentage of whatever it is. In this case it’s solar.
          For example in 2018 China had 176 K MW of solar. Germany had 45 K MW. But China has 1.2 billion people while Germany has about 80 million. Germany is using solar at triple the rate of China.

          There is a group called Coal Watch that tracks these plants via satellite. A much more reliable source than the CCP.

    • Wolf Richter says:

      Jonas Grimm,

      My in-laws live in a suburb of Tokyo in direction of Fukushima. Explain to them your ideas of “confronting peoples’ terror of nuclear energy.” The costs of managing that mess are still HUGE, and will go on for decades. The Pacific along the coast of Fukushima is heavily contaminated, and this continues to get worse, and there is no solution, and the contamination is spreading around the Pacific.

      Nuclear power is simply the most expensive form of power, via both, the costs of building the facilities, and the costs when it comes time to deal with the consequences, such as nuclear waste, decommissioning the plant, and dealing with the catastrophes.

      • Unamused says:

        The costs of managing that mess are still HUGE

        $300 billion, expected to top a trillion. Not cost-effective.

        SF is getting the radiation, by the way. Don’t eat the feesh.

        • Cas127 says:


          “$300 billion, expected to top a trillion. Not cost-effective.”

          Link to data source/methodolgy please.

        • Wolf Richter says:


          Different angle here, but same theme. In 2013, a report done by the French government was leaked. It studied what a nuclear accident at a specific plant in France would cost. I covered it at the time. Here are a couple of quotes from my article:

          “The upper end of the cost spectrum of an accident at a single reactor at the plant chosen for the study, the plant at Dampierre in the Department of Loiret in north-central France, would amount to over three times the country’s GDP. Financially, France would cease to exist as we know it.”

          “It evaluated a range of disaster scenarios that might occur at the Dampierre plant. In the best-case scenario, costs came to €760 billion — more than a third of France’s GDP. At the other end of the spectrum: €5.8 trillion! Over three times France’s GDP. A devastating amount. So large that France could not possibly deal with it.”

          The report had been kept secret for years because France at the time got 75% of its electricity from nuclear, and this was the cost of just one reactor melting down. So the public was not allowed to know about it. Here is the whole article:


        • Lisa_Hooker says:

          Not to worry. I am working on the completion of the conversion of my Krupps coffee grinder to a Mr. Fusion source of almost unlimited power. (This has been done before, but apparently the technology was lost.) We will all be saved.

      • Shizz says:

        From the onset NO ONE has been honest about the severity of the
        Fukushima disaster. I haven’t followed up on it in a while but to my knowledge the melted down cores (the ones no one wants to admit to) are still contaminating ground water that dumps into the pacifiç.

        God help us if another disaster strikes that washes the tons upon tons of contaminated waste that they are running out of places to stack out to sea.

        Fukushima is far, far worse the Chernobyl and it continues to polute half the globe. So far the only solution from governments is to raise acceptable radiation doses.

        So aside from that how was the play Mrs. Lincoln?

      • Chris Coles says:

        The BIG mistake was not sheet piling the coastline to keep the radioactivity within the local area; instead concentrating upon the problems created by all those spare fuel ponds trashed by the explosions. Now we all pay the price. Not good, not good at all.

        • Lisa_Hooker says:

          If they had not concentrated on cooling those expended fuel storage ponds we would be in a world of much more hurt than we are now. Notwithstanding, we are going to have serious problems for a long, long time.

      • wkevinw says:

        I would like to see some kind of “real experience” cost model for nuclear power over the past ~50 years, with 3 Mi Island, Fukushima, Chernobyl. Also, the true costs of waste handling.

        I have no idea what the answer would be, but that seems like the most important calculation.

        Based on “reasonable assumptions” nuclear power seems excellent, but maybe those assumptions are not really so reasonable.

        As usual, Fukushima was caused by “predictable” human error(s), but potential human errors have to be included in assumptions.

      • Jonas Grimm says:

        I’d love to hear your suggestions for a baseline for power then. Renewables are great, but battery storage is still getting off the ground. Nuclear is only dangerous when mismanaged and safety measures are skimped on. The USSR invested in graphite-tipped control rods because it was cheaper. Fukishima ignored two different tsunami studies, one in 2000 and one in 2008, both of which warned of a danger of flooding should there be a severe earthquake.

        If you cited Three Mile Island, you’d have a better defense, but both the ones you chose are the result of the factors I just stated. Nuclear might be expensive to construct, but it lasts, and as for accidents, well…compare the total cost of cleaning up Chernobyl to the total cumulative costs of climate change on the global economy from now until 2050. Something tells me you’ll come up with a much higher number for the latter.

        • Lisa_Hooker says:

          “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.” – from a different Donald, February 12, 2002

          It’s the unknown unknowns with nuclear power production I most worry about. And, as we have seen, errors/omissions in engineering of known knowns can be extremely long lived.

        • Thomas says:

          I saw a documentary once on Fukishima. In it one of the plant workers with his identify, concealed, claimed that the pipes that operated the cooling system, were in destitute condition. He said those water pipes broke during the earthquake. And that even without the tsunami the meltdowns might have still occurred.

        • char says:

          If Japan can’t manage nuclear than who can. It is not like the US has a better reputation

      • Dan Romig says:

        Buckminster Fuller’s ‘Critical Path’ page 346:
        “Nature as the omni-informed and omniconcerned , omniconsiderate cosmic designer discovered and heeded that human organisms and their absolutely essential ecological support complex could not operate safely at a distance of less than ninety-two million miles away from the nearest atomic-energy plant – the Sun – and all the latter’s lethal radiation involvements. The would-be exploiters of atomic energy on board our planet Earth will in due course discover there is no way for them to solve atomic-energy-radiation waste-disposal problems save by rocketing it all back to the Sun, where it belongs.”

        Bucky wrote that 39 years ago. On 11 March, it will be nine years since Fukushima got rocked by earthquake and tsunami.

        29% of my home’s electric supply is generated by Xcel Energy’s nuclear production.

    • Freewary says:

      @ jonas Grimm

      Has the climate actually changed?

      My summer & winter wardrobes are the same since I was a kid

      • NBay says:

        That is very ecologically admirable, you deserve an Earth First award. Even if you sorta got lucky by not growing much.

    • NBay says:

      I always like the satellites that collected solar energy and then beamed micro waves back to stations on earth. It may have been one of your previous favorites. BTW, have you published in Popular Science yet?
      You seem quite well informed on things scientific.

      • freewary says:


        thx for compliment. I should publish as my observations about still needing a hat in winter and still being able to sunbathe in summer and the accompanying conclusion that the climate hasn’t actually changed at all are much higher quality than the propoganda published in famous journals. I will write and submit my paper tomorrow!

    • NBay says:

      I get the sarcasm in Grimm’s two posts. First he curses and sentences incompetent gas company managers, then he suggests expanding a business 1000+ times harder for people to run correctly. Nothing worse than a nuclear power plant that doesn’t deliver profits and becomes a “zombie’ company.


  3. Realist says:

    No wonder the US tries to stop North Stream2 to force Europeans to buy LNG from the US … and a few days ago Russia and Turkey did agree to build the South Stream pipeline to the Balkans and southern Europe

    • Paulo says:

      Exactly. And stops Iran by force and tariff from selling oil and building a NG pipeline to service Pakistan and China, with an oil pipeline to follow. It’s one big reason why the US is still in Afghanistan and KSA, plus the general ME region to this date. Furthermore, Iranian NG remains landlocked from going through Syria and heading north.

      All this excess NG is a result of drilling for oil; just lots of NG and light by-products in Shale.

      If interest rates were sane this “project” would have collapsed long ago. If Govt policy was not controlled by corporations, this would never have happened in the first place.

      For those that dispute the concept of protectionism and subsidies for the US energy industries, this article is just a glimpse of it. The cost has been paid not just in tax dollars, or borrowed Govt financing debasing currency, it’s been hidden in body bags since 1953.


      Why would Europe ever commit to relying on US produced NG that has to be compressed into LNG, and transported across the ocean by ship when they could just open a pipeline valve? Would you commit to a supplier that continually threatens tariffs and pulling out of trade and defense agreements? It’s not like it’s a secret, or anything else. Just look at those red MAGA hats and listen to the overt ‘America First’ rants disguised as policy. Boris Johnson goes along with it as North Sea oil and gas is in final stages of decline and he sports idiotic hair :-). They’ll have to get their gas from someone else in any event. The rest of Europe will choose pipeline supplies going forward.

      Look for increased well head flaring and further reduction of EPA standards to try and keep this going.

  4. hidflect says:

    Meanwhile, the U.S. Baker Hughes Oil Rig Count continues to slide…


    • MC01 says:

      I think it’s called “footprint minimization”: one drilling pad (meaning one drilling rig) can be used to drill a number of wells. When combined with horizontal drilling and the use of frac sand it can lower rig count dramatically while increasing production: I think it was Mitchell Energy (now part of Devon Energy) that pioneered the system in cooperation with Texas A&M while the University of Texas developed most present one pad horizontal drilling technologies. A single pad can now handle up to 22 wells albeit I think 8-9 are the norm.

      Considering how capital intensive and technically sophisticated hydraulic fracturing is, one pad horizontal drilling makes a ton of economic sense and, financial factors aside, it’s the technical innovation most responsible for reducing production costs and keeping shale operators afloat.
      Thus rig count keeps on getting hammered while production keeps on going up…

      • hidflect says:

        Awesome info. Thanks.

      • Tinky says:

        But with due respect, the problem with your conclusion is that with fracking, production peaks quickly, then dries up dramatically.

        • Paulo says:

          60+ percent decline in the first year, alone. Almost total decline by year 3.

          “Run run as fast as you can, you can’t catch me I’m the ginger bread man”, on the wheel of shale finance and production.

        • weinerdog43 says:

          Pfft… they just need to seek added value by leveraging their strengths and focusing on the details. Rightsizing staff, and providing sufficient forward guidance will maximize assets by increasing shareholder value. Extrapolating additional bit coin type mining parameters and applying them to the relatively mundane ‘ordinary’ mining & drilling ventures should create a gusher of wealth of intergalactic size.

          Also, a couple of extra sprinkles of dilithium crystals in the old matter/anti matter warp drive will increase production by 870%

        • Wolf Richter says:



        • Briny says:

          Wolf, the sad and sorry truth is that I can here this pitch (in my mind) being made on Wall Street. Sooner rather than later. And they call me insane?

      • Yak now says:

        It doesn’t matter if one rig drills 8 wells or 22 wells, the amount of economically recoverable gas underneath is about the same. Unless managed very very carefully, the setup with 22 wells can lose pressure faster and yield less economic gas than the 8 well setup.

        The basic problem remains that it costs more than $2.50/mmcf to extract the gas, even with 22 wells off the same rig… so the setup is still not economical. It still needs “free” money from the Fed to appear viable.

        PS horizontal drilling was invented in the early 1980s, it wasn’t viable then because the Fed wasn’t throwing money into the wind. It only became “credit viable” when Fed funds dipped below inflation again

        • c smith says:

          EQT has some of the lowest cost gas on earth – as low as $1.50/mmcf to produce in Greene county PA. Just not a big enough part of their production mix, I guess. If they can’t make it, who can?

        • Yak now says:

          I strongly question the idea of $1.50 cost anywhere in PA… but even if that is accurate at a few wells, the well head cost doesn’t include transport or removal of all the unwanted junk (liquids, solids, and other gasses). Final costs are much higher.

          Aany sentence that says “as low as” is suspicious. Used car lots have cars as low as $100… as in there is (was?) one car at that price, the other 99% are much higher. “As low as” is often a red flag for truthful but deceptive marketing.

          There might be a well or two “as low as”, but the average cost in PA is above the current market price

        • MC01 says:

          The US oil/NG industry has been proclaimed dead for at least forty years now because “some reserves are left but are not economically viable to recover” and “economically viable reserves have been exhausted”. The Saudi and the rest of OPEC have been particularly enthusiastic in this activity, followed by a large group of the usual doomsayers, false prophets and the like who never let some good bad news go to waste to peddle their own ideas.
          Like all things it will meet its end one day in the future, but so far news of the US oil industry’s death have been greatly exaggerated. The Saudi have learned this the hard way (and it will get worse for them before it gets better), but doomsayers keep on soldering on, possibly hoping to be like the proverbial broken clock and to be right by chance a couple of times a day. ;-)

  5. Dan Romig says:

    Western North Dakota has natural gas from fracking that gets flared off and wasted. Eastern North Dakota has wet grain that needs to be dried.


    • c1ue says:

      Sounds good in theory – but isn’t one of the main reasons for flaring is the lack of transport?
      Who will build a pipeline from West ND to East ND to dry grain? Or truck grain from East ND to West ND (and to each well)?

      • Dan Romig says:

        “One possible option is to build off the Northern Border Pipeline south of Burleigh County (Bismarck) and down into McIntosh County (Ashley).”

        The ND legislators are considering to fund a pipeline(s) from the state’s ‘Legacy Fund’ which is money generated by oil and gas revenues. The fund’s money needs a two-thirds approval in both legislative chambers.

        I spent nearly twenty years in the wheat business in eastern ND, and I can tell you that oil and Ag are the driving forces in the ND economy, so I would hope that the lawmakers approve building pipelines for Nat. gas to replace propane which is twice as expensive and not always readily available.

        • Erle says:

          I was looking for a place to comment on propane and NG liquids. Thanks for the lead to ask why propane costs are still so high at the customer level? The naysayers claim that fracked hydrocarbons are too light for being motor fuel or lubricants as they have too much in the low molecular weight fuels. If that is so then why does propane remain so costly?

        • Dan Romig says:

          That’s a good question.

          “Propane , just like crude oil, typically bases it’s value off of supply and demand.” is a quote from Kim Leisner, Energy Sales Manager of CHS in June 2018.


          Propane does contain more energy than Nat. gas when the propane goes from liquid to gas.

          I’m afraid I don’t have a good answer as to why propane is more expensive, and actually comparing BTU vs BTU on a cubic foot comparison, perhaps there’s not much difference.

  6. unit472 says:

    Above average temperatures along the Atlantic, mid sixties in New York and Boston in mid January, are not helping. What would help gas prices is a couple of major hurricanes in the Gulf of Mexico this summer or an extended high pressure over Texas to becalm their windmills.

  7. Yak now says:

    We went through this same nonsense in the 1970s.

    Pre-Volcker, the Fed was printing money like central planning mental patients. Every oil rig in line of site of Penn Square Bank (Oklahoma?) got “free” funding (fed funds were below inflation then too).

    Wanna-be scientists were warning the UN that the sky was falling; a new ice age was upon us. Prepare for freezing temps in the summer.

    GM was telling us that we simply had to buy gas guzzling wood panel station wagons with terrible quality problems and an absurd price tag…. ok, todays health care sector replaces 1970s Detroit, but otherwise it’s the same.

    Penn Square took down Continental Illinois bank (a money center bank). Fed financed Uneconomic oil rigs shut down. The eco-terrorist warnings proved to be complete fiction. And it turned out quality cars with decent gas mileage were possible, just not from corrupt unions and unimaginative management.

    Poorly run hospitals will go the way of government motors, but otherwise history is going to repeat

    • Greg Hamilton says:

      Thanks for the trip down memory lane. The movie “The Hospital” by Paddy Chayefsky reinforces your point.

    • GolferDave says:

      I’ve got to call “fake news” on this one:

      “Wanna-be scientists were warning the UN that the sky was falling; a new ice age was upon us. Prepare for freezing temps in the summer.”

      I was there in the 70’s and I remember that the big concern was overpopulation and air pollution and later, diminishing of the ozone layer…which was due to chemical pollution of the upper atmosphere.

      St. Ronald actually agreed with the science and banned flurocarbons. Too bad big oil and their pet politicians managed to kill all the gas mileage initiatives since then.

      • Happy1 says:

        Correct on air pollution (a real problem that has been vastly improved in the US by the Clean Air Act), overpopulation (appears to be ending as the world becomes increasingly wealthy), and ozone hole (it’s still here, turns out it’s of little consequence).

        But there was an ice age alarm phase as well, it fell out of fashion in the 80s when global temps started rising again.

      • GolferDave says:

        “Only unemployed hippies are still clinging to this global cooling, no wait warming, no wait changing in any direction FRAUD. ”

        Not sure what you mean by this… not even sure it makes any kind of sense.

        I’m quite sure my mind is intact and so is my memory.

        Could you point out the “quack science” you accuse me of?

        Or are you referring to the bird noises reverberating between your ears.

      • Erle says:

        Golly Golfer Dave, I hope that your electric golf cart gets a flat tire.
        In the days that you were speaking of in the 70s there were great minds trying to figure out how to combat the cooling. There was some very expensive study project by the Department of Energy that was so fearful of Lake Erie becoming frozen over for ten months of the year that their master plan was to build nuclear plants just to heat the lake.
        Goomint will always have the utterly useless pols to gin up more taxes and expenditure to fund the useless eaters in their employ.

  8. David Hall says:

    In the 2000’s the US witnessed declining natural gas production. Energy prices soared. There was pain at the pumps. Companies built LNG import terminals. Someone figured out how to frack shale in the Barnett Shale, Texas. Companies rushed to acquire oil and gas leases. Other shale formations were also found to yield NG. Now natural gas prices are lower. Some companies can not make it, but the natural gas consumers get a break. The oil majors are paying their bills. LNG import terminals were reversed to export LNG. Other nations are also prospecting their shales, even places like Australia and South Africa. Some companies can make money selling sand and gravel, even though the materials are common and cheap.

  9. Ace says:

    Too bad. Used to work for them on their utility side back before they sold that piece of the business. Good company to work for. Hopefully they can right the ship. Still have friends that work for them.

  10. Augusto says:

    This is capitalism at work. Those companies that are over extended will refinance, cut costs, look to improve revenues or go bankrupt. If they go bankrupt someone will pick their assets up on the cheap and then try and operate with a lower cost of capital with suppliers, employees, getting less. If it is all really uneconomic everyone will eventually go broke. But I don’t think so.

  11. Trent says:

    The physical world wants deflation, but the make believe world of finance wants inflation. Until the bad debt is cleared and prices return to where they want to be, the money printing and fake accounting will continue.

    • Nick says:


      you got that backwards: until the money printing and fake accounting stop, bad debt will not be cleared and prices will not return to where they want to be.

  12. Augusto says:

    I find it amazing all the comments about how “fracking” is uneconomic while in the same breath pushing the glories of wind and solar. Fracking “works”, it’s just a question of the costs. Wind and solar don’t work. They require massive subsidies (by utilities, by taxes, by Red Ponzi, etc….)and their efficiency rates will never go beyond the wind blowing and sun shining (they need backup carbon based processes). Adding in batteries only piles on another expensive system whose usage or efficiency is sub par, 50 % at best, and good luck at that. Carbon based operating processes aim for 100% usage, reducing and spreading costs and increasing efficiency. Of course if you believe in the Perpetual Engine and practice Magical Thinking then get the wind in your ears and stare at the sun, and it will all feel true.

    • Adam says:

      The reality seems to be that neither really works the way fossil fuels used to. Neither windmills nor fracking are profitable when all factors are accounted for.

    • Gandalf says:

      Current WTI prices at $55-60 are adequate to sustain break even or slightly profitable fracking for oil.

      Gas prices, however, have steadily dropped for the last several years, and are at recent historical lows. So the natural gas story is different

      Like the Saudis who turned on the oil spigots in late 2014 to try to drive US oil frackers out of business, the Russians have recently been pushing gas output and sales to Europe and Asia, almost certainly to drive away US shipped LNG. This has driven the price of gas in Europe to decade lows, and prices are now BELOW the cost of producing and shipping US LNG.

      Russia completed a gas pipeline to China in December. Russia also exports LNG, and its closer location to Europe and Asia gives it a huge cost advantage for exporting gas by LNG ships to both areas

      Some very large LNG production and shipping terminals had been built in the US in recent years in Louisiana etc in anticipation of exporting LNG worldwide. With the low prices due to competition from Russia (and other countries), US LNG producers are now faced with selling at below cost

    • Wolf Richter says:

      Fracking has been hugely subsidized by investors for over a decade. Fracking is where money has gone to die. And investors just keep sending more money that way — though now they’re getting a little more leery.

      • Gandalf says:

        Prices had dropped to $40 in late 2014 when the Saudis made their concerted effort to kill the US fracking industry. This did drive out a lot of the higher cost fields and operators, not just US frackers, but the tar sands in Alberta

        But, prices have since risen and stabilized at $55-60, the drilling subcontractors have cut costs to the bone, and…. the FED LOWERED RATES AGAIN!

        Voila, with that little sprinkle of Fed magic dust, investors just plowed another $6 billion into the fracking industry to refinance debt. Look it up, it’s true.

        So, go ahead and tear your hair out, but this is no different from the Tesla story, except the oil industry has a long history of being even more creative than Elon Musk at sprinkling magic dust to finance its operations

  13. c1ue says:

    The analysis presented is not strong.
    The key is the historically low price of natural gas – this is the cause of EQT’s (and the fracking natural gas industry overall’s) financial issues.
    This is a direct result of overproduction. Yes, I would agree that the overproduction is likely a result of too much cheap/free money, but is this really different than any other historical energy boom/bust cycle?
    If anything, the fracking well productivity decline points to this boom/bust cycle being shorter; at some point, the companies which are able to most efficiently produce will (hopefully) survive while the others go away.
    In reality, this might not be true. I can absolutely see where companies better able to raise money – due to political or other connections – could outlast those which are operationally more proficient but financially less so.

  14. DR DOOM says:

    No problemo , a nice warm fed cash enima will work better than brain eating for this zombie. It will still be staggering around this time next year clutching it’s enima bag in it’s neither dead nor alive putrid hand.

  15. sierra7 says:

    Good article….even problem with company discussed having serious problems. As a consumer I learned little; over the years observing/reading about “fracking” the article re-enforced the idea that for fracking to be “profitable” the price of world oil (as published in places like Marketwatch every day) should be above $50 barrel. As one commenter stated about the “external” costs hopefully being met…..environmental damage, water pollution, etc. I also don’t believe that the “frackers” would have lasted this long without the “la-la land” of interest rates since 2008-09 (actions of the FED).
    Nuclear: The most dangerous direction our world can go for “all in” energy production. There can’t be any argument there. None. It’s not like designing airplanes; hopefully (by science) most all airplanes can be designed with very small chances of fatal accidents. Not so with nuclear. All it takes is one. And we have had more than one. There is zero tolerance for nuclear accidents. Following the Fukushima one should make one’s hair curl in fright. Greed is ok when designing autos; not nuclear plants.
    Updates on Fukushima: https://www.google.com/search?client=firefox-b-1-d&q=Fukishima+update
    Not only is the design super critical but the problem of nuclear waste disposal that is compatible with human life has not been solved.
    Finally there are many ways we can mitigate energy “waste”….but, it would take stringent regulations that are so hated by so many. The first would be a complete overhaul of our “human shelter” ideas in construction. Rainwater catchments; solar panels on every home depending on the areas (not economically unsolvable); more hydro power projects; tidal current generators….and much more.
    We need to use our imagination better, not be so greedy and think more “collectively”. Reflect on the “commons” more than on how much “money” we can accumulate.

    • Erle says:

      I agree completely that wind is the way forward. As a bird hater I find that they are great at reducing those nuisances that chirp before dawn and wake me from my overpass tent.
      The biggest problem that I have is the disposal of fifty thousand tons of worn out blades from the perfect source of power. Collectively the Millenials can figure out a way to re purpose the blades to make housing for themselves so as to get out of their parents’ basements without having to incur massive debt levels on top of their school loans.

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