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Rail Permit for New Fortress to Ship LNG Expired, Putting Future Projects at Risk

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) granted Energy Transport Solutions a permit on Dec. 5, 2019, to transport refrigerated liquid methane in tank cars that meet specifications set by the Department of Transportation. Yet, the permit to ship liquefied natural gas (LNG) by rail expired on Nov. 30, prompting to wonder whether the company will proceed with related initiatives.

One of the projects in question is located in northeast Pennsylvania, Wyalusing: where New Fortress originally planned to transport NLG from its future liquefaction plant to Gibbstown, New Jersey. Afterward, customers in the Caribbean and elsewhere would have received LNG shipped from Gibbstown port.

However, The Pennsylvania liquefaction plant, which would liquefy natural gas from the Marcellus shale, still awaits a final decision about construction from New Fortress. It is unclear whether or not this development halted any plans.

According to PHMSA regulations, a special permit holder must apply for renewal at least 60 days before the expiration date in order to avoid expiration. Yet, Delaware Riverkeeper, a group opposing the LNG project, claims that there has not been a renewal request submitted for this permit.

Fortress Transportation, PHMSA, and New Fortress officials did not immediately return messages requesting comment.

Meanwhile, in the same period that the special permit is running out, President Joe Biden's administration is pausing regulations allowing LNG-by-rail so the PHMSA can study safety issues regarding this method of transportation. The action contrasts with that of former President Donald Trump, who in 2019 attempted to dramatically increase the export of LNG from the US, dubbing it as the molecules of freedom.

Despite concerns about the proposed Gibbstown LNG export terminal, Delaware Riverkeeper still believes that New Fortress may continue to pursue it. Even If LNG by rail cannot be accomplished, New Fortress could still transport LNG by truck to the port. After all, New Fortress already spent about $159 million developing the Pennsylvania facility through 2020, according to federal filings.

However, New Fortress appears to have abandoned or stalled its plans to build a liquefaction plant in Wyoming, introduce a new pipeline to deliver feed gas to Wyalusing from shale gas wells, and build a fleet of railcars for transporting LNG, according to Delaware Riverkeeper and other sources.

As a public company, New Fortress invests in, builds, and operates natural gas infrastructure and logistics in order to provide quick, turnkey energy solutions that promote economic growth, enhance environmental stewardship, and increase local prosperity.

For now, though, it remains to be seen, what changes if any, this development will bring to the Fortresses Pennsylvanians projects.

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Look At The Future Of American And Appalachian Gas Production

The crux of the matter is rather simple: productivity gains of local energy operators have been stable not only because they are drilling better acreage, but also because players finally realized capital efficiency gains. And even if some new obstacles impede Appalachia's growth at the same rate as the Permian or Haynesville, it does not detract from the value of the Marcellus and Utica basins. The Appalachians will still be the top producers at a very competitive pace as long as commercial inventory exists. After all, as long as there is commercial inventory, somebody will have to drill.

Colgate Energy is planning to float its shale oil producer in the Permian's Delaware Basin on the stock market. If successful, this IPO would be the first major U.S. oil producer offering since Jagged Peak Energy's IPO in January 2017. Looks like investors’ confidence in the sector is returning as U.S. crude prices hit their highest in seven years late last year S&P energy index delivered roughly twice the return of the S&P 500 in 2021.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

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