In ENB episode #24 we sit down with Dave Boyer, President, Mudrock Energy and we cover everything natural gas in Pennsylvania’s Marcellus formation. While most people know that natural gas flaring is bad and associate all gas production with bad practices. In Texas and New Mexico they have been cracking down over the last several years and many operators have eliminated flaring. Well in the Marcellus, there is literally no flaring as that is the coveted products being sold.
Dave covers the Six Billion new refinery going in and the Bitcoin mining being put onto lower producing wells. That is quite a spread in different topics, but he covers them in detail.
If you have anything to do with natural gas, consider Mudrock energy as a resource. The tag line for Mudrock is “The world needs more energy. We are here to help”. That is a great tagline and their commitment shows.
Thanks for stopping by Dave, we really appreciate your time – Stu.
Full automated transcript. Just like Mission Impossible, we disavow any mistakes unless they make us funnier, or sound smarter.
Stu Turley, CEO Sandstone Group [00:00:00] Welcome to the Energy Newsbeat podcast. My name is Stu Turley, CEO of the Sandstone Group, and we have Dave Boyer. He’s the president and CEO of the Mud Rock Energy Group. Thanks, David. Thanks for
Dave Boyer, CEO, Mudrock Energy [00:00:15], stopping by. Thanks for having me back. Oh OK. I see slides this week, but I brought some notes, so we’ll be ready to go here.
Stu Turley, CEO Sandstone Group [00:00:23] I’ll tell you what, I enjoy watching your information, and you have some top-notch information for everybody. His website is Mudrockenergy.com, and as a big-time industry leader with the Marcellus. Thank you for taking the time. I mean, it’s fun seeing all your information. Do you ever sleep?
Dave Boyer, CEO, Mudrock Energy [00:00:46] No, I do. Yes.
Stu Turley, CEO Sandstone Group [00:00:49] You know it is fun. Everybody needs to see Mud Rock Energy’s website. Lots of tools on there. Lots of information. And Dave, your papers are very, very nice. Your update. I just printed out your mud rock energy. It was November 3rd, and there is data data data on here. The number of rigs. Latest change by basin. That number of frac fully ducks. And these ducks don’t quack. These are the ducks that we like to drill and uncompleted there. And you have the posts, Baker Hughes report. And as we get rolling here, what are some of the major developments that you’ve been seeing from your clients and the Marcellus?
Dave Boyer, CEO, Mudrock Energy [00:01:36] So, I mean, one of the big things going on, Marcellus, which isn’t a surprise, is, you know, the pipeline situation here has not gotten any better. One of the main things is we’re capacity-constrained here in Appalachia, and it’s right now we’re producing, and it’s around thirty-four Bcf a day. And, you know, utilization of interstate pipelines is up over 90 percent. And so, you know, without new channels, we’re going to be constrained on how many more wells and rigs we can get in and get running up here. So one thing that was interesting last week came out was in the Cerro, you know, talking about this gas to liquids plants up in Northeast Bay. So that’s something that, you know, in the future could play a role here as we develop more outlets for the gas in Pennsylvania.
Stu Turley, CEO Sandstone Group [00:02:21] Was that that big one I saw in the news? I didn’t see all the details.
Dave Boyer, CEO, Mudrock Energy [00:02:24] Yeah. So it’s they announced it last week. They’re talking about a $6 billion plant going in and outside Nanticoke. And so Nanticoke is it’s pretty much at the doorstep of some of the best wells in the world. I mean, you’re right there, just south of Wyoming County, Susquehanna County P.A.. And also, importantly, it’s just north of all the refining capacity we have in Philadelphia.
Stu Turley, CEO Sandstone Group [00:02:51] and those wells. How much? I mean, Marcellus is mainly it. It is just stuffed with gas. How much are those wells percentage-wise? Do you know off the top of your head gas or in the whole glacier area? Are they mostly gas? Is it mostly oil?
Dave Boyer, CEO, Mudrock Energy [00:03:09] So that part of the play it’s on, it’s all-natural gas. It’s in the dry gas window. They’re going right up to what we call the line at death, where you get to the point where the gas gets cooked completely out and so longer methane either. So yes, it’s completely gas. And so that’s what they’ve been using is what
Stu Turley, CEO Sandstone Group [00:03:26] is the line at death? That just sounds frightening.
Dave Boyer, CEO, Mudrock Energy [00:03:29] So the line of death is this line essentially in Northeast P.A., where the natural gas in the reservoir gets overcooked to the point where you’re now getting carbon dioxide, carbon dioxide, and you do not have methane in the reservoir anymore. And so when you cross that line of death and you get unproductive wells, and so you go from having overpressure some of the best wells in a basin to nothing and a very, you know, pretty short distance it makes sense to. If you look at the geology of Pennsylvania up there, we have the anthracite coal belt. And so, you know, anthracite coal is metamorphic rock. And so this is not a really good product, and that’s actually where this plant is looking to go is in that anthracite belt just south of, you know, some of the best wells in the base.
Stu Turley, CEO Sandstone Group [00:04:17] And I’m asking because I don’t know which my wife says. I don’t know very often, you know, but when you have normal depletion curves on an oil well, natural gas is a lot easier to top off and then punch the gas out. But what kind of depletion rates are compared to oil, or is that? Is that a major issue as well?
Dave Boyer, CEO, Mudrock Energy [00:04:37] It is not. Is that is still a major issue, will it? We’ll be seeing, and that’s something that a lot of people have gone out and spoken about. Cabot now terror with their depleted inventory up there in Northeast Bay. But overall, I mean, we still have many years of development in the basin, so we do have a steep decline curve, especially early on. You know, we’re getting these big, hyperbolic curves too. Me down, but you know, there’s still a lot of development that’s going to take place with you
Stu Turley, CEO Sandstone Group [00:05:04] helping out with folks and everything else. Drilling wells there has a lot lower cost than out in the Permian, doesn’t it? I mean, it’s a fairly. How much is it ballpark ish to do a well out there?
Dave Boyer, CEO, Mudrock Energy [00:05:17] Well, I don’t know if we can say it’s really any less expensive than in the Permian. OK, maybe, maybe a little. But Permian is flat, right? Right here. You’ve got to build beds on hillsides and far away from infrastructure, never mind. You know, there’s there’s a lot of costs that do add up here, too. And I mean, it varies quite a bit. Operator operator. What is their frac completion model? How long are the laterals? So I mean, I would say you’re probably in line with the same type. Of course, you’re seeing in Texas just allocated slightly differently.
Stu Turley, CEO Sandstone Group [00:05:51] But there is a big difference with Pennsylvania in that area is there’s no flaring. You never hear about people grumbling about flaring.
Dave Boyer, CEO, Mudrock Energy [00:06:00] You know, gas is our product out here, too. So for flaring, it’s not. That’s not really what we’re drilling the well for there. So if early on in the play, there were some early flares, you know, obviously doing wellhead testing for understanding as you explore out into the base. And but yeah, I mean, the gas up here is the product. And so if you’re flaring it, the only place where they’re doing that is there are some bitcoin mines here now where we have some one-off wells with it are far from infrastructure, and the wells weren’t good enough to necessarily build the pipeline to. They’re now doing some, you know, small bitcoin mining operations on these, you know, standalone bubbles.
Stu Turley, CEO Sandstone Group [00:06:42] Would you have ever guessed that they’re putting in? I would have never guessed bitcoin mining facilities, and they’re calling it ESG.
Dave Boyer, CEO, Mudrock Energy [00:06:50] I know.
Stu Turley, CEO Sandstone Group [00:06:52] I mean if you’re burning excess gas and I understand that, and I did not also realize how much power is being used to mine bitcoin.
Dave Boyer, CEO, Mudrock Energy [00:07:02] Yeah, it’s pretty incredible.
Stu Turley, CEO Sandstone Group [00:07:04] You know, I’m sitting here thinking, Well, how much power are we actually using playing games and all of our iPhones and everything else? We, as Americans, we’re burning a lot of energy, just playing with our payment. I think I got 10 screens behind me too, so I guess that’s not good. But when we take a look at the Marcellus, the pipeline takeaway is not good. So when you’re talking about how do we increase or where do we go because of the regulations or what do you see coming around the corner?
Dave Boyer, CEO, Mudrock Energy [00:07:34] I mean, honestly, you kind of alluded to it. There is, you know, electric use and energy use is not going away. If anything, it’s growing. It’s going to be growing here, and it’s going to be growing everywhere. And so, even though we’re pushing for more renewables with the solar and the wind, there’s going to be more electricity demand than what we’re going to be growing with on the writable side. And a big part of that is going to be through natural gas, and up here in Pennsylvania, we’re a really big exporter of electricity, primarily in the past, it’s been cool, and it’s been nuclear. But as you move forward, we’ve been building new natural gas plants, and I think a lot of this take away. We’re going to have more natural gas plants being built in Pennsylvania, exporting electricity to Pennsylvania and outside into other states. And then we have these options, like these liquids to petroleum gas operations. You know, if this area goes forward with this, I mean, that’s, but I did do a little bit of research here had not found anywhere where, you know, it said how much gas they’d be using on this planet, right? But so I did go back and look at Shell’s pearled VTOL plant in Qatar. So that’s the largest gas liquids plant in the world. And so it’s produced, it’s using 1.6 Bcf a day of gas and it’s creating one hundred and forty thousand barrels of gas to liquids and 120000 barrels of NGOs essay. And so one key thing takeaway here, though, is they’re using the fisher tropes method that was developed over 100 years. Well. It was about 100 years ago, right? That’s really famous for when Germany in World War Two, it produced 25 percent of their vehicle. Fuel use was through coal and natural gas converted to gasoline. And so that’s where that Fisher drove really was well known. But it also creates lots of other low molecule liquids and high molecule liquids, what Mesereau was doing there using a methanol process. And so, with that process, they’re getting a much higher concentration of gasoline molecules from the natural gas. But in their Texas plant that they’re building, they’re going to start building soon. They’re going to be creating 100000 100000 barrels per day of NGOs or sorry details. And so I mean, that’s a world-scale plant that they’re putting in Texas, that they’re going to be pulling out of the Permian flared gas. And that’s. That’s Bill Plant there, so in Pennsylvania, the one they’re proposing, they haven’t announced, you know how much they’re going to be producing. But they said tens of thousands of barrels a day. And so they also announced a plant in Arizona that they’re going to be doing it 35000 barrels per day. So if you’re kind of in between the two of those you’re looking at in Pennsylvania, maybe we’re looking at half a Bcf a day of gas it was using to turn to escalate. So I mean, if you got a couple of weeks, you can really start adding up, you know, some actual volumes coming out of the basins, right?
Stu Turley, CEO Sandstone Group [00:10:34] This is amazing to me, and I think the ESG factor on this is in the Permian. The takeaway was not there for gas and with the Texas regulator group saying, Hey, no more flaring and I agree with them, flaring should not happen. I mean, you know, don’t drill the well if you know, if you can’t get the pipeline to it, is my opinion. But for the ESG side of it, that’s pretty cool. I mean, that is exciting for those plants.
Dave Boyer, CEO, Mudrock Energy [00:11:04] And so, Sarah, with these plants, with their marketing and as their marketing, as a more of a renewable energy where all their power will be coming from renewable energy. So they’re going to be putting in solar panels, wind farms and pulling off electricity that way. And then they’re marketing to versions of their gasoline. They’re going to be marketing a blue gasoline and a green gasoline. And so the green gasoline is going to be produced using renewable natural gas or flared natural gas that’s being recovered. So down the Permian, they’re going to be creating those green natural gas basically off the flaring wells in the Permian and the blue natural gas is what they’d be creating up here in Appalachia, where they’re taking it from, basically pipeline spec natural gas methane, converting it into gasoline and then using renewable energy to convert it. So that kind of marketing as a clean gasoline.
Stu Turley, CEO Sandstone Group [00:12:00] You know, that is brilliant. That is, I mean, that might help them get permits a lot faster. Yes.
Dave Boyer, CEO, Mudrock Energy [00:12:07] Yeah. And then the other aspect of this is in, you know, this beetle, you’re not refining of oil down, you’re building the molecules up, right? So you’re taking methane, putting them together to get to a longer chain hydrocarbon of gasoline. And with this, you’re also, while you’re putting these together, you’re also getting hydrogen out. So they’ll also be marketing blue hydrogen on the side of the gasoline. So when you’re building all this up and you’re using renewable energy again to create hydrogen, it’s considered a blue hydrogen product so that they can upsell the hydrogen also on the side.
Stu Turley, CEO Sandstone Group [00:12:43] My head’s about to explode, David. I mean, this is actually very good because Saudi Arabia is also putting out the green and blue hydrogen and then everything else. So they I love this bait and switch that we’re using. You know, you’re going to go out and say, this is green hydrogen or this is blue hydrogen because green hydrogen is made with renewables and blue is actually made with natural gas. And you’re kind of whatever marketing guy created that he should be like getting a Nobel Peace Prize, I think.
Dave Boyer, CEO, Mudrock Energy [00:13:15] Yeah. Well, I don’t know that hydrogen anymore. It’s a whole rainbow of things. Now that you have to look it up, pull out the dirt just to know what you’re trying to buy here. So do you
Stu Turley, CEO Sandstone Group [00:13:24] think hydrogen using calling it hydrogen in about 10 to 15 years? Is it until then is a unicorn?
Dave Boyer, CEO, Mudrock Energy [00:13:33] Yeah, I mean, I think you’re probably right about that ballpark. I mean, to grow the market, I mean, you’re looking at another 10, 15 years. I mean, even this GTO plant they’re talking about in Pennsylvania, we’re two years away from any kind of groundbreaking because of permitting, and it’s four years of time to build. So before you have any product rolling off, you’re you’re in the six-year mark. So I mean, I think that’s in Appalachia again near term, the next two or three years. We’re not seeing a whole lot of production growth because of a lack of infrastructure. I mean, MVP will hopefully be coming on next year, and that’s allowed to be two Bcf a day out. But other than that, we’re not really growing. So, you know, when we get plants like this, this could add some significant demand. But we’re talking six and 15 years out for a lot of this stuff.
Stu Turley, CEO Sandstone Group [00:14:22] What do you think it would take besides looking at the regulations and changing, I hate to say of the administration to help out. Are there anything coming along that you’re hearing from all your groups that are positive and thinking of how fast we can change to natural gas? I’m a big natural gas believer. I mean, I think it is the way that we need to go, but clean energy tech is so important. And what are you seeing on clean energy tech coming around the corner, you know, trying to remove CO2 air and all that kind of stuff? There’s a lot coming around the corner at the wellheads like. Ceiling in, you know, natural gas at the wellheads and those kinds of things, so it’s common.
Dave Boyer, CEO, Mudrock Energy [00:15:05] So I mean, couple a couple of big points there. I mean one you’re talking like Q.C. carbon capture, utilization, storage, you know that that is a big talking point. A lot of the conferences, you know, we’re going to and different things. They’re talking a lot about, you know, what we can do with this and it gets very complicated quickly. When you’re in Texas, you’ve got a lot of oil fields where you can do enhanced recovery. You’re taking that CO2, you’re putting in the oil fields and recovering secondary oil. That’s a great utilization of the CO2. You come off into Appalachia, we don’t have those reservoirs. Not quite the same withdrawn as down in Texas. We have some, but it becomes its own thing. Wow. It’s not the same thing. And you got another big legal issue, too, where what happens when you have CO2 migrate into someone else’s reservoir. And now instead of producing methane, you’re producing methane with CO2, you know, are you going to be, you know, there’s a whole kind of legal issues here. And then it also comes down to where are you putting all of this CO2? And there’s a project down in southwest Va. where they’re talking about it over the lifetime of a plant. They’re talking about two TCO of CO2 gas. Wow. Yeah. From one plant, you think about the reservoir space, you need to store those kind of volumes. I mean, it makes your head spin. And so you’re really going into a lot more. Science needs to be done and a lot more regulation is in place
Stu Turley, CEO Sandstone Group [00:16:33] because in the Texas area and in the fields down here, they have salt domes. You know, they can pump all this kind of stuff in what do they have up in Appalachia?
Dave Boyer, CEO, Mudrock Energy [00:16:42] So we have old reservoirs similar to Texas, not at the same scale. One thing they are looking at primarily more for storing natural gas liquids and other products you can go in, we have we do have salt bearing zones where you can dilute or basically dissolve the salt out and create the underground caverns and put it in there. And I mean, they’re looking at actually mining out limestone caves. So in the eastern side of the state, we have some already basically mined out limestone caves where they store petroleum liquids underground near the refineries. And so we’re looking at situations like that in Southwest also. So there are options, but again, it takes time, a lot of money and some some more science and understanding.
Stu Turley, CEO Sandstone Group [00:17:26] And this one we I don’t know, and you may not know this either, but it seems to me there is a big push for LG LNG cars and trucks, and that seems to me like that would have been a heck of a lot better on the environment than battery cars when you have all the renewable. I mean, the precious minerals, the damage to the Earth and and everything else that those are doing. I why don’t we use LNG cars? I don’t get that.
Dave Boyer, CEO, Mudrock Energy [00:17:55] Yeah, I thought it was a great idea 10, 15 years ago, but I don’t think it’s ever going to happen here. Infrastructure’s time place and it wasn’t. It was pushed. It was never, you know, advanced forward. I think the one the one thing with electric cars, the battery-electric vehicles that we have that we won’t get past is it’s a better user experience. You talk about your bat, your you know, your cell phones as a advance, you get into a battery electric vehicle. It’s like stepping into the future compared to a 15 year old car. Right? The technologies and everything that are in it, you know, third of most drivers, you know, personally, I like having a manual transmission, driving around, shifting the gears. But most people don’t. They look at it as an appliance to go from point A to point B. And the simplicity of about electric vehicle is far superior to, you know, a gas vehicle. A lot less can go wrong with it. You know, you’re talking about a couple of simple motors, batteries underneath. You basically plug it in. You get from point A to point B and everything’s new and shiny on the inside. It’s like your new cell phone. And so I don’t know. I think battery electric vehicles are going to move forward because of the user experience is superior to a gasoline diesel. You know,
Stu Turley, CEO Sandstone Group [00:19:10] I had never heard it put that way. As far as the user experience is better than an LNG or any of those kind of things, I really like the way you phrased it.
Dave Boyer, CEO, Mudrock Energy [00:19:20] Now that being said, to your point, there’s a lot of things we need to work on critical minerals being a key factor of that. And so there’s, you know, that’s a big thing moving forward right now. And all these conferences, too is where are we going to find these critical minerals? You know, how are we going to do it, United States? And there’s a lot of new technologies and things coming out. But we also really have to assess our resources here and understand where we’re going to get them.
Stu Turley, CEO Sandstone Group [00:19:45] So if we start, you know, we’re still using a lot of coal in Pennsylvania, lance coal and you know, you sit back and as the commodity of coal now it is really in there and you take a look. The fossil fuel use and coal and in all that electrical generation, if we’re going to leave and everything else, you sure want more natural gas plants in order to power all the electricity for the E.V.s. It seems like there’s a time to go on going back in and everything else. So the more natural gas plants we have coming in, those should be coming along pretty quick. As far as those go, since coal price is going up so much.
Dave Boyer, CEO, Mudrock Energy [00:20:29] Yeah, you’re definitely not going to get the coal, you know, switching back the coal here this winter. I mean, the coal prices spiking. You know, you had the natural gas spike to right. I mean, the coal went up. So you’re definitely not kind of switching back. Oh, no.
Stu Turley, CEO Sandstone Group [00:20:42] And it’ll be employable rates, though. And natural gas, once the pipelines are put in, and it’s not a coal mine, it sure employs a lot more people. But natural gas employs a lot of folks in the Pennsylvania area as well. And so you sit back and look at the economic impact for natural gas a lot, and I think the ESG portion of the nation, what kind of you know your expertise in industry leadership, but there’s pretty darn cool. And if anybody is not following you on LinkedIn or using your resources, so you’re an independent consultant and the CEO of Mud Rock, what are the services that you provide?
Dave Boyer, CEO, Mudrock Energy [00:21:29] So I mean, it’s primarily in the oil and gas industry, but I have done serious work for other organizations, including yours. But we’ve I’ve also done a lot of work with operators doing permitting geologic services, going through and doing basically geologic operations for them, you know, kind of across the gamut. A lot. It’s a lot of guesswork and a lot of geologic work.
Stu Turley, CEO Sandstone Group [00:21:58] I want to give a shout out as a reference for anybody meeting you as a consultant for gas or anything else because you have been fabulous helping us on our projects. And so, you know, we’re definitely gonna throw that out as a gigantic reference. What’s next for mudrock coming around the corner?
Dave Boyer, CEO, Mudrock Energy [00:22:18] So I’m in quite a few projects right now, which has been great continuing to push forward and keep building on this momentum.
Stu Turley, CEO Sandstone Group [00:22:26] So that is fabulous,
Dave Boyer, CEO, Mudrock Energy [00:22:28] has any work or has any needs, you know, feel free to reach out and give me
Stu Turley, CEO Sandstone Group [00:22:31] a call in. And Dave Boyer, thank you very much for your time. I cannot even begin to tell you how much that I do appreciate you as well as your industry knowledge. And we’ll have all your show contact information in the show notes. And everybody needs to go to Mud Rock Energy dot com. And it’s Dave Boyer. So thank you very much.
Dave Boyer, CEO, Mudrock Energy [00:22:56] All right. Well, thank you, Steve. Thanks again.
