% | $
Quotes you view appear here for quick access.

National Fuel Gas Company Message Board

  • zjxn06 zjxn06 Jul 9, 2012 9:28 PM Flag

    Why Gas Prices Will Stay Soft I

    According to the article, half of all Marcellus wells are currently shut-in waiting on completion and/or pipeline. Huge inventory.

    Marcellus article
    Natural-gas prices force down number of Marcellus drilling rigs

    By Andrew Maykuth

    Drilling in the Marcellus Shale region has slowed substantially this year because of the drop in natural-gas prices, and it is unlikely to resume at the same pace anytime soon.

    The number of drill rigs operating in the state is down 29 percent from its peak a year ago, according to Baker Hughes Inc., which tracks the industry nationwide. According to data from the Pennsylvania Department of Environmental Protection, the number of Marcellus Shale gas wells drilled in the first quarter declined 18 percent from the same period last year.

    The decline in activity comes as no real surprise. Exploration companies have been signaling for more than a year that they planned to shift drilling equipment to areas where more profitable oil and natural-gas liquids are targeted. The warm winter, which reduced demand for natural gas and further depressed prices, only accelerated the exodus.

    The slowdown is apparent in the northern reaches of Pennsylvania, where the most intensive drilling activity has occurred in the last three years. Bradford and Tioga Counties, which last year had the most new wells, now rank behind Lycoming County, home of Williamsport, according to an analysis by the Powell Shale Digest.

    "You can clearly see there's a leveling off in traffic, both physical truck traffic and business development," said Thomas B. Murphy, codirector of the Penn State Marcellus Center for Outreach and Research. Commercial real estate that was tied up a year ago is now available, he said. Housing is more abundant. Residential rents are softening.

    But the decline in exploration does not spell the end of the Marcellus Shale phenomenon, which exploded in 2008 as producers employed horizontal drilling techniques with hydraulic fracturing to unlock new reserves that had been locked in the deep shale formations.

    "We're really talking about a long-term play," said Kathryn Z. Klaber, president of the Marcellus Shale Coalition, the industry trade group. "This relatively short-term drop in price does not change the overall viability and attractiveness of a play like the Marcellus."

    Drilling has slowed mostly in the northern part of the state that produces "dry gas" — natural gas that does not contained coveted oil or liquids. But companies are continuing to build pipelines, compressor stations, and processing equipment to connect wells to the market.

    "The rig count is coming down, but I see companies continuing to hire and continuing to invest in the infrastructure to bring product to market," said Klaber.


    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Predicting where NG prices will go into the future is a crap shoot at best IMO. IMO No different than USDA predicting a record corn crop and than changing it's forecast due to dry weather. Sure its all about supply and demand economics, but the overwhelming driving factor that will determine NG price, is MOTHER NATURE. Then we can talk about the Mr. Obama's speculators who make commodity prices go higher without due cause.<G> I don't know anyone that can predict that far ahead with any accuracy. Mother Nature determines and drives supply and demand.

      Last I knew This is still America where you still can get rich by speculating right. The Gov't even benefits by collecting the taxes on speculating profits. It time to go back to supply side economics. :+ )

      BTW- IMO-If we have a cold winter. It's those nasty commodity speculators who will bring the NG rig count back up, along with JOBS.

55.58-0.78(-1.38%)Jun 24 4:04 PMEDT