CH: As natural gas prices fall, shale drilling loses some luster
Shale drilling has, in some ways, become a victim of its own success. With natural gas now selling for less than $3 per million British thermal units, shale drillers have been looking for foreign investments and other tactics to keep drilling programs going. But at these prices, the more gas they produce only feeds the glut in the marketplace.
Gas drillers have been cutting back on drilling programs, focusing instead on shale prospects, such as South Texas’ Eagle Ford Shale, that yield more oil and natural gas liquids. The problem: such “liquid-rich” plays also contain a lot of gas, and that ongoing gas production is continuing to keep prices depressed.
Allen Brooks goes into more detail on the switch from “dry” gas to “wet” in his RigZone post, includes some charts that show that the number of active oil rigs surpassed natural gas in April, as oil prices rose towards $100 a barrel and gas prices continued to fall. Since September, that shift has accelerated:
