With the natural gas price slump now being measured in terms of years instead of months, producers continue to pull rigs from dry gas unconventional plays to pursue oil targets, according to NGI‘s Shale Daily Unconventional Rig Count.
Of the 13 plays tracked by the rig count, 12 of them either recorded no change or a decline in active rigs from the week ending July 27 to the week ending Aug. 3. Four dry gas unconventional plays each recorded a 5% drop in rigs for the week. The Barnett Shale in North Texas fell from 43 rigs to 41 rigs, and the Fayetteville Shale in Arkansas declined from 22 rigs to 21 rigs, while the Haynesville/Bossier of northwest Louisiana and East Texas declined from 37 rigs to 35 rigs, and the Marcellus Shale of Pennsylvania, West Virginia and Ohio fell from 127 rigs to 121 rigs.
Looking at the same 13 unconventional plays, nine currently have less drilling in them than one year ago.
Leading the year-over-year declines are the Haynesville/Bossier (down 69% from 112 rigs to 35 rigs), Arkoma/Woodford of Southeast Oklahoma (down 56% from 16 rigs to 7 rigs) and Piceance Basin of northeastern Colorado (down 50% from 30 rigs to 15 rigs).
Ample supplies of natural gas from shale development, recent mild winters and a depressed economy have converged to push natural gas prices to 10-year lows.
While NGI‘s just-released August natural gas bidweek report saw stout price gains across the board except for a handful of Marcellus Shale trading points, NGI‘s National Spot Gas Average of $3 for August 2012 was still $1.36 — or 31% — lower than August 2011 (see Shale Daily, Aug. 3).
Sitting in the heart of the Marcellus Shale, Tennessee Zn 4 Marcellus notched the lowest price for August 2012 bidweek, plummeting 65 cents to an average price of $1.34, less than half of the National Spot Gas Average.
With better current economics, it’s no surprise that oil-weighted plays are the ones with more drilling today than a year ago. The Bakken/Sanish/Three Forks play in North Dakota is currently up 21% from a year ago from 185 rigs to 223 rigs. Likewise, the Eagle Ford Shale of South and East Texas has 20% more rigs as the 200 rigs in operation a year ago turned into 240 rigs today.
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