The Massive Shift Underway from Dry to Wet Gas Drilling
An article on the SNL Financial website about the “massive shift” from drilling in dry gas (methane only) shale gas areas to the natural gas liquids (NGLs) areas begins this way:
During Anadarko Petroleum Corp.’s fourth-quarter earnings call, the members of the executive board were asked what price it would take for the company to invest more capital in dry gas holdings in the Marcellus and Haynesville shales. President and COO R.A. Walker was quick to respond.
"Higher," he replied. "You’ve heard us talk in the past, we are moving more towards oil and liquids-rich opportunities in order to be able to survive a sub-$3 gas world. It’s not attractive, and I’d challenge very many places to be able to explain how you get positive wellhead economics at sub-$3."
Company President James Hackett was equally blunt with his assessment, saying: "We don’t plan to add any rigs for dry gas. We might be going the other way, in fact."
The first spate of fourth-quarter earnings calls have shown that Anadarko is far from the only company working on cutting gas production in favor of more liquids-heavy production.*
Read the rest of this insightful and enlightening article by clicking the link below.
*SNL Financial (Feb 9, 2012) – Massive shift to liquids under way, but analysts say it may not move gas prices
This shift in E&P may stop the slide in the price of gas, but it may be awhile before there is a big price increase. Wells for wet gas still produce huge volumes of dry gas along with the natural gas liquids. Ditto for wells for oil from shales.
All the rigs moving to shale wet gas and oil could lead to a mini-bust in the economies of counties in Pennsylvania that have gotten use to incomes from drilling,