Norwegian company Statoil continues to change its focus away from the Marcellus Shale region and instead concentrate on “oily” shale areas of the country, like the Bakken Shale in North Dakota. Why? Natural gas prices continue to bump around at historically low prices, making it a challenge to be profitable.
Statoil has cut the number of drilling rigs in the Marcellus nearly in half from one year ago and the wells they’re drilling now are simply to hold acreage. That is, they drill on acreage for which leases are about to expire to hold that acreage.
According to Bill Maloney, president of Statoil North America:
Statoil’s expansion in the Bakken and in other liquids plays comes at the expense of its natural gas acreage in the Marcellus shale, where it is partnered with Chesapeake Energy, as low natural gas prices erode production profits. Currently Statoil is only drilling in natural gas acreage to hold onto leases that would expire if the land remained fallow.
The company is at present operating about 20 rigs in the Marcellus, down from 36 rigs at the end of 2011.
"We’ve brought the rig count down and we’ve taken some of that (capital) and put it in the Bakken," Maloney said.
"We continue to bring on more wells (in the Marcellus) but we don’t produce them to the capacity they have," he added. Statoil had previously said it has 400 wells awaiting completion in the Marcellus shale.*
*Reuters (Jun 20, 2012) – Statoil to triple North America oil and gas output