Associated Gas in Oil Plays Not a Threat to M-U This Time Around

In years gone by, when oil drilling in the Texas/New Mexico Permian, Texas Eagle Ford, or North Dakota Bakken picked up, the increase in oil drilling came with an increase in natural gas production--something called "associated gas" because the gas is not produced for its own sake but as a byproduct of oil drilling. With tightening environmental laws that require oil drillers to capture instead of burn off or flare the gas, those oil drillers looked for markets to sell their associated gas. All of that extra associated gas would compete in the market with Marcellus/Utica gas, because our gas and the associated gas often flows to the same Midwest and Gulf Coast markets. Prices crash due to an abundance of supply with the same (or even less) demand. This time around, things have changed.

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