Natural gas prices are about a third of what they were last summer, and oil and gas companies are cutting their capital spending to the bone. But it’s hard to turn off the spigots in the enormous shale fields that have been developed from Pennsylvania to Texas over the last few years.
The Dallas Morning News noted on Thursday that the three largest natural gas companies operating in the Barnett Shale of north Texas — thus far the motherload of shale fields — produced significantly more gas during the first quarter of this year compared to last.
This comes despite a plummeting number of rigs and dwindling industrial demand for gas due to the current economic slowdown. The abundance of the gas output reflects the fact that new shale wells are extremely productive in their first year or two, and it means that it could take several more months for the price of gas to rebound as production slows and balances with reduced demand.
“We really have a hard time slowing Barnett growth down,” said Keith Hutton, chief executive of XTO Energy of Fort Worth on a conference call.
The chairman of the company, Bob Simpson, said on the same call: “Who wants to grow gas and production in a $3 price environment? We don’t.”
Natural gas ended the first quarter of 2008 at $10 per million BTUs. It now hovers at just above $4, having risen in recent days along with oil and other commodities.
XTO produced 29 percent more natural gas in the quarter than last year. Devon Energy, the biggest producer in the Barnett, boosted production by 7 percent. Chesapeake Energy, an aggressive player in shale across the country, raised its production by 5 percent.
Nevertheless, profits have been shrinking across the industry.
Many experts say that by early next year production will be down, and prices could be $7 per million BTUs or higher.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment