Print Edition - 2017-07-06 | MONEY
US shale gas drilling turning a corner
A file photo shows a natural gas drilling site in the Susquehanna County township of New Milford, Pennsylvania.
Jul 6, 2017-Pennsylvania’s moribund drilling industry, which has struggled with persistently low prices and a dearth of infrastructure to get its product to market, is showing signs of life.
Natural gas producers drilled 397 shale wells through the first six months of 2017, more than twice the number they sank in the same period last year. About 20 additional drilling rigs are exploring for natural gas. Fracking crews are suddenly in short supply.While the pace remains much slower than it was during the industry’s boom years earlier this decade, when a drilling frenzy transformed sleepy towns and rural areas into economic hotbeds, 2017 has produced a modest rebound and hope of better days ahead in the Marcellus Shale, the nation’s largest natural gas field.
“There’s a cautious optimism out there right now,” said David Spigelmyer, president of the Marcellus Shale Coalition, a trade group.
One big reason is that natural gas prices have recovered from 20-year lows, nearly doubling since last year, according to S&P Global Market Intelligence.
Drillers had been battered by several years of rock-bottom prices caused by oversupply and inadequate pipeline capacity. The low prices were good for consumers, and businesses and manufacturers that use gas, but they cost energy companies billions and prompted some of them to stop drilling altogether.Houston-based Southwestern Energy Co., one of the most active producers in the Marcellus, drilled only two wells through the first six months of 2016. That has ramped up to 38 so far this year.
“Markedly better prices, thus more cash flow and more capability to invest,” said Jack Bergeron, Southwestern’s senior vice president of operations.
Drillers have also been encouraged by the development of big pipeline projects like Rover, Mariner 2, Atlantic Sunrise and PennEast that will provide access to key markets.
Power companies, meanwhile, are rushing to build new plants to take advantage of cheap Marcellus gas, providing another outlet.
EQT, Pennsylvania’s busiest driller, recently positioned itself to become the nation’s largest natural gas producer by announcing plans to acquire Rice Energy Inc. of Canonsburg, the state’s No. 3 producer, for $6.7 billion.
In announcing the deal to investors, the company said it was bullish on the Marcellus, which Schlotterbeck called the “most economic natural gas basin in the country.”
Published: 06-07-2017 09:14