Natural gas drilling declines along with prices
Now that crude oil is about eight times more valuable than natural gas on an energy-equivalent basis, producers continue to shift their focus from gas to crude oil and natural gas liquids, according to the U.S. Energy Information Agency.
The slow-down in natural gas production is affecting drilling in Castle Country, including on the Tavaputs Plateau field.
For the week ended March 7, the multi-week downtrend in natural gas prices across the country continued throughout the report week, with the exception of some brief upticks that were followed by quick reversals. The Henry Hub price closed at $2.24 per MMBtu on March 7, down 20 cents for the week.
-At the New York Mercantile Exchange (NYMEX), the April 2012 natural gas contract fell 31.4 cents per MMBtu for the week to close at $2.302 per MMBtu.
-Working natural gas in storage fell last week to 2,433 billion cubic feet (Bcf) as of Friday, March 2, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 80 Bcf, positioning storage volumes 739 Bcf above year-ago levels.
-The natural gas rotary rig count, as reported March 2 by Baker Hughes Incorporated, fell for the eighth week in a row, decreasing by 19 to 691 active units, the lowest since August 2009. Meanwhile, oil-directed rigs increased by 28 to 1293, 61 percent above the year-ago level.