Signs of Increased Haynesville Production Begin to Show
The recent rally in natural gas could boost drilling later this year as producers aim to take advantage of a tightening US market amid growing demand for the power plant fuel.
Prompt-month natural gas prices are trading near a nine-month high, settling yesterday at $2.604/mmBtu, on forecasts for hot weather, high demand from the power generation sector and recent government data showing sluggish injections into gas storage. That represents a 14pc increase this month.
The rally "is likely to push the gas rig count higher sooner than we initially envisioned as operators may be encouraged to add incremental activity," analysts with the energy investment bank Tudor Pickering Holt said. The surge in US gas prices has lifted to 2017-calendar strip above $3/mmBtu, where producers could lock in prices on future output and boost drilling by 2016 third quarter, the bank noted.
Increased drilling could push more gas into the US market, putting downward pressure on prices and derailing predictions that domestic output growth will flatten this year. The early signs of higher activity are already emerging.
Gas well completions for May have already picked up in Texas, the largest gas-producing state by volume. May gas well completions rose to 199, up by two-thirds from April but down slightly from 201 completions a year earlier, according to the most recent data from the Railroad Commission of Texas, the state agency that oversees oil and gas drilling.
In addition, the rig count in the Haynesville shale, a gas-bearing formation underlying east Texas and northern Louisiana, has increased for four of the last five weeks. The Haynesville rig count rose last week to 17, up by two from a week earlier and the highest since 29 January, Baker Hughes said.
Development of US gas fields like the Haynesville, which is close to growing gas demand in the southeast and on the Gulf coast, dwindled as an unusually mild winter weighed on gas demand, eventually pushing prices to a 17-year low in March below $1.65/mmBtu. Persistently low prices over the past year have caused large gas producers such as Southwestern Energy and Chesapeake to push rigs to the sidelines.
read more: http://www.argusmedia.com/news/article/?id=1258610
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Replies to This Discussion
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Permalink Reply by Steve P on
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This site used to routinely post drilling rig locations. Perhaps it is time for that feature to be renewed. Very helpful for those of us who live far away to see when drilling is near our property.
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Permalink Reply by Skip Peel - Mineral Consultant on -
Steve, the Drilling Rig Locations were posted by Les B who has not participated on GHS in years. I follow locations by way of a proprietary subscription weekly rig report. The subscription agreement does not allow for that information to be posted on a public websi
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Permalink Reply by kittycatmama on
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Skip, what happened to Les B. He was a great member . Miss his posts
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Permalink Reply by Skip Peel - Mineral Consultant on
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Les works in the industry and got very busy with some major projects. Beyond that, I don't know.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I subscribe to the RigData Weekly Rig Report published online every Friday.
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Permalink Reply by ken hatcher on
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I concur!
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