Oil and Gas companies now rushing to catch up as gas supplies tightening
January 5, 2010

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Analysis of: Trinidad Drilling to Resume Work on Six Haynesville rigs
Published at: www.rigzone.com
Summary
Trinidad Drilling (Canada) has agreed to resume construction of 6 new rigs that were delayed in 2009 by deteriorating oil and gas prices. The rigs remain under 5 year contracts. First rig delivery scheduled for Q-1 2010. an additional $60 million will be needed to complete construction. The new rigs will bring Trinidad's total rig count in the Haynesville play up to 31. with the new rigs, 45% of the company's rig fleet will be operating in unconventional shale plays.

Analysis

It is beginning to appear that drastic capital and exploratory budget cuts made in the fall of 2008 and continuing all through 2009 are now revealing weakness in the supply side of the oil and gas demand/supply equation. A contributing factor is the high decline rates of all shale gas wells. A shale gas well that went on the line at 10 million btu/day last January can now produce only about 2 million. While liquefied natural gas (LNG) is not going to disappear from the market, clearly in the U.S., great interest exists in a more rapid development of the domestic shale gas reservoirs. The Haynesville, the Marcellus and now the Eagle Ford look to be large sources of easily exploited, low cost gas. Recent moves by ExxonMobil to acquire XTO Energy and now Total's agreed investment of $2.5 billion in Chesapeake's Barnett shale go a long way to reinforce the belief that shale gas will be needed sooner rather than later. This is good news for all of the service companies which include Halliburton, Baker Hughes, Weatherford International and Schlumberger. It is also good news for drilling fluid companies like MI-Swaco and Cabot and proppant manufacturers like Carboceramics and Hexion. Increasing oil field activity in 2010 will also hearten that army of laid off rig workers that must be feeling the stress.


Buck