CATEGORIZED | News

Drillers, hold on for an ugly ride

Posted on 20 January 2009

 “I think we’re close to bottom” on the price of crude, Mr Adkins said, and it could end 2009 around $60/bbl. That is just a forecast, however. He notes that there’s still rampant uncertainty in the market because “we just don’t know how bad the global economy is going to get.”

Still, with any stabilization in the economy in the second half of 2009, oil prices are likely to firm up, he said, then move higher in 2010 and beyond.

On the natural gas side, the picture is not as pretty. In fact, he said, it’s pretty ugly and may get uglier in 2010.

The past year has seen “unprecedented, phenomenal” growth in the US gas supply, driven primarily by technology. “It’s the application of horizontal drilling and multi-stage fracturing,” he said.

Shales have become a huge factor. For example, Barnett Shale wells were twice as productive as the average US gas well – even back in 2005. Then they got better and better. By 2007, Barnett Shale wells were three times as productive as the US average was in 2006. “This is why the US gas supply was going berserk,” he noted.

Looking at conservative numbers that have been coming out of the Haynesville, those wells are about 10 times as productive as the average gas well drilled in 2006.

What does this mean? If you take out 90% of the rigs drilling in 2006 on land and put the remaining 10% in the Haynesville, you would (theoretically, of course) get the same production growth  we saw in 2006. “What that means is we may need a 60%-70% reduction in the US land rig count before you see production start to roll over,” he said.

And while supply is growing, gas demand is going down, as evidenced by recent storage data.

Even figuring in a cold winter, Mr Adkins said, it’s possible that 10 billion cu ft of gas per day will be shut in – that’s about 20% of the 50 billion cu ft produced in the US every day. In some regions, “that will take gas prices essentially to nothing. … Any way you slice it, it’s going to be pretty ugly for natural gas this summer.”

To affect a no-growth scenario for natural gas, the rig count needs to be reduced by 20% year over year, he said, and the first wells to go will be the small producers, while Haynesville wells will certainly keep on producing.

So could the rig count go down by 60-70%? Absolutely, he said. “You may be down 60% and still not see a negative gas supply.”

Leave a Reply

*

FEATURED MICROSITES


Recent Drilling News

  • 31 July 2014

    Eni discovers gas and condensates offshore Gabon

    Eni has made a gas and condensates discovery in the Nyonie Deep exploration prospect in block D4, approximately 13 km offshore Gabon and 50 km from the capital city Libreville...

  • 31 July 2014

    Blue Ocean Technologies: Subsea well intervention completed in 6,700- ft record depth

    Blue Ocean Technologies has set multiple records in subsea well intervention by intervening in, and subsequently plugging and abandoning, a production gas...

  • 30 July 2014

    Fugro’s DeepData pod provides data for deepwater riser monitoring

    Fugro has delivered a motion dataset from the BOP stack and lower riser of two deepwater wells in the Barents Sea using its DeepData pods. The DeepData pods...

  • 28 July 2014

    SDI completes 500th MagTraC MWD Ranging project

    Scientific Drilling International (SDI) has completed the 500th MagTraC MWD Ranging project. MagTraC was introduced in 1998 to target challenging applications...

  • 28 July 2014

    Modular offshore rig design reduces deployment costs

    William Jacob Management (WJM) has introduced an offshore rig design that reduces deployment costs and improves speed-to-market for upstream operations. The 3,000-hp...

  • Read more news