Greater Efficiency Looks Good for Natural Gas Supplies, Prices

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Greater efficiency continues to open up greater horizons for drilling potential—which looks good for keeping natural gas prices low.

Bad news for Kemper.  Natural gas producers are getting even more efficient.

The Wall Street Journal reports that improvements in technology are allowing companies to drill “bigger and better wells in shale formations” with fewer rigs. A competitive environment continues to spur innovation and decrease costs; although big companies have a tougher time adapting to market changes and experimentation while still profiting.

The article states that five out of six U.S. petroleum basins showed increased efficiency in a report by the Energy Information Administration (EIA). One particular example of increased efficiency is the Eagle Ford Shale in South Texas.

“The number of rigs drilling wells declined by 5% in September from a year earlier. But each remaining rig was drilling more, and the oil and gas output from these wells was 28% higher than wells drilled by a single rig the previous year. Overall, oil and gas production in the Eagle Ford was up 57%, according to EIA data.”

Fracking is also affecting the structure of world oil supplies:

“This summer, the U.S. passed Russia to become the world’s largest producer of oil and natural gas, thanks to hydraulic fracturing, or fracking, and related well-drilling improvements.”

Crude prices have remained stable in the face of Middle East trouble, and natural gas prices have dropped to under $4 per thousand cubic feet.

Greater efficiency continues to open up greater horizons for drilling potential—which looks good for keeping natural gas prices low.

>> Source: Gold, Russell. “U.S. Shale Producers Drilling Bigger, Faster Wells.” The Wall Street Journal. 22 Oct. 2013

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