DULLES, Va.--(BUSINESS WIRE)--The combination of lower capital spending, shut-ins and even a shift to other plays won't deter natural gas production from escalating in the Appalachian Basin this year, according to data compiled by NGI's Shale Daily.
Gas drilling in the U.S. onshore has been on a downward trend for about three years, off to date this year about 25% from a year ago. For the week ending March 13, there were about 257 gas rigs total operating across the country, versus 344 in 2014. The Marcellus Shale by itself has lost about 15 active gas rigs.
However, production growth from the Marcellus, and to a lesser extent the Utica Shale, highlights how efficiencies in drilling techniques and low operating costs are overcoming the energy industry downturn.
NGI's Shale Daily research shows capital expenditures (capex) this year by 18 of the biggest independent producers in Appalachia are going to decline by an estimated 27.4% from 2014. Range Resources Inc., one of the biggest producers in the Marcellus, has cut its capex by almost 42%. Cabot Oil & Gas Corp. has knocked 49% from its spending plans.
Producers also are reining in output. Chesapeake Energy Corp., which has shut in 250 MMcf/d through this year, plans to spend an estimated 9.4% less in the combined Utica/Marcellus (see Shale Daily, Feb. 25). National Fuel Gas Supply Corp.'s exploration arm Seneca Resources Corp. also has shuttered around 200 MMcf/d in the Northeast, said Genscape Inc.'s Randall Collum, managing director of supply analytics.
"We have seen drilling declining but production is still growing quite a bit," Collum told NGI's Shale Daily. By Genscape's estimates, producers have shut in close to 500 MMcf/d from the Marcellus region since December, production that isn't expected to return before the end of this year. However, "we're not seeing a decline in production whatsoever."
To read the full article from NGI's Shale Daily on the shrinking capex budgets of Appalachian producers -- which includes a chart of 18 of the largest operators in the basin -- and what impacts the reduced budgets are having on production levels and other unconventional plays, go to natgasintel.com/app-capex.
NGI has been an independent voice delivering real-time news and price survey reports for the natural gas market since 1981 in its publications: Natural Gas Intelligence Daily Gas Price Index, Weekly Gas Price Index, and NGI’s Shale Daily. Relied on by industry and government since 1988, NGI data is the industry’s lowest cost essential data available on conventional and unconventional natural gas pricing.