Abundant Natural Gas Drives Operators To Liquids Shale Plays

By Rita Tubb, Executive Editor | June 2012, Vol. 67 No. 6

Underground Construction’s sister publication, Pipeline & Gas Journal, in partnership with the Interstate Natural Gas Association of America (INGAA), held its eighth annual Pipeline Opportunities Conference April 4, at the George R. Brown Convention Center in Houston. This industry benchmark event drew more than 400 attendees.

In the natural gas perspective session, Adam Bedard, senior director, energy analysis, Bentek Energy, provided an overview on how low natural gas prices are driving producers to the nation’s oil shale plays.

“If you are a producer and have assets around the country you’re going to go after natural gas liquids or oil because you’re going to get two to three times the value that you would get for dry gas,” he said.

He was also quick to point out that oily plays are holding up quite well. “One example is the Haynesville where 66 rigs are currently active, 43 less than a year ago. If you look at the hot oily plays, Eagle Ford has 250 active rigs, which is an 85 rig increase from a year ago; Permian Basin, 480 active rigs, up 89 from a year ago; and Anadarko 251, up 16 from a year ago.

“The liquids plays are attracting the producers and the rigs.”

In the challenges for oil and natural gas session, Bill Moss, partner, Mayer Brown LLP, provided a look at the prospects for natural gas becoming a world global market, with particular reference to the U.S. market.

Oversupply of gas
Noting the radical changes in supply and demand of natural gas in the U.S. from the shale revolution, Moss said, “In the last five years the entire situation has changed and we’re looking at a vast oversupply of natural gas. Looking back to 2000, Shale gas was 1 percent of our natural gas supply. Future projections by the U. S. Energy Information Administration show shale gas contributing 50 percent of the nation’s gas supply. Moreover, North American natural gas reserves are reportedly sufficient to supply current consumption for more than 100 years.”

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Turning to gas prices, he used the accompanying slide to show the disparity in natural gas prices in the U.S. versus select areas of the world.

“Obviously, this incredible difference in price offers a real opportunity if you can get the gas, in the form of LNG, out of the U.S. and export it elsewhere,” he said.