Texas Drillers Bearish On New Gas Production, Despite Spiking Prices

Last week, the spot price of natural gas in the U.S. spiked above $6.00 per million BTUs. That’s the highest level the market has seen in more than five years, according to the U.S. Energy Information Administration.  But it’s less than half the most recent peak, set in June 2008.

Natural gas drilling in Texas has plummeted in recent years, along with spot market prices.  Karr Ingham, petroleum economist for the Texas Alliance of Energy Producers, says that’s not likely to change anytime soon.

“We’re rather accidentally producing more gas now than would be the case with so few rigs drilling for natural gas, because it’s being produced as an ancillary product of crude oil production. In other words, this thing called ‘casing head gas,’ which is just gas produced off a well that was drilled to produce crude oil, is really propping up production and keeping a lid on prices.”

Ingham estimates that nearly 90% of the rigs in Texas are now drilling for crude oil, rather than natural gas.


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