Barnett Shale production dips below 5 billion cubic feet a day

Posted Wednesday, Aug. 21, 2013  comments  Print Reprints
More information Barnett production slows Here is the average daily production from the Barnett Shale for each month in the past year. Production peaked at 6.33 billion cubic feet a day in November 2011.

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Natural gas production in the Barnett Shale fell below 5 billion cubic feet a day in June, the lowest since December 2009, a new report said.

Powell Shale Digest, an online industry newsletter, said its analysis of Texas Railroad Commission monthly reports shows that the big North Texas gas field produced an average 4.84 billion cubic feet a day in June. That's down 16.5 percent from a year earlier and down 20.8 percent from two years earlier.

Producers also reported 15,497 barrels of oil and condensate, a natural gas liquid, in June.

Barnett gas production peaked in November 2011 at 6.33 billion cubic feet a day. It has been surpassed by the Marcellus Shale in Appalachia as the most productive U.S. natural gas field.

This year, the Marcellus topped 7 billion cubic feet a day, according to estimates by IHS, an energy consultant and information provider. Regulators in Pennsylvania and West Virginia, where Marcellus production is concentrated, do not require producers to file monthly production reports.

Gene Powell, publisher of the Shale Digest, told the Star-Telegram that while the Barnett’s overall trend of decline is apparent, he expects reported production to fluctuate above or below 5 billion cubic feet a day for several months, depending on when producers file monthly reports. After that, he anticipates production from the field to hold above 4.5 billion cubic feet a day in the coming year.

Devon Energy, which with about 1.4 billion cubic feet daily is the largest producer in the Barnett Shale, said its production in the field is basically steady.

“Our production in the Barnett remains flat largely because of measures we have taken to reduce declines in existing production,” spokesman Chip Minty said. “However, because of reduced drilling activity, we expect to see our output fall in the second half of the year.”

Devon is running five drilling rigs in the Barnett, which Minty said “continue to be focused in liquids-rich areas” such as Wise, Montague and other counties in the northern reaches of the field. Those areas contain more natural gas liquids and even oil, which earn a much better price than natural gas.

Devon was operating 10 rigs at this time a year ago.

Production declines in shale wells have long been a concern. Hydraulic fracturing of the shale tends to release crude oil and natural gas quickly, resulting in a steep fall-off after the first year of production.

But Powell and many producers maintain that production flattens out and shale wells can produce for years if not decades.

Powell said production has held up better than he expected, given the sharp fall-off in drilling since gas prices collapsed starting in late 2008. In recent months 30 or fewer drilling rigs have been working in the big North Texas field at any particular time, the least activity in more than a decade, according to RigData's weekly report.

Last week 29 rigs were active, versus 48 rigs a year ago. Drilling peaked at more than 200 rigs in 2008, when gas futures prices also peaked at more than $13 per 1,000 cubic feet.

Natural gas prices would have to reach about $5.50 per 1,000 cubic feet and stay there a few months for producers to resume drilling at a rate that could push production back above 5 billion cubic feet a day, Powell said.

On Tuesday, natural gas futures closed at $3.44 per 1,000 cubic feet, nearly $1 below the recent high in April but up substantially from a 10-year low of less than $2 in April 2012. Natural gas last traded for at least $5.50 per 1,000 cubic feet in early 2010.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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