Why Natural Gas
Why Is Natural Gas Currently Cheap?
Natural gas is currently cheap because of an abundance of supply largely attributable to Shale gas. Advances in directional drilling and completion technologies have enabled producers to exploit gas from impermeable shale rock formations that occur extensively in sedimentary basins around the U.S. and the world. The result has been a major mineral rights land rush with wave of natural gas well development. Examples of shale gas plays that have evolved in the U.S. include the Barnett Shale, Fayetteville Shale, Haynesville Shale, Marcellus Shale, and the more liquids rich Utica Shales. In western Canada the Montney and Duverney Formations represent shale hosted hydrocarbon plays.
Example of well development history in the Barnett Shale. Since 1997 more than 13,500 wells have been completed
Drilling and Completion Technology
- The U.S. hosts leading expertise in cutting edge drilling and completion applications. From research, engineering, design to field implementation, technological and operational advances in horizontal drilling and down hole completions have enabled industry participants to develop tight gas and shale gas with game changing effect to natural gas markets.
- Land rushes associated the shale gas revolution involve leasing mineral rights over vast areas from mineral rights owners. Mineral lease expiry terms vary and in general may range from one to 10 years. Three year expiry term leases are not uncommon. If a lease holder does not perform drilling or development obligations prior to the lease expiration date the lease will expire and the rights revert back to the mineral rights owners. Many participants in the shale gas land rushes during the past decade implemented aggressive drilling campaigns designed to hold acreage with contributory production compounding downward pressures on gas prices.
- Operators are able to drill multiple wells from one surface disturbed drill pad area. Simultaneous with active drilling operations at a drill pad site, operators are able to fracture stimulate complete drilled wells. The result is that site development activities involving different specialized crews and equipment can be performed concurrently with very little field down time. Wells can be efficiently drilled, completed, and placed on sales in a manufactured style process. A well that five years ago may have taken six to eight weeks to develop and place on sales, with high cost, may now take as little as two weeks to develop, with reduced cost.