HOUSTON: Higher natural gas futures prices for 2021 and a continued glut of crude oil are prodding U.S. shale firms to boost gas drilling and production.
Shale producers are increasing spending on natural gas, a change from the past, amid forecasts for a 45per cent jump in gas prices next year compared to a 15per cent gain for Brent prices. The shift is a reminder to the Organization of the Petroleum Exporting Countries meeting this week how shale moves quickly in response to price. The OPEC group is considering whether to ease oil output curbs from Jan. 1, report agencies.The largest U.S. shale oil producer, EOG Resources, this month said next year it will start selling gas from 15 new wells from a newly discovered field holding 21 trillion cubic feet of gas. Continental Resources recently shifted drilling rigs to gas from oil in Oklahoma. Apache Corp this month said it plans to complete three Texas wells after lifting its third-quarter U.S. gas production by 15per cent over the second quarter and 6per cent over the same period last year.
“Demand has remained pretty robust. Supply has been starved for capital,” said Christopher Kalnin, chief executive of Denver-based Banpu Kalnin Ventures, which last month closed a deal to acquire Devon Energy natural gas assets. Banpu Kalnin has hedged about 65per cent of its gas production for next year.
The number of U.S. rigs drilling for natural gas, an indicator of future output, has climbed 13per cent to 77 since July. About a quarter of all active U.S. rigs are drilling for gas, up from 16per cent last year, according to services firm Baker Hughes.
In the Haynesville gas field that spans Louisiana and Texas, the number of working rigs is up 25per cent since July. Rigs also are up 8per cent in the Marcellus, the top U.S. gas field.
Gas prices could jump 45per cent to an average US$2.94 per million British thermal units (mmBtu) in 2021, from US$2.03 this year, analysts predict. That would be the highest annual average since 2018. Summer 2021 prices could hit US$3.50 per mmBtu, according to Bank of America, from US$2.84 per mmBtu on Friday.