A recent interview with Penn State’s Tom Murphy delivers a powerful Happy Thanksgiving message to all of America from the vibrant shale gas industry.
It wasn’t described as a Happy Thanksgiving message but R. Brock Pronto at Pennsylvania/Marcellus Business Central delivered one from the shale gas industry by interviewing Penn State’s Tom Murphy earlier this month. Tom Murphy is one of Penn State’s best and always offers the keenest insights into what’s really happening with the shale gas industry. What he delivered in the interview is something truly to be thankful for this Thanksgiving!
Here are some key excerpts (emphasis added):
- According to Baker Hughes latest report, issued on November 3, there were 898 rigs operating in the U.S – an increase of 329 rigs compared to November 4, 2016.
- There are currently 31 active rigs in Pennsylvania and 29 in Ohio. While the rig counts are lower than those before the downturn in 2014, they show that the natural gas industry in the Appalachian Basin is recovering.
- If you look around the state, even in the dry gas region of northcentral Pennsylvania in Tioga, Lycoming, Bradford and Susquehanna counties, you’ll see rigs operating in gas fields that have not seen activity since 2014. The targets operators are going after are not just in the Marcellus but also deep Utica wells in the northcentral part of the state, which are producing phenomenal amounts of gas.
- If you look at the wider Appalachian Basin, the number of rigs now operating in eastern Ohio is close to matching those operating in Pennsylvania, and I believe that’s the first time that’s occurred since the beginning of shale development in Ohio.
- The growth in Ohio rigs speaks to a variety of factors including the demand for natural gas, the increasing takeaway capacity in that region, and the ramping up of ethane development in anticipation of the demand for ethane for the Shell cracker plant, which is expected to consume about 105,000 barrels of ethane per day. Shell has already signed supply contracts with 10 gas operators. Even though it’s going to be a couple years before the plant is running, operators need to build capacity before that, so they’re ready to meet that increased demand.
- Truck drivers, pipeline drivers and people operating on the rig itself are being hired. Any time you have more rigs operating and all the other components occurring around that in the midstream, it’s eventually going to impact workforce development. So, a lot of gas operators have been hiring, and businesses that service the industry have also been re- hiring and rebuilding their crews.
- There are still not as many rigs on the ground as there had been in the past, and efficiencies and new technologies that have been created in the industry are also lessening the workforce demand. For example, hoisting pipe up on a drill rig was done mechanically with fork lifts, but now all rigs have that capability built in, so that lessens the number of workers needed per rig, but it creates a safety advantage.
- Also, some companies are drilling longer laterals, adding more frac stages, doing better placements, and all that’s leading to more productivity especially in the sweet spots, but even in the surrounding areas. If you look at Eclipse, for instance, they’re seeing a significantly increased level of production in their long laterals in Ohio.
- Drillers learned that to produce more gas from a well, they needed to use more sand and water to frac that well. Even before they knew this, it required over 500 tanker truck trips per well. However, the demand for CDL licensed drivers has diminished because less wells are being drilled today and the water is moving to well sites by pipeline. So, you still have increased amounts of gas being produced, but in some cases, technology has replaced steps in the fracking process.
- It all comes down to takeaway capacity, meaning if you’re in an area where takeaway capacity is restrained, then price is clearly going against you. If you are in other areas where you have more options such as western Pennsylvania and eastern Ohio, then prices are going up. By the end of this year and the first half of next year, we’re going to have much more takeaway capacity in play, so there’s optimism that gas prices will rise for wells throughout the state.
We can add to this list by thanking Ohio and Pennsylvania, two working class states who’ve not buried their heads in the sands of irrational radical environmentalist political correctness, for allowing all these wonderful things to happen in their states as New York and Maryland governors have sold their souls to the special interests. We can also put our rational environmental hats on and thank the gas industry for dramatically lowered emissions and cleaner air, especially in places such as New York City, which use more natural gas every year as they protest our delivery of it. Irony is such a beautiful thing!