UPDATE: Ahead of demand | Green Arkansas

Tuesday, September 30, 2008

UPDATE: Ahead of demand

Posted By on Tue, Sep 30, 2008 at 9:49 AM

Last week, Chesapeake announced a reduction in their budget for drilling operations.  Here's a good piece with a little bit of background on why.

"We've had fairly high gas prices and have drilled more each year," Bell [chairman emeritus of the Mid-Continent Oil and Gas Association of Oklahoma] said. "We've now gotten to the point where we are drilling rapidly enough, and our reserves are strong enough to meet demand and even a little ahead of demand. Obviously there has to be an adjustment, which means we have to stop selling and producing as much to bring it back into balance."

Bell said drilling for natural gas is economically viable unless it's down to the $3 to $4 range.

"I think we'll see upward pressure re-established," Bell said. "Chesapeake's move will probably be followed by large independents and some of the majors will probably go ahead and reduce budgets for the next year or two to get everything back into a balance."

 UPDATE: For those of you who are interested, there's more here on the shale boom and market saturation. 

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