One recent example of just how jaw-dropping the US shale gas story has become came from big independent Newfield Exploration. Houston-based Newfield said in a conference call this week that its production from Oklahoma's Woodford Shale today is 308,000 Mcfe/d, versus about 240,000 Mcfe/d at June 30 -- up nearly 30% in less than four months. Moreover, the company has an inventory of 28 drilled but uncompleted Woodford wells waiting to be put online by early 2010, signalling the potential to boost production still higher.
But Newfield, and the Woodford field, are hardly the only purveyors of über-volumes of gas. Despite cutbacks in activity elsewhere, dozens of companies both large and small are drilling away at shale and other unconventional plays which they claim continue to offer towering economic rates of return. Their efforts have resulted in huge gas volumes flowing around the US and also recently in Canada. But with just a week left in the refill season, US gas storage bins are brimming over with the commodity. And current demand is not enough to use it all, which could continue the surplus into next year.
Just this week, companies injected another 18 Bcf into storage, bringing the October 22 total to 3.734 Tcf, versus 3.337 Tcf during the same week last year. The five-year average is 3.302 Tcf. The overhang, which has worried industry for months, was the chief culprit behind the gas price plunge to the mid-$2s/Mcf in early September, a level not seen since 2002.
Besides the Woodford, high-volume gas is coming from other prolific plays such as the Haynesville Shale in east Texas/northwest Louisiana, Marcellus Shale in Pennsylvania and Horn River Shale in Canada's northeast British Columbia which are all routinely turning in initial well outputs north, and sometimes well north, of 10,000 Mcfe/d each. The first seven wells in Newfield's Granite Wash play, for example, averaged 22,000 Mcfe/d apiece.
And the gas just keeps on truckin' -- or is it riggin'? In any case, big US shalesmith Chesapeake Energy said late October 22 that it is now producing over 1 Bcf/d from the Barnett alone, and also that more than 2 Bcf/d, or roughly 4% of total US gas production, comes from its Barnett, Haynesville, Marcellus and Fayetteville (in Arkansas) Shale operations combined.
Even though those stratospheric initial outputs don't endure, the weeks and months before the purported 50%, 60%, 70% or even 80% first-year well decline rate starts to kick in can throw off an awful lot of gas -- and also throw off gas prices. While prices are now teetering at the $5/Mcf level, many industry observers look at storage figures and scratch their heads. Says one: "Given the amount of gas sitting around out there, it's a mystery why prices are so high."
