Drilling activity in the U.S. shale sector is likely responding to fluctuations in prices at the wholesale level, analysis finds. File Photo by Gary C. Caskey/UPI | License Photo
Dec. 7 (UPI) -- Operators working in the inland shale basins in the United States are focusing their activity on natural gas to capitalize on elevated prices, though gains aren't universal, analysis finds.
Enverus Intelligence Research (EIR), a subsidiary of Canada-based energy research firm Enverus, found that, since the start of 2021, operators in Texas shale have shifted their activity in line with the rally in natural gas prices.
"The relative well-level economics in the gas-weighted areas generate comparable returns and value when compared to the core of the basin and should compete for capital for operators with regional optionality," Stephen Pratt, a senior associate at EIR, said in an emailed statement.
Wholesale natural gas prices are highly variable, moving on anything from the weather to curtailments overseas. Henry Hub, the U.S. benchmark for the price of natural gas, was trading around $5.47 per million British thermal units, down from August highs of $9.65 but still higher than the $3.80 level that started the year.
The federal government expects Henry Hub will average $5.43 next year, compared with the $3.91 average for 2021. On production, the government said it expected an uptick in natural gas for next year, though gains could be limited by a lack of pipeline capacity that can carry products away from the field.
Enverus found that markets are supportive of operations in the Permian, but that might not be the case elsewhere.
A month-on-month forecast from the U.S. Energy Department finds that, by volume, the Appalachia basin -- comprising both the Marcellus and Utica shale plays -- is the most productive.
Appalachia gains, however, are not as great as those in the Permian basin in Texas and New Mexico or the Haynesville play straddling the border of Louisiana and Texas. Haynesville production is on pace to accelerate by 1% from November levels, Permian by 0.6% and 0.4% in the Appalachia basin.
Federal estimates put total U.S. natural gas production at 98.1 Bcf/d for 2002, a 0.1% revision higher than previous forecasts. By 2023, the United States is expected to produce 100.4 Bcf/d, an increase of 0.6% from previous estimates.