• 4 minutes Will We Ever See 100$+ OIL?
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 11 minutes Energy Outlook for Renewables. Pie in the sky or real?
  • 15 mins Shale Oil will it self destruct?
  • 2 hours Berkeley becomes first U.S. city to ban natural gas in new homes
  • 21 hours Excellent Choice: Germany's Von der Leyen Secures Powerful EU Executive Top Job
  • 2 hours Today in Energy
  • 2 hours Oil Rises After Iran Says It Seized Foreign Tanker In Gulf
  • 1 hour Mnuchin Says No Change To U.S. Dollar Policy ‘As of Now’
  • 29 mins Populist, But Good: Elizabeth Warren Takes Aim at Private-Equity Funds
  • 19 hours Migration From Eastern Europe Raises German Population To Record High
  • 13 hours Washington Post hit piece attacking oil, Christians and Trump
  • 1 day Germany exits coal: A model for Asia?
  • 1 day White House insider who predicted Iran False Flag, David Goldberg found dead in his New York apartment
  • 1 day A Silence is heard
  • 5 hours Why Natural Gas is Natural
Alt Text

Why Natural Gas Prices Collapsed

Natural gas prices have collapsed…

Alt Text

Trade War Is Unexpected Boon For Iranian Gas

The continued U.S.-China trade war…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Natural gas Producers Focus Shifting to Wet Gas

The divergence between oil and gas prices in Canada and the U.S. has reached epic proportions. Currently the oil-to-gas price ratio sits around 15. Up considerably from the historic average of 7.

Oil is simply a lot more valuable than gas in today's market. And that's changing the dynamics of oil and gas play development across the continent.

To be sure, gas plays are still getting drilled. But focus is shifting to "wet gas" that contains a significant amount of natural gas liquids.

These liquids usually sell at prices close to (or even above) the prevailing oil price. They are a significant "sweetener" for gas plays during the current period of low natgas prices.

Plays that come with high liquids today show some of the best economics in the world. One of the leading locales is the Eagle Ford shale of southeast Texas.

Gas wells in the Eagle Ford can produce hundreds of daily barrels of liquids. Which has given the play a leg-up on most others. In fact, many analyses of North American gas plays now show the Eagle Ford as having the lowest break-even gas price on the continent. By some estimates, these wells yield positive returns on investment even below $4 per mcf.

Even within the Eagle Ford, the shift to liquids has been clear. The chart below is from DI Energy Strategy Partners, who produce an excellent blog about the Eagle Ford (and a host of other unconventional plays). DI is partnered with Drillinginfo, one of the premier services for collecting and analyzing American exploration and production data. They know these plays.

Well Production

The chart shows production rates for wells drilled during each of the four quarters in 2009. The top chart blends liquids and gas production, using the traditional 6-to-1 gas-to-liquids ratio. Initial production rates improved dramatically in the fourth quarter (light green line), to nearly 4.5 million cubic feet gas equivalent per day.

Probably due to improved understanding of the play.

But the lower chart tells an even more interesting story. Converting liquids to gas using the current 15-to-1 ratio, initial production rates for Q4 jump even more, to over 5.5 million cubic feet equivalent per day.

As the chart's annotation explains, there was a notable shift in the latter part of 2009 from dry gas to liquids-rich gas in the Eagle Ford. Because of the high liquids content, production rates get higher (and wells more valuable) as the gas-to-liquids conversion rate increases.

Effectively, drilling high-liquids wells has allowed Eagle Ford producers to bump up the gas-equivalent production rates of their wells. A big part of the reason the play is showing superior economics right now.

As long as the current divergence between oil and gas prices continues, liquids-rich plays are going to be the hot topic for gas producers.

By. Dave Forest of Notela Resources




Download The Free Oilprice App Today

Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play