Posted on 12/05/2014 4:35:04 AM PST by thackney
The United States has enough shale gas to supply the surge of recently announced petrochemical expansions and, despite anemic prices, producers have no plans to stop pumping as long as demand exists, a Southwestern Energy executive said Thursday.
Gas prices collapsed two years ago and while they have recovered somewhat, some drillers have turned their focus to more lucrative regions rich in oil and other liquids. But companies that specialize in natural gas production continue to produce more, spurred on by technological advances and cheaper drilling and completion costs that allow them to produce more with less.
“Looking at the rig count is no longer a good measure of production,” said Jim Tramuto, vice president of regulatory and government affairs for Southwestern, which is among the largest natural gas producers in the continental U.S. “We’re getting more productive on every well that we’re drilling.”
From 2007 to 2013, Houston-based Southwestern slashed its well costs 14 percent and shortened the amount of time it takes to drill a well by 61 percent. At the same time, output surged 800 percent, Tramuto said.
“What this translates to is our ability to continue to drill in all pricing environments,” he said. “In 2012, when gas prices were down at $2.50, we were still drilling because we were still making a lot of money.”
Natural gas fell 15.6 cents to $3.649 per million British thermal units in trading Thursday on the New York Mercantile Exchange.
Adequate supplies of natural gas and natural gas liquids are critical for the petrochemical industry, which is spending billions to expand and build new plants to take advantage of vast new supplies of cheap natural gas unlocked by the U.S. shale boom.
Since 2010, the industry has announced plans for 215 projects worth $133 billion to build plants, reopen shuttered units or expand existing facilities, according to the American Chemistry Council. The Gulf Coast is at the epicenter of that petrochemical renaissance, with major companies including Chevron Phillips Chemical, Dow Chemical, LyondellBasell and Exxon Mobil Chemical investing billions on new ethylene crackers, propylene production units and other expansion projects.
In the Houston area alone, the industry is spending $40 billion on new projects expected to create 30,000 construction jobs and 1,000 permanent jobs, said Jim Griffin, director of manufacturing at Mitsubishi Chemical Corp. and member of the East Harris County Manufacturing Association.
Speaking to a room full of petrochemical officials at a conference in Houston on Thursday, Tramuto sought to reassure the industry that exploration and production companies will be able to pull enough hydrocarbons from the ground to feed their massive new investments.
“We understand you’re making 20-year decisions,” he said. “Before you make one of those decisions, you have to be comfortable that we producers are going to be around to serve your needs, to make sure your economics work well on your plants.”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.