Riding on the high times may soon end for the WORKERS!
By Dwight Baker
Big Oil and Gas industry writing down billions in U.S. shale gas assets http://www.examiner.com/article/big-oil-and-g...
The popular view is the main culprit is the ongoing price of today’s U.S. price for natural gas of $3.08 per million British Thermal Units (MBTU), a price that dipped as low as $1.90 per MBTU back in April of this year. When the shale-drilling boom began, the drillers proclaimed aggressive values for the gas held in ground as calculated in land lease agreements with landowners. Back in early 2008, the price of natural gas at the U.S. Henry Hub was being priced at more than $15.00 per MBTU. As the drilling boom took off unabated and natural gas began appearing into storage, the price the market was willing to pay for it declined month by month.
The shale gas industry continues to reel under the unrelenting economic realities of today’s price for natural gas from their own self-inflicted mad rush to get as much shale gas out of the ground as possible over the last 5 years. Now this is resulting in major shale gas asset write offs. Incredibly some here in Pennsylvania now believe the answers lie in yet more taxpayer dollars to drive demand under Senator Bob Casey’s “STATE Natural Gas Act” to mandate more use of natural gas while Gov. Corbett vows to fight on for PA ACT 13 provisions to strip local townships of their ability to enact zoning restrictions against shale gas drilling in their local municipalities.
Nothing new about these things going on today, that is the way it has been since time began. Mining for buried treasures has been the CALL to go find, then when finding the bigger FISH ate the smaller ONES.
In the mid 1970-80’s natural gas was sold on 30 year contracts for 25cents per thousand then over night the price was posted to pay $15.00 per thousand for all gas found below 15,000 vertical feet! The rush was on to the deep Anadarko Basin in Oklahoma where old time geologist knew deep gas was there to take. So drilling rigs were built to drill to 30,000 feet and deeper, money was spent wildly while the buried treasure they were seeking was just a bit deeper. But when finding the zones thought to hold all that buried gold –dust too bad the zones were so tight that to get it out proved to be impossible at that time.
The overnight the plug was pulled and notice was given that NO $15.00 per thousand was on the table any longer. So as quick as those rigs went up now they came down. Workers from all over the USA went limping back home broke as they were when it all began.