Natural gas prices have fallen to a 17-year low. The number of drillers that can remain profitable at these prices has also collapsed.
There’s only 97 rigs operating today compared to 900 about five years ago. This is the first dip below 100 rigs in three decades.
Natural Gas Monthly Chart
Only 97 Rigs Left
Bloomberg reports Fewer Than 100 Gas Rigs Drilling in U.S. as Rout Pains Producers.
For the first time in at least three decades, fewer than 100 rigs are drilling for the fuel.
Drilling rigs targeting gas slid by five to 97 in the week ended March 4, the least in data going back to 1987, Baker Hughes Inc. said Friday. There were about 900 working in gas fields five years ago.
The declining rig count portends the drop-off in gas production that analysts have been calling all year as prices have slid. Bullish gas traders have been waiting for drillers to cut deeply enough to shrink output from shale formations and eat into the biggest supply surplus in four years.
In 2008, when gas lat spiked above $13.00, I received several calls a day generously offering me the option to lock in gas prices at $12.00.
The messages from various utility companies or their suppliers was the same: There is a shortage of gas, and prices would go to $20, then $30. “Better lock in now!”
I said no thanks. History suggests cold calls like these come at market extremes.
It’s fitting that about a month ago I started getting calls advising me to short gold.
Mike “Mish” Shedlock
The U.S has 40 billion proven barrels of oil in place (conventional and unconventional).
The U.S is consuming 7 billion barrels of oil a year.
That is 6 years of oil independence.
The U.S has 400 trillion cubic feet of gas in reserves in total.
The U.S consumes 25 trillion cubic feet of gas a year.
That is 16 years of gas independence.
You are making the classic mistake that has been made since the fool said oil production will “peak” at some point. The world is awash in oil. Technology is finding it. The deeper they drill ( 5 miles plus) the LARGER the field. Look at Brazil. They are finding oil 7 miles down.
Suppose oil/gas goes back to 50 bl. What happens is the wells are re-opened and the market is flooded again. With all the oil being found, everywhere, with TECHNOLOGY, it is going to be very difficult to keep prices anywhere above $50.
The amount of KNOWN, PROVEN oil increases every year. Not decreasing, but Increasing. Also, the deeper the wells, the lighter and cleaner the oil. Why is that? Shallow wells are dirty, full of particles, etc. Why is that? Just maybe, maybe, the shallow fields are nothing but leakage from the original deeper deposits. They get dirty as the oil is forced up.
Maybe maybe but we don’t really know . Production is pretty much flat though , it was flat at 75 and higher as well , but it is hard to judge because of the delay into on-line and the break even pencilled in.
What should make us think is the swing in oil prices , 135 to 35 dollars in a few years – that is a big move that is not easily interpreted by a little fracking. It also asks how are you going to plan out your costs , what price tomorrow … and that also depends on what happens when major suppliers start scraping the bottom of their fiscal barrel . There is nothing obvious in the direction energy prices will take, except that between 50 and 100 for oil is where producers prefer it .
Do you have a link to someone who show me this ? I admit that I have just started to look into oil… and its getting more and more complicated.
Yoshus – if you read the comments section fully at
You will find interesting arguments from all sides.
There are probably more detailed arguments somewhere, but for now the question of majorly replenishing abiotic oil is not fully proved or accepted, though it seems possible.
Thanks, I’m a bit more confused now.
I think that I will stick to the idea that oil is a fossil fuel for now and that Peak Oil is a fact.
I understand that some oil wells are in fact filled to some degree again. The source might be small close by wells, from where the oil migrates after movements in the crust has made cracks and passageways for the oil, some of the oil might come from deeper layers that are forced up through pressure.
Like many things… oil is a complex matter.
We wont run out of hydrocarbons, there are 5 trillion barrels of Kerogen, but it seems that crude production peaked in 2005, the production increase in crude and condensates (c+c) since then seems to be an increase in condensates from tight light oil and natural gas.
The problem seems to also be that despite trillions invested in crude production the last decade we have only managed to keep the production at the same level… and that the price of oil production is rising. The average global break even price today seems to be $50 p/b oil since the cheap, easy to extract oil is running out.
The Earth’s core is iron carbide. There is no end of carbon working its way to the surface.
Close!!! The “plates” are Limestone. Calcium Carbonate. What is “carbonate”? Carbon and Oxygen. What happens when Calcium Carbonate is under extreme pressure and temperature (like 10 miles down) with water (H20)? It breaks down into Hydrocarbon chains. (HxCx)What is
Hydrocarbon Chains? Petroleum.
Jon Sellers said:
Rig counts aren’t a pure indicator of future production. Most oil rigs pull up a lot of gas as a byproduct and flaring it is frowned upon by the EPA. With all of the oil drilling over the last few years, gas is coming up essentially free for the market leading to this massive glut. That will change slowly over the next year as fracked oil begins to recede.
Nat Gas may be close enough to a bottom to start investing in some of the stronger players.
Frank Smythe said:
And, as soon as all the wells start the pumping again, the glut returns and the price recedes.
Solution Bring back the 1968 Pontiac GTO with 9 mpg.
The intelligent thing to would be declare the new standard for full time work was 15-20 hrs. per week and then just have the Fed distribute the gap directly to individuals. Then if you simply implemented a statistically derived discount percentage to all retail prices that was rebated back to the retailers you’d have a roaring economy, no inflation and much more leisure time for everyone. Unfortunately this a little too smart and outside of the box for economists, politicians and pundits of all kinds. Hi him.
part time nation said:
got news for u playa the vast majority of jobs created today (outside of the massive ever increasing public sector) is less than 20 hrs per week
Precisely, and that situation is only going to get worse, we just have to embrace it and then make the economy functional…..by Gifting a monthly payment of money to individuals and by a discount to retail prices so profit making systems can survive the onslaught of technological innovation and AI. Think about it.
The Russell 2000 closed at about 1160 on December 29 and dropped about 207 points to close a little below 954 on Feb 11. Today it closed at 1181.93, up about 128 from the low, meaning it has retraced ~62% – which is very, very close to 61.8%. Sounds ominous.
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