Tuesday, July 10, 2012

West Virginia Drilling Rig Activity Up Slightly

Provided is an article in the July 10 edition of The State Journal:

The number of drilling rigs operating in West Virginia rose to 27 for the week of July 6, the highest level since March. After hovering at 28 and 29 rigs from October 2011 through March this year, the number of drilling rigs active in West Virginia dropped to 22 in April and as low as 21 in May, according to weekly data from Baker Hughes.

April was the low point in a plunge natural gas prices have taken from a June 2008 high of $12.89 per million British thermal units, with the Henry Hub spot price dropping below $2 per million Btus, according to the U.S. Energy Information Administration. Prices have slowly rebounded to the middle $2 range and, with them, rig counts in West Virginia.

Nationally, the numbers of rigs devoted to natural gas drilling are falling, according to Baker Hughes data, from 588 at the beginning of June to 534 at the end of the month.

As companies have moved from "drier" to "wetter" parts of the Marcellus shale to capitalize on a premium for natural gas liquids, West Virginia has benefited. It may not last; Forbes speculated last week that natural gas liquids may be the next fossil fuel glut.