Wednesday, March 28, 2012

Gas Drilling Nationwide Declines Twice As Much As In Pennsylvania

Pennsylvania's Marcellus gas drilling is withstanding low, low gas prices much better than gas drilling nationwide.  The number of gas drilling rigs nationwide has declined twice as much across America compared to Pennsylvania's shale, as gas prices plummeted.

Nationally the gas rig count has declined by 30% since October 2011, according to the Baker Hughes data for the week of March 23rd, and is near a ten-year low.

Pennsylvania has not been immune to the nationwide decline but has seen a much smaller reduction--about 15%--in the number of gas drilling rigs.  Currently 98 rigs are drilling for gas in Pennsylvania, down from 116.

The fact that gas drilling rigs have declined twice as much nationwide as in Pennsylvania is another indicator of the powerfully positive economics of the Marcellus.

While the national gas drilling rig count is near a ten-year low, the oil rig count is approaching a 25-year high as a result of the sustained high price of oil that is made even more attractive by the sustained low price of natural gas.

The decline in gas drilling rigs demonstrates that coal is not alone in being unable to compete with $2.50 natural gas.  Gas itself cannot compete with prices that low and so the drill rig decline.

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