/EINPresswire.com/In an effort to combat weak natural gas prices, producers are shifting drilling resources toward sites with greater potential for crude oil and natural gas liquids (NGLs), a move that has become a growing theme.
In a presentation before the Council on Foreign Relations in New York City, Exxon chief executive, Rex Tillerson, said, “We are all losing our shirts today. We’re making no money. It’s all in the red.” These comments were in response to slumping natural gas prices, which he says has dogged producers since 2009. Tillerson said natural gas prices in the U.S. have fallen to below the cost of exploration and production of new supplies, dropping to ten-year lows below $2 per MMBtu in April 2012. Tillerson said natural gas prices in the U.S. have fallen because of aggressive production efforts when natural gas prices were in excess of $6 per MMBtu.
Analysts say the natural gas industry grossly underestimated the speed of the U.S. natural gas boon and the ability of horizontal drilling technologies and hydraulic fracturing to unlock natural gas trapped in shale rock formations and the result has been a supply glut. In an effort to combat weak natural gas prices, Exxon says it is shifting its drilling toward sites with greater potential for crude oil and natural gas liquids (NGLs), a move that has become a growing theme among producers. In addition, Exxon said it is designing drilling programs on most of its U.S. gas fields to better assess the long-term prospects of the assets, not capture the short-term production and revenue gains.
Additional insight on the transition by producers toward crude oil and liquid-rich supply basins is discussed in “The Economics Behind Oil and Gas Business Strategies,” by Ken Silverstein, editor of EnergyBiz Insider, and in the July edition of The Advisor, a natural gas publication of Energy Solutions, Inc. In addition, the attached file provides an excerpt from Natural Gas Price Outlook on the price impacts of NGLs and crude oil production on natural gas.
For a limited time, Energy Solutions, Inc. is offering a free, no-obligation 60-day trial to The Advisor, which contains an evaluation of the current market factors driving natural gas prices and additional insight into the steps that producers are taking to make ends meet in today’s low-priced natural gas environment. Learn more by visiting www.energysolutionsinc.com.
About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.
Media contact:
Valerie Wood
Energy Solutions, Inc.
608-848-6255
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