OIL VS. GAS WELLS
T
he economic effects of oil wells are found to be significantly different from those of gas
wells. Unlike crude oil prices, which tended to rise over the observation period between
2009 and 2014, natural gas prices hovered around relatively low levels below $5 per million
BTU. As a result of the increase in the price of oil relative the price of natural gas, the U.S.
production of shale oil increased during that period while gas production remained flat.
Beginning in 2011, the number of gas wells in the Permian Basin declined over time in
response to low natural gas prices. Likewise, fewer gas wells were drilled in the Haynesville
shale after 2012. The Eagle Ford Shale is the only region that has exhibited steady growth in
natural gas production. The different price trends of natural gas and crude oil might have
generated different economic impacts between oil and gas wells among Texas shale formations.
Natural Gas Production (MMcf/Day)
OIL IMPACTS
Source: U.S. Energy Information Administration.
Annual Review of South Texas Economy
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