AQUA BOOK 2015 - Page 19

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 17