As US natural gas prices collapse to 1990s-era lows, producers in four shale plays have halted the drilling, yet production is not on decline, reported Bloomberg. Surging output has sent gas futures tumbling, while expanding a supply glut amid low demand due to a mild winter. This has forced drillers to abandon marginal plays in favor of more profitable areas, as detailed data by Baker Hughes Inc. show. The number of working US oil rigs has dropped 71% from its peak in October 2014, to its lowest level in almost six years, the Financial Times wrote. Only 19 drill rigs are operating in Pennsylvania, which is down 65% from the last year, and fewer drill rigs than in 2008, before the shale boom, Philly informed.
Until now, the drop-off in drilling has had little effect on US crude production. It has declined to 9.3mb/d in November 2015, down from its peak in April at the level of 9.7mb/d, the Financial Times added. However, according to recent forecasts, including the ones issued by the government’s Energy Information Administration, expect the production drop to continue in 2016. The 2016 outlook is shaping to be worse also due to the fact that several other major shale-gas operators have announced cuts in drilling plans, among them Cabot Oil & Gas Corp, Southwestern Energy Co., and Consol Energy Corp. EQT Corp., a Pittsburgh-based producer, said it would cut capital spending to $1b, from $1.8b in 2015. Seneca Resources Corp., the exploration subsidiary of National Fuel Gas Co., became the latest operator to tighten its belt.