It finally happened.
After reporting only a handful of rigs working in the Barnett Shale for some time, industry publication RigData last week reported that it could not find any active rigs in the natural gas field that underlies about two dozen counties in North Texas.
It was shocking news for an area that supported nearly 200 rigs a week less than a decade ago.
“Sorry to inform you but there are no rigs currently working in the Barnett Shale,” said an email Friday from LuAnn Zellner, RigData editorial director. “The report produced zero results.”
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On Monday, Mary Jane Arias, a lead editor, said they were so taken aback by the finding last week that they triple checked what was going on, verifying that the last rig had packed up and moved on. The last Tarrant County rig was near Interstate 20 and U.S. 287.
“We thought there was something wrong with the system — so we checked it,” Arias said, adding that it marked the second straight week without any new wells being drilled in the Barnett. “It is just so slow right now.”
Plummeting oil and gas prices, along with the seductive lure of bigger payouts in other parts of Texas and across the country, have brought exploration in North Texas to a halt. In March of last year, the count dropped to one rig for a week, then stayed under 10 since then.
It was certainly no surprise to me whatsoever.
Will Brackett, managing editor,
Things have gotten so bad that the Powell Shale Digest in Fort Worth, once a must-read for those following industry activity in the Barnett, is publishing its last edition on Tuesday.
“Wouldn’t you know that the report now says we are down to nothing, nada,” in drilling rigs, said Will Brackett, managing editor of the Powell Shale Digest, who has worked for the newsletter since it started in 2007. “For us to go out with the Barnett Shale at zero, it is almost appropriate.”
“It was certainly no surprise to me whatsoever,” he said.
The Barnett’s heyday was in 2008. In June of that year, the average monthly price of gas was $12.78 per million British thermal units (Btu), stirring up so much interest that by September there were 194 rigs in the field, the highest recorded by RigData, according to the Powell Shale Digest.
Hastening the decline were moves by the Barnett’s biggest players to take what they learned about drilling unconventional wells in hard shale rock and head where the gas was greener. The Marcellus and Utica formations in Pennsylvania and Ohio are considered more productive.
But it wasn’t long before things began to slow down as natural gas prices began their fall from historic highs. In 2009, the number of rigs dropped below 100, never to see triple digits again. Three years later, the number of rigs dipped below 50 for the first time.
Hastening the decline were moves by the Barnett’s biggest players to take what they learned about drilling unconventional wells in hard shale rock to area where the gas was greener. The Marcellus and Utica formations in Pennsylvania and Ohio are considered more productive.
XTO Energy, once a big player in the Barnett, said in March that it no longer had any rigs working in the area. And BlueStone Natural Resources II, soon after it bought another big Barnett player, Quicksilver Resources, out of bankruptcy, said it didn’t anticipate having many new drilling rigs.
“I think the current price level of natural gas is not terribly supportive of drilling, but quite honestly we have a longer-term view for the assets,” John Redmond, president and chief executive of BlueStone, said at the time. Natural gas was selling for about $2 then.
Last week, the number of rigs exploring for oil and natural gas in the U.S. dropped to 431, another all-time low, with 343 searching for oil and 88 for natural gas. A year ago, 932 rigs were active, according to Baker Hughes, the Houston oilfield services company.
With the price at $2.06 Monday, the near-term future for the Barnett is not promising, Brackett said.
He said his publication’s founder, Gene Powell, once said it would take $6 to $6.50 natural gas prices for six months or more to lure drillers back to the Barnett. “We’re a long way from where prices need to be for us to see a lot of interest in the Barnett Shale,” he said.
Which makes it a good time for the Powell Shale Digest, formerly the Barnett Shale Newsletter, to cease publication.
“I could see the handwriting on the wall,” said Brackett, who has already landed another job with a firm that will provide information for mineral and royalty owners in Texas.
“Given our publication started as the Barnett Shale Newsletter, the fact that the rig count has gone to zero it almost seems appropriate we are closing,” he said. “When we started this thing, there wasn’t really anything else than the Barnett.”