I attended Evonik’s Oil & Gas Symposium in Houston this past week. There were presentations by two companies, Spears Associates and Wood McKenzie, which track oil and gas production in the U.S. Both presentations commented on the fact that oil would have to go to $70 or below to seriously impact the production in the U.S. If cutbacks in production were to occur, it would probably be the second half of 2015 before we began to see the impact of the drilling cutbacks.
I have stated in previous newsletter that the reductions in oil drilling could result in the rigs being moved back to PA for more natural gas drilling. I asked Jeff Spears of Spears Associates if that could occur. Spears stated that natural gas production is so efficient in the PA that there is no need for any more rigs. Marcellus production is up 20% over last year so there’s no need for more rigs.