Barclays: Shift to liquids to have slight effect on US gas production growth

By OGJ editors
HOUSTON, Nov. 3
-- The shift of capital spending and drilling toward liquids-rich and away from dry gas basins because of the relatively high price of oil to gas will only have a slight negative effect (if any) on US gas production, according to Barclays Capital Inc.

It noted that a simple calculation tends to overestimate the effect of the shift on gas production because liquids-rich areas also have high initial gas production rates.

Barclays also determined that rigs moving to liquid-rich areas such as the Eagle Ford and Granite Wash are from less-productive areas or areas such as the Haynesville in which the time to drill and complete a well is much longer.

The net effect is that rigs are more productive in the liquids-rich areas and therefore the shift will affect only slightly US gas production growth, according to Barclays.

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