NGSA: US gas producers' costs nearly triple in 3 years

US natural gas producers' costs have nearly tripled since 2003 because of growing finding and production costs, reported Natural Gas Supply Association Chairman Chris Conway Apr. 26.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Apr. 26 -- US natural gas producers' costs have nearly tripled since 2003 because of growing finding and production costs, reported Natural Gas Supply Association Chairman Chris Conway Apr. 26.

"A combination of increasing activity along with higher per-unit service and technology rates led US producers to spend about $156 billion last year alone in response to continuing tight supply," said Conway, who also is president of gas and power at ConocoPhillips.

"Compared to the $56 billion spent in 2003, that's an increase of almost 200%," he added during a Canadian Embassy briefing with the Canadian Association of Petroleum Producers.

While some costs are coming down from peaks reached following Hurricanes Katrina and Rita, Conway said, expenses remain high as more unconventional supplies are tapped. International competition for offshore rigs, deeper resource recovery levels, and a growing onshore fleet also are contributing, he said.

Well completions up
US gas well completions, nevertheless, were a record 31,587 during 2006, according to an analysis performed for NGSA by ICF International's unit EEA Inc. The number of onshore rigs drilling for gas doubled from 2003 to more than 1,400, it added.

Domestic gas reserves increased to 196 tcf at yearend 2005 from 158 tcf in 1999, the analysis said. Gas reserves in shale, tight sands, and coalbed formations climbed to 19.9 tcf in 2005 from 18.4 tcf in 2004, it indicated.

Conway said the US gas reserve changes during 2004-05 show that most of the increase in the Lower 48 states came from shale and tight sands formations. "The Rockies and eastern Texas dominate recent tight-sand reserve additions," he said. "The Barnett play in northern Texas dominates shale-gas reserves."

Producers' costs account for only part of consumers' gas bills, which also reflect market conditions. "Efficient market conditions continue to assure reliable deliveries, reflected, for instance, in an unprecedented hurricane recovery and average annual natural gas production that remains constant at 50-54 bcfd," Conway said.

Contact Nick Snow at nsnow@cox.net.

More in General Interest