Arkansas drops a spot on natural gas list

by The City Wire staff ([email protected]) 166 views 

Arkansas maintained its status as one of the top 10 largest marketers of natural gas in the U.S., but cheap wellhead prices and the industry’s switch to oil-rich shale plays could slow the state’s production in 2012, according to annual data from the U.S. Energy Information Administration (EIA).

Still, preliminary EIA data from 2011 shows that Arkansas is poised to top a trillion cubit feet (Tcf) of marketed natural gas production, joining powerhouse energy producing states like Texas, Wyoming, Oklahoma and Louisiana in the exclusive club.

Arkansas now stands as the 8th-largest marketer natural gas producing state in the U.S., down one spot from its position in 2010.

“Arkansas has also seen strong growth in its marketed natural gas production, with output more than tripling since 2007 due mainly to increased production in the Fayetteville shale play,” the EIA said in its April 27 report.

Overall, combined marketed natural gas production from the top five natural gas producing states — Texas, Louisiana, Wyoming, Oklahoma, and Colorado — increased by about 7.5% to 15.7 trillion cubic feet (Tcf), although their share of total U.S. natural gas output fell slightly to about 65%.

The EIA, housed in the U.S. Department of Energy, typically releases annual natural production reports several months after the end of the calendar year. Preliminary data for 2011 is now being released as the U.S. Energy Department compiles information from state energy agencies, such as the Arkansas Oil and Gas Commission.

To date, the AOGC has not released its 2011 marketed natural gas production statistics for Arkansas to the Energy Department, EIA officials said. Commission officials did not respond to several media inquiries from The City Wire seeking up-to-date natural gas sales for Arkansas.

Between 2004 -2008, as Fayetteville Shale drilling and development peaked, Arkansas’ annual production of marketed natural gas jumped nearly 140% from 187 billion cubit feet (Bcf) to 446.5 Bcf.

Then in 2009, Arkansas first joined the list of the nation’s top marketed natural gas producers when sales of Arkansas natural gas spiked 53% to 683 Bcf of production. Last year, Arkansas natural gas sales continued on an upward trend, jumping 35.7% to 927 Bcf of annual production, according to AOGC and EIA figures.

However, decade-low natural gas prices in 2011 and 2012 have pushed the state’s rig count to its lowest level in more than six years and have substantially stalled production and hiring in the Fayetteville Shale, according to industry experts.

At the same, oil and gas companies are shifting their drilling rigs and equipment from older dry gas shale developments like the Fayetteville and Barnett plays to newer oil and liquids-rich shale plays in west Texas, Pennsylvania, Louisiana, and parts of Colorado and Wyoming.

That industry transition has propelled Pennsylvania closer to the “top five” natural gas producing states on the strength of rapidly developing Marcellus Shale play, where former Fayetteville Shale leader Chesapeake Energy and other drillers are investing billions.

“Due primarily to drilling programs in the Marcellus shale formation, Pennsylvania's marketed natural gas production in 2011 more than doubled to nearly 1.3 Tcf, according to preliminary estimates from Pennsylvania's Department of Environmental Protection,” the EIA report said.

Overall, Texas produces 7 trillion cubit feet of natural gas each year, about 30% of the nation’s total production. Second-place Wyoming produces 2.3 Tcf, while Louisiana was close behind at 2.2 Tcf. Oklahoma and Colorado ranked 4th and 5th respectively with 1.8 Tcf and 1.6 Tcf of natural gas sales in 2011, EIA statistics show.

Pennsylvania leapfrogged seven states to take over the position as the nation’s sixth-largest seller of natural gas producer. New Mexico, Arkansas, Utah and Alaska round out the top 10.