SOURCE: Industrial Info Resources

Industrial Info Resources

January 05, 2011 05:30 ET

High Oil and NGL Prices Drive U.S. Shale Drilling Decisions, an Industrial Info News Alert

SUGAR LAND, TX--(Marketwire - January 5, 2011) - Written by John Egan for Industrial Info Resources (Sugar Land, Texas) -- Sustained high prices for oil and natural gas liquids (NGLs) such as ethane, butane and propane are causing North American Oil & Gas developers to increasingly focus on drilling for oil and "wet gas," at the expense of "dry gas," even in shale formations, according to Don Warlick, president of privately held Warlick International (Houston, Texas), an oil & gas market intelligence firm.

For example, in early 2010, when gas sold for about $4 per thousand cubic feet, Seneca Resources Corporation (Williamsville, New York), a unit of National Fuel Gas Company (NYSE:NFG), had an ROI of 20-40% when it extracted "dry" gas from a well in the Marcellus Shale. But Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas) reaped an ROI of 50%-60% for a well drilled in southwestern Pennsylvania that had a higher NGL content than the Seneca well. The wells had the same costs to drill, about $4 million.

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