Some shale gas plays not currently economic

The ability to access energy from shale will drive down the cost of production for American industries. In the case of natural gas, however, the story is always complicated below the surface, and the rate of production has slowed.
By Ben Straus, U.S. Energy Services | December 12, 2013

Over the past five years, the United States has experienced rapid growth in oil and natural gas production. The driving force behind this supply renaissance is the improvement of well development processes in the form of directional drilling and hydraulic fracturing of shale deposits. For many in the industry, the large narrative is well known and understood. The ability to access energy from shale will drive down the cost of production for energy intensive industries and reduce domestic reliance on foreign oil. In the case of natural gas, however, despite rapid growth in production over the past five years, the story is a little more complicated below the surface. 

Almost all shale wells produce some level of natural gas and oil, but the balance of production—more oil and less gas or vice versa—varies across the different shale plays. If a shale tends to favor natural gas production rather than oil, it is typically referred to as a dry play, where locations that tend to produce a higher proportion of heavier hydrocarbons like propane, butane, natural gasoline or crude oil are typically referred to as wet. The old saying in commodities is that “low prices are the cure for low prices.” In 2012, when the average price of natural gas was below $3 per MMBtu, many shale plays that had been driving production growth were suddenly no longer economic. Even at current price levels, many of the dry shale plays remain uneconomic and the rate of drilling and production has slowed.