It’s truly a sad day when the granddaddy of shale plays disappears from the active rig count for the 1st time. For the 1st time since we started tracking unconventional plays in 2004, there isn’t a single rig active in the Barnett Shale—nor was there a single drilling permit approved for the Barnet Shale in April.
We also must note another sad milestone: the publication this week of the last issue of the Powell Shale Digest—formerly the Barnett Shale Newsletter—founded in 2007 by our good friend Gene Powell to focus solely on the Barnett and lately commandeered by Will Brackett with a broader scope. The Barnett Shale is where George Mitchell stubbornly bucked conventional wisdom to ultimately spawn drilling and completion innovations that would transform the global energy picture forever. The play’s annual average active rig count peaked at 169 in 2008 but had dropped to single digits by 2015 and averaged only 3 YTD in 2016 before disappearing this month.
The grim news extends beyond the Barnett. All active US rigs directed toward natural gas have dropped below 100 for any given month for the rst time in our records. Unconventional gas rigs dropped to a record low, by our reckoning, of less than 13% of the total active rig count, accounting for roughly half the US gas rig total.
Prospects of a turnaround for US unconventional gas drilling aren’t any better than they are for unconventional oil, with US gas futures struggling to stay above $2/Mcf. Thanks to an El Nino-inspired warm winter, natgas storage levels ended the winter heating season on a record high of 2.48 Tcf. US gas production continues to grow, notably in the Marcellus Shale and is projected to hit a fresh record this year as well. Gas-focused operators are already looking to 2017 for any relief.