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Showing posts from November, 2012

After the Natural Gas Boom...

One of thedailylawblog's readers forwarded this New York Times Article, which contains a great discussion of the state of domestic natural gas shale development during record low gas prices.  The article tells the story about how the gas market affects natural gas producers.  For the visual learners, these charts depict the story perfectly.

Essentially, gas prices must reach $4.00 per MMBtu in order for a newly drilled well to be minimally profitable. You can see on the US. Energy Information Administration's website where the gas prices were during the natural gas boom period.

As a result of the current low prices, natural gas drilling in most places, including the Fayetteville Shale in Arkansas and Haynesville Shale in Louisiana and Texas, has nearly halted.  Those new wells that are being drilled are being drilled at a loss.

The gas companies aren't the only ones noticing the difference.  Royalty owners surely have seen their royalty checks dwindle. The royalty check…