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LSU study shows large Haynesville drilling decline

Warns that growth won't be sustainable unless natural gas prices climb above $5.
Louisiana State University researchers have described the decline in new natural gas wells drilled in the Haynesville Shale as 'precipitious.'  Their report released in the Oil & Gas Journal warns that if natural gas prices remain in the $4-5 dollar per unit range future industry growth likely won't be sustainable in the area.

Ragan Dickens, with the Louisiana Oil & Gas Administration says the news isn't all bad. When natural gas prices were higher there were nearly 140 drilling rigs on the Haynesville Shale. As prices dropped last year the number of rigs dropped as low as 12. However, companies are slowly returning and natural gas prices are slowly rising and the rig count now sits at 36.

"One thing to keep in mind that's really important, we've got over 2,400 wells that have been drilled in the Haynesville, we've only tapped into roughly 25 to 30 percent of the resources in the ground," says Dickens.

In order for natural gas prices to climb Dickens says manufacturing companies, utility companies and vehicle makers will need convert operations to natural gas and drive demand up.

Centenary College Professor of Economics, Dr. David J. Hoaas, agrees.

"In order for us to see greater use of natural gas we're going to need to have some kind of investments in infrastructure I believe, by the government," he says.

Dr. Hoaas says the cold weather working across the country has contributed to natural gas prices rising above the $4-mark this week. Prices had dropped lower than $3-dollars in 2012.

"I don't believe we're going to see a lot of activity until we go back to that $6 to $8 dollar mark," he says.

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