Gas production from domestic shale formations is expected to decline in September, says a new report from the US Energy Information Administration. The drop would come just a few months after gas output peaked in May.
The explanation for the decline is fairly straightforward: older wells aren’t producing as before, and the new wells aren’t producing as much as the older ones once did.Â
“In each region, production from new wells is not large enough to offset production declines from existing, legacy wells,” says the EIA analysis.
We aren’t talking about a massive decline, though. Shale wells produced 45.6 billion cubic feet of gas per day in May, and are expected to produce about 44.9 billion cubic feet per day in September, says the EIA. But if the trend bears out, it’ll be the first time that shale gas production has dropped since the 2011 start of the domestic gas and oil boom, according to Yale Environment 360.
The shift may not be a major one, but it is an early reminder that the domestic shale gas boom won’t last forever. The wells have a shorter life than conventional wells and drilling companies need to constantly bore new wells to keep up the volume of gas production.
This article appears in Aug 26 – Sep 1, 2015.
Shale wells definitely have a shorter life than traditional methods of gas extraction, but there is another explanation for the decline in production. Gas prices were $3.74-4.00 a year ago, but are now abut $2.75. Such a decline means that some investments are n longer economical, and so are not made. If you look at oil, where prices are also down significantly, people have continued to utilize existing and in process investments, but are cutting back on new investments. You will see further declines over the next year if prices remain this low.