EIA: Crude Oil Worth Eight Times More Than Gas
Thursday, March 08, 2012
The U.S. Energy Information Administration (EIA) has reported that natural gas is selling for one-eighth of the price of crude oil, on a BTU basis. It said the crude oil-to-natural gas price ratio (the Brent crude oil price in dollars per barrel divided by the Henry Hub natural gas price in dollars per million BTUs) hit 54.36 on March 6, 2012, making crude roughly eight times more valuable than natural gas on an energy-equivalent basis. The ratio had averaged only about 9 from 2000 to 2009.
EIA said the relatively high price of crude has resulted in a major shift away from natural gas-directed drilling. It said Smith Bits has reported large declines in the Haynesville Shale of Louisiana, which has mostly dry natural gas.
Smith Bits said drilling in the Marcellus Shale of the northern Appalachian Basin was flat last year, although recent company announcements indicate increased activity in the "wet" (liquids-rich) areas of the play in Western Pennsylvania.
The company noted that the wet portions of the Eagle Ford shale of southern Texas has seen an increase in both oil and gas drilling.
For more information: www.eia.gov