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Black gold comes to Texas' rescue again


The following ran in the July 20, 2012, edition of the San Antonio Express-News. Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University, provided expertise for this story.

July 30, 2012

By Vicki Vaughn

While low natural gas prices may help you with your utility bill, it isn't helping energy companies' bottom line.

Low gas prices have slowed drilling in shale plays where gas is predominant because the wells aren't bringing in a decent return.

But no one is sounding an alarm that the boom in the Eagle Ford Shale of South Texas is soon to bust. In fact, drilling activity in the Eagle Ford Shale is intensifying because it's blessed with oil.
“With gas prices falling, many, many companies are rebalancing their portfolios and going to oil,” said Stephen Trammel, senior manager of industry affairs at consulting firm IHS/CERA. The fallen price of natural gas has squeezed profits for many drillers. It closed Thursday at $2.99 per million British thermal units after reaching a high of $4.58 per million Btu as recently as July 21, 2011. By contrast, crude oil hit a two-month high Thursday at $92.66 a barrel.
That's made shale formations that also have oil the hot plays in North America right now....

“The break-even point for natural gas drilling varies almost by every individual development,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business. Where companies can extract natural gas liquids that include ethane and propane, “it's still pretty economical to drill,” he said....

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