New natural gas rig counts hit the wires Friday morning and on cue the number decreased yet another 15 rigs to 422, another 21st century low and a massive 55% below the 936 peak one year ago. An article was published by me on July 22nd predicting a spike to $8.00 natural gas by this winter. Well, we are right on track. During that July week natural gas storage numbers were 19.2% and 17.5% respectively above the one and five year averages. Back then we had had eleven straight weeks of below normal storage injections. Since that time we have had a look at thirteen more data points twelve of which were below normal so now the “glut” has diminished to only 6.8% and 7.8% more than the one and five year averages. Thursday’s actual storage injection was 72 Bcf against a 108 Bcf increase one year ago this week.
I have continued to inspect decline curves for wells in the Eagle Ford shale. After viewing records for over 70 wells with between nine and eighteen months of production data, the declines continue to be precipitous. A one year decline rate of 80% or more was more the norm than the exception for the data I inspected. In other words a well making 800 BOE (barrels of oil equivalent) on day one, more likely than not was generating well under 200 BOE twelve months later.