Business Research
Business research provided free of charge to clients of the SBDC. We have proprietary research as well as research performed by our National Research Center, SBDCNet, at the University of Texas in San Antonio. We have researched everything from Popcorn Flavoring to Artificial Insemination of Elk. Go ahead, try and stump us!
2011 Drilling Research
Drilling data shows a mixed bag of indicators and reflects the volatility in the market at present. With all time high inventories and this supply/demand comparison...
... it's easy to see why the price for Nat Gas at the wellhead is at or near lows that haven't been seen in decades.
Production rates are following traditional seasonal changes but consumption remains constant due in part to a warmer than usual winter. Another major factor is that 35% of all Nat Gas is used by the industrial sector which is only just now emerging from the effects of the recession.
Common sense would indicate that with high inventory and low prices, production would continue to be soft. It doesn't pay to drill a well right now. That may not be the case for 2012.
The Good News
As you will see in our research below, there has been an upswing in Applications for Drilling permits during 2011 (24% statewide due to increased activity in Duchesne and Carbon counties and 18% in Uintah County). Spudded wells however remain constant statewide and are up 14% in Uintah County. Most of the APD increase came in the last quarter of the year which indicates an increase in drilling in 2012.
We have noticed that Spuds lag APD's by about 6-8 months. This is a good signal for the last half of 2012 when combined with the improving national economy.
(Click to download reports)
Comparison of Applications for Permits to Drill (APD), Started Wells (Spuds) and Completed Wells
Charts for APD's, Nat Gas Price at the Well head and Underground Working Inventory with trendlines
Prices and inventories are recorded through October. Our research utilizes the official Energy Information Administration numbers and they lag by two months. They will be updated as they become available.