Friday, August 19, 2011

Baker Hughes Rig Count For PA Drops 5 in One Week: Here's My Prediction

In Pennsylvania, the Baker Hughes' count for the week ending today, Friday, August 19, was 111 active rotary rigs. 

The previous week's count was 116.  So that's a relatively abrupt drop of 4 percent within just one week.

In fact, 116 is now likely to stand for awhile as the PA state record — reached during three separate weeks spread over the last two months.

It's 4 p.m. now.  I'm going on record as predicting that somebody within the northeastern media will make a story out of this, relatively soon.  This will be based either on the more conservative Baker Hughes count, or on one of the competing counts, which tend to include all rigs, whether they're actually drilling or not. 

The story will go something like this:  The rig count is falling!  The rig count is falling!  The New York Times was right!  Shale gas must be a Ponzi scheme!  The bubble's already popping!

(Spoken like somebody who has never lived through an oil and gas downturn — which come around as often as cops at the donut shop.)

There's a lot of possible explanations for what's really going on, starting with the theory that many are moving to oil work, which is paying better.  But I don't know if that'll get much coverage.

I have noticed on numerous occasions over the last year — most recently here — that nobody in the northeastern media has ever said boo directly about Pennsylvania's rig count hot streak — which has run even or higher, virtually without exception, for every month on average over the last 30 months, since January 2009. 

For some reason, that's not a story.

But now the rig count is headed lower. 

That's a story. 

(I know — I don't get it, either.)

Since this latest mini-crash, we've seen natgas slipping below $4 MMBTU.

I, for one, don't think it makes any sense to sell any more of the stuff at that price level. 

I burn the stuff at home. 

And this is my business. 

But I do believe — at this point — industry should ease off. 

Drill less.  Frack less.  Even choke down the valves on existing wells.

In fact, I believe that environmentalists, conservationists, and people who are truly interested in the long-term American public interest should demand that government find ways to make this happen.

We need, like, a government-sanctioned OPEC for shale gas.

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