Natural gas slowdown costs at least $1.5B in capital spending in 2015
Five natural-gas producers with significant operations in southwestern Pennsylvania have reduced their capital budgets collectively by 23 percent — or $1.5 billion — according to numbers reported in operational guidance.
The reductions are based on a Pittsburgh Business Times analysis of amounts reported by Consol Energy, EQT Corp., Range Resources Corp., Rex Energy and Rice Energy.
Lou D’Amico, president of the Pennsylvania Independent Oil & Gas Association, said the number is significant.
“And it’s just the tip of the iceberg. Others are doing the same cutbacks, many with larger percentage drops,” he said.
Jeff Kotula, president of the Washington County Chamber of Commerce, said it reflects the current market.
He said he fears that a severance tax, as Gov. Tom Wolf has proposed, could only help to further discourage investment.
“I think the current market situation doesn’t bode well not only for Washington County, but for the state of Pennsylvania,” he said.
Less spending means less drilling. So it’s not necessarily a surprise that the number of rigs running in Pennsylvania have dropped to their lowest number since summer of 2009, based on the Baker Hughes weekly rotary rig count.
One notable exception, however, is Southwestern Energy, which is beginning to develop the Marcellus acreage it has acquired from Chesapeake.
The company expects to spend $625 million in the southern Appalachian basin, and increase spending in northeast Pennsylvania from $700 million to $790 million.