Filed Under:  Business, News

Gas drillers turn to Ga.

11th March 2013   ·   0 Comments

By Dan Chapman
Contributing Writer

(Special to AP from the Atlanta Journal-Constitution) – Trillions of cubic feet of natural gas believed to lie below the hills of northwest Georgia have remained virtually untouched and unwanted – until now.

Shale gas drilling is slowing across the country, but a handful of companies are poking around this corner of the state looking for the next natural gas “play.” If they succeed, Georgia could join the ranks of states reaping jobs, revenue and fears of environmental damage from energy production, The Atlanta Journal-Constitution has learned.

It has been at least 30 years since Georgia — which has never produced a drop of oil or natural gas — has seen as much exploratory activity.

An Oklahoma-based company that leased 7,500 acres of land outside Dalton has two test wells in place and plans another nearby. Seventy miles away, near Cave Spring, a Texas oil, gas and development conglomerate plans a deeper well.

At least three other companies have recently researched the so-called Conasauga shale field, a 20-by-100 mile swath of farm and forest that runs from Alabama across Georgia and into Tennessee.

Georgia joins Tennessee and North Carolina as Southern states newly popular with wildcatters and major gas and oil companies.

The timing is odd. A gas glut and low prices make extraction economically unfeasible in many parts of the country. Production has throttled down in Pennsylvania, Texas and Kentucky.

Northeast Alabama raged with gas fever until 2010 when low prices and technological hurdles cooled the interest. Georgia doesn’t have the infrastructure — the trucks, tanks, pipes and refineries — needed to transform a liquid into a fuel to heat homes and cook food.

Natural gas production nationwide was in decline until 2005 when technology — horizontal drilling and the hydraulic fracturing, or fracking, of prehistoric rock to release the gas —re-energized the industry. Fracking makes it easier — and cheaper — to reach gas wedged between prehistoric rock thousands of feet below the surface.

By the summer of 2008, a record 1,600 natural gas rigs had been planted from Oklahoma to Pennsylvania. Prices peaked at $12 per thousand cubic feet. The industry was running and gunning and carving out new plays, including in Alabama on the western leg of the Conasauga shale field. Major producers invested tens of millions of dollars, drilled 18 productive wells, compressed the gas and put it in a pipeline. They sucked 187 million cubic feet of gas from the ground, according to the Alabama oil and gas board.

By 2010, gas prices had fallen to $4.27 per thousand cubic feet. The Alabama wells were capped.

“They found gas in the shale, but, bottom line, there just wasn’t any way to get enough of it released to be economical,” said Dave Bolin, deputy director of the Alabama oil and gas board.

Nationwide, only about 425 wells were producing late last year, according to Baker Hughes Inc., an oilfield services company in Houston, the lowest count since 1999. In Kentucky alone, 400 wells shut down.

Forecasts, though, show gas prices rising as demand increases. Nationwide shale gas production is expected to double by 2035. U.S. natural gas sold for $3.20 per thousand cubic feet last week, but the Energy Information Administration pegs the price at $5 by 2015, an economically feasible level for production in most places.

This article originally published in the March 11, 2013 print edition of The Louisiana Weekly newspaper.

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