Shale Gas Will Cover Lost Offshore Gulf Of Mexico Production: Analyst

May 24, 2010
Onshore natural gas production from shale plays will make up for any offshore production that may be delayed or lost because of US government actions in the wake of the oil spill at BP's Macando play in the Gulf of Mexico, a Credit Suisse commodities analyst said, according to Platt's analyst Bill Holland.
"Even under our most aggressive scenario, we expect that lost production in the Gulf will be more than offset by onshore growth," Credit Suisse's Director of Commodity Research Teri Viswanath told clients Wednesday.
A complete halt to all new drilling in the Gulf would cut the Gulf's 6.7 billion cubic feet per day production rate by 1.3 billion cubic feet per day to 1.6 billion cubic feet per day, Credit Suisse estimated, a figure "which is in the ballpark of our domestic production growth estimates for this year," Viswanath said.
"A more reasonable, but somewhat aggressive, scenario [of shutdowns] would amount to a loss of about 0.15 billion cubic feet per day," a "rounding error" on onshore gas production, Viswanath said.
"It might seem surprising that a deepwater disaster of this magnitude would have very little impact on natural gas supply," Viswanath said.
"The growth of shale gas has been a game-changer in the US, not only with regard to reliance (or the lack thereof) on imports, but also in the very manner in which natural gas is explored and produced domestically," Viswanath said.
"The ability to unlock vast onshore reserves through affordable new drilling techniques means that expensive deepwater and ultra-deepwater exploration is no longer on the front-burner for the industry," Viswanath said.
"Specifically, because there is not another large project like Independence Hub on the immediate horizon, the impact of even a six month moratorium on drilling should have a minimal impact on US natural gas supplies."
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