The Barnett Shale set off a national renaissance in the production of oil and natural gas through fracking. But as we look back on 2013, it's clear that the boom has left North Texas behind, for now anyway. Drilling and permitting activity in the area has fallen to a 10-year low.
The Railroad Commission of Texas issued some 827 drilling permits. For context, that's down from more than 4,000 in 2008, at the height of the shale-gas bonanza. In fact, this is the first year the agency has issued fewer than 1,000 permits since 2003.
Through the middle of December, 784 wells were drilled, down more than 50 from the year before, and nearly 3,000 in 2009. Interestingly, despite the steep declines in drilling and permitting, production was only off by 6.5 percent last year. These wells tend to produce in large volumes at first, then experience steep declines. To keep production levels high, the industry has had to drill at a rapid clip to offset the declines. Some in the industry are saying the typically precipitous production decline curves of Barnett Shale wells may be growing more gentle.
"Production is losing its correlation with the rig count," natural gas producer Quicksilver Resources told The Fort Worth Star-Telegram.
This year will put that claim to the test. A combination of factors may keep 2014 as quiet as 2013. Natural gas prices have slowly crept up over the last two years, but haven't managed to crack $5 per million BTUs -- well below the $12 and $13 it fetched during its heyday in 2008.
Why bother with cheap gas approaching break-even prices when oil is readily available in South Texas' Eagle Ford shale and West Texas' Cline Shale, and selling for nearly $100 a barrel? The opportunity cost, for the moment, is too big to ignore.
The biggest knock against shale has long been that it only works if you drill with maniac fervor. In the meantime, the lull in the Barnett will test whether the formation has any staying power.
