State News

March 11, 2013

Gas drillers turn to Georgia


Industry re-energized

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.

Critics say chemicals and water pumped underground can leach into groundwater. Buckeye and Forestar, according to the state’s geologist, don’t have any near-term plans to frack. Long-term is a different matter and would require permission from the state.

Environmental groups, including the Southern Environmental Law Center (SELC), were unaware of the renewed interest in northwest Georgia’s natural gas field. The SELC is challenging new fracking rules in Tennessee and proposals to drill on public land in Alabama.

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.

Spalvieri says oil could be an easier, first-step extraction. The state’s $250,000 bounty would prove a nice bonus, too.

“If we make a discovery and drill a good well, it will make us some money,” Spalvieri said. “But everyone sits back and says, ‘Let’s see what you find.’ “


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