More on USA natgas pricing...
talked to a gas producer this afternoon who told me the spot price he was getting at the wellhead for his Arkoma Basin (Southeastern Oklahoma and Arkansas) gas was $2.80 this morning. He said that they were going to stop drilling as soon as their contracts had expired and have already terminated about half their rigs. He also said that with the new drill bits and other technology that drilling was much more efficient than in past years and that the rig count was not a good indication of drilling productivity. He thought that the rig count would have to fall a lot more than in previous downturns to account for this increased productivity. He is expecting the rig count to likely have to get down to about a third of what it was at the highs to have any meaningful impact on supply occur by year end. So he is not looking for any improvement in prices until 2010. But then he thinks there could be a sharp spike as there will be little cash in the companies and limited financing alternatives around to support any kind of rapid resumption in drilling once depletion brings supply and demand into balance. I know he is talking from the position of a medium sized independent. He did say that there was some talk about curtailments but that he had not heard anything about people shutting in production.
I have not been in the field for a couple of years after I retired. But the guys my age who are still in the business have lived through the though times of the 1980's and 1998. They are really worried that we could be slipping back into a protracted downturn much like the 1980's because of the weak world economy. These guys are going to be pretty conservative with their budgets