COLUMN-Drilling downturn will tighten gas in 2010: John Kemp

-- John Kemp is a Reuters columnist. The views expressed are his own --

By John Kemp

LONDON, Nov 12 (Reuters) - While soaring output from the Barnett shale has been one of the main contributors to the gas glut in North America and the rest of the world this year [ID:nLB290860], a sharp cutback in drilling could now have a modest impact tightening the gas market in 2010.

After trending steadily higher between 2005 and H1 2009, the number of gas wells being completed each month in Texas Railroad Commission Districts 5 and 9 (which cover the counties at the heart of the Barnet play) has fallen sharply in the last five months.

The number of wells completed in Districts 5 and 9 averaged just 292 in the six months ending October, down from 399 in the six months ending June:

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Completions in Districts 5 and 9 remain high by historical standards. But that is partly because rigs have pulled out of speculative areas on the Barnett's fringe and in other parts of Texas to concentrate on drilling high-productivity, low-risk wells in the counties at the Barnett's core, especially Tarrant and Johnson.

The number of wells completed in Districts 5 and 9 has fallen back to levels last seen in H2 2007 and H1 2008, but completions in the rest of the state are down to levels not seen since 2005.