Shale Gas Well Blowout Raises Specter of New BP: Energy Markets
June 07, 2010, 12:48 PM EDT
By David Wethe and Asjylyn Loder
June 7 (Bloomberg) — A Pennsylvania natural gas well “blowout” last week helped drive prices to a 14-week high on concern that tighter restrictions on offshore drilling following BP Plc’s Gulf of Mexico spill will spread onshore.
The incident on June 3 at the project operated by EOG Resources Inc. shot natural gas and drilling fluids onto the ground and 75 feet (23 meters) into the air, the state Department of Environmental Protection said in a statement on June 4. The well is in the Marcellus Shale gas find in Clearfield County, about 122 miles northeast of Pittsburgh.
With offshore exploration curtailed, dependence on shale gas may grow, amplifying the impact of any disruptions. A “blowout” is the industry’s term for a surge of pressurized oil or gas that causes an eruption and is what caused the explosion and fire at BP’s Macondo well in the Gulf April 20, resulting in the biggest oil spill in U.S. history.
“The shale problem is a bullish factor in the market,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “A lot of people are starting to worry about the Gulf production of gas. The more we cut back on Gulf production, the more we rely on shale production.”
Natural gas for July delivery climbed 3.6 cents, or 0.8 percent, to $4.833 per million British thermal units at 12:44 p.m. on the New York Mercantile Exchange. Gas rose 11 percent week last week, the biggest gain since the week ended Dec. 18.