Natural Gas 75% Gain Speeds Horizontal Drilling at Devon, Range

June 27 (Bloomberg) — U.S. natural-gas producers are drilling wells previously deemed too costly and resurrecting abandoned fields from Appalachia to the Rockies, spurred by the biggest rally in fuel prices in eight years.

Devon Energy Corp. and Range Resources Corp. are drilling horizontal wells that cost three times as much as traditional vertical shafts to unlock gas from rock formations that were unprofitable to exploit before this year’s 75 percent gain by gas futures. The number of active U.S. gas rigs rose to a nine- month high last week, according to a survey by Baker Hughes Inc.

“As prices are better you want to drill more wells to get more production on line as quick as possible,” said Larry Pinkston, chief executive officer at Unit Corp., a Tulsa, Oklahoma-based gas producer and drilling-rig operator. “So we definitely are drilling more wells.”

The rise in gas futures in New York this year exceeded the 45 percent surge in oil and all commodities besides coal. U.S. gas demand probably will grow 4 percent this year, double the rate of new supply, said Roger Read, an analyst at Natixis Bleichroeder Inc. in Houston.

Bloomberg