The latest industry happenings straight from the desk of ND's editor.

Natural Gas Prices in the U.S.

Reduced gas drilling with increasing gas consumption is likely to check falling natural gas prices in the United States, according to a recent report from Research and Markets.

The United States has been facing a supply surplus of natural gas since last year that has resulted into a steep fall in gas prices. Natural gas prices in the United States have declined from around $4.54 per million British thermal units (MMBtu) on Jan. 3, 2011, to $2.05 per MMBtu as per Henry Hub index as on April 27, 2012. The low prices have prompted exploration and production (E&P) companies engaged in shale gas drilling and production to shift their operations to liquid-rich areas, considering higher and sustained oil prices. This move by the E&P companies is expected to bring down the natural gas output of the country over one to two years. Furthermore, low natural gas prices have encouraged its usage in power generation and petrochemical industries, which is expected to increase along with the country’s gas consumption in the near term. This rebalancing in the supply-demand scenario of natural gas in the United States is expected to check the fall in gas prices in the near term.

The report highlights the plans announced by major E&P companies engaged in U.S. shale gas production to reduce gas drilling amidst low natural gas prices, and analyzes the potential impact of this supply-demand adjustment on natural gas prices. Furthermore, it assesses possible impact of reduced drilling on the country’s gas production in near future. It also assesses possible increase in natural gas consumption driven by increased gas usage in power generation and petrochemicals sector.

To get the full report, contact Research and Markets at 800-526-8630.

Summit Drilling's Expansion

Summit Drilling Inc., one of the Northeast’s largest environmental services companies, has merged Tabasco Drilling into its southern New Jersey operation. This move furthers the company’s strategy to encompass the northeast while expanding its presence in the Mid-Atlantic region.

“This move is significant for us,” states Tory Donnelly, vice president of operations, southern New Jersey. “We have added seven talented professionals, several pieces of key equipment and a 10,000-square-foot facility to our operation in South Jersey alone. More importantly, we have many new customers from Tabasco Drilling in our care, and they’re already providing us the opportunity to demonstrate our ability. We’re delivering a wide variety of drilling services, all supported by our industry-leading ‘Experience Safety’ health and safety programs,” adds Donnelly.

Joe Tabasco has been involved in the drilling industry since 1965, and founded Tabasco Drilling Corp. in 1990. “It was important for me to find a partner who maintained the same level of commitment to customers,” says Tabasco. “Bob Kreilick (CEO of Summit Drilling) has built his business and reputation on providing an exceptional experience to customers. What more could I ask for? I feel that my customers not only have a talented and safety-conscious service provider to support them, but one that can offer them an expanded platform of services as their needs grow,” concludes Tabasco.

During the first months as a combined operation, all new Summit Drilling employees were trained in Summit’s health and safety program. “I was impressed with the quantity and quality of the training Denis Crayon (Summit Drilling’s health and safety director) provided our staff in the initial weeks,” states Rick Davis, Summit’s operations manager – Southern New Jersey and long time manager of operations for Tabasco. “I think he spent more days per week here in Mount Laurel than he did at Summit’s headquarters in Bridgewater. Starting with health and safety was a great way for our guys to get to know people from Summit, while learning the importance of safety as the number one value in Summit’s culture. Our merge into Summit Drilling has been very smooth, and our customers have been very comfortable with our service and ability to deliver,” Davis concludes.

Drill Bit Investigation Underway

The United States International Trade Commission (USITC) has voted to institute an investigation of certain drill bits for mineral mining. The investigation is based on a complaint filed by Boart Longyear Co. and Longyear TM Inc. The complaint alleges violations of the Tariff Act of 1930 in the importation into the United States and sale of certain consumer drill bits and products containing the same that infringe patents asserted by the complainants. The complainants request that the USITC issue an exclusion order and cease-and-desist orders.

The USITC has identified the following as respondents in this investigation:

• Boyles Bros Diamantina S.A. of Peru,
  
• Christensen Chile S.A. of Chile,
  
• Diamantina Christensen Trading Inc. of Panama, and
  
• Intermountain Drilling Supply Corp. of West Valley City, Utah.

By instituting this investigation, the USITC has not yet made any decision on the merits of the case. Within 45 days after institution of the investigation, the USITC will set a target date for completing the investigation. Remedial orders in these cases are effective when issued, and become final 60 days after issuance, unless disapproved for policy reasons by the U.S. Trade Representative within that 60-day period.