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All the DUCs in a Row: Natural Gas Production in U.S.

Using data from seven shale gas regions in the United States, we examine natural gas production in terms of drilling rig activity and well completion rates. Our objective is to examine the determinants of well completion decisions in the U.S. natural gas production. We observe that in recent years, the explanatory power of drilling rig count has declined. On the other hand, the number of producing wells remains a significant factor for explaining the variation in gas production. We find that an increase in the number of drilled but uncompleted wells (DUCs) plays a significant role in natural gas supply. The number of DUCs depends on drilling rig activity and futures prices of oil and natural gas. Also, our results indicate that well completion decisions and the duration of DUC status depend on oil and gas prices, pipeline capacity, producing well type and well depth.

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Keywords: Natural Gas Production, Rigs, Drilling, Completion, Pipelines, Prices.

DOI: 10.5547/01956574.42.3.dmug

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Published in Volume 42, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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