Low natural gas prices cause wave of impairments
Friday, February 14, 2020
As a result of continued low natural gas prices, oil and gas companies have had to recalculate and reduce the value of their assets to reflect the down market, according to ShaleOhio.
Last month, Chevron Corp. recorded a $10 billion impairment last month and more than half of it was attributed to assets in the Appalachian Basin.
Chevron’s recalculations were followed by CNX Resources Corporation writting down $46 million in assets in Pennsylvania.
Next month, EQT Corp., the largest natural gas producer in the country, is expected to write down anywhere from $1.4 to $1.8 billion in assets.
According to the Pittsburgh Post-Gazette, the recent wave of impairments could mean “some oil and gas leases will be allowed to expire without follow-up and some potential drilling locations are now off the table.”
Learn more: ShaleOhio > Continued low natural gas prices spark new round of impairments
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Shale FAQ
What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.