Natural gas drilling slows as prices drop

As natural gas prices continue to drop, the recent nationwide boom in drilling is slowing. Drillers don't make money if prices go too low.

"It is safe to say that there will be fewer natural gas wells drilled in 2012," said Kathryn Klaber, president of the Marcellus Shale Coalition, an industry group based in Pennsylvania.

In recent weeks, several companies have announced plans to cut gas production around the nation.

When the shale drilling boom was starting in 2008 the average price for a unit of gas was about $8. Two years ago it was down to $5.50, and now it's dropped to about $2.50. The shale gas formations became productive more rapidly than expected, as thousands of new wells have been drilled nationwide.

Industry reports note that the national count of active new gas drilling rigs fell to 775 in early February, down from about 1,500 in 2008.

Yet Klaber said the low prices create opportunities for more use of the product. Some drilling companies are focusing more on the so-called "wet gas," which sells for a higher price because it can be transformed by refineries into consumer products such as plastics and fertilizer.

Sara Moeller, a professor of business at the University of Pittsburgh, said a key factor in the price will be how quickly consumers, power plants and refineries increase their use of natural gas. -- AP