Henry Hub plunge hits Reliance US ventures
Reliance's dreams of capitalising on the US shale gas revolution are about to go up in smoke with the Mukesh Ambani led company in alarm mode over the future of its US ventures.
Low Henry Hub and oil prices have forced Reliance to drastically reduce drilling at three joint ventures: one in the Eagle Ford shale play in south Texas and two in the Marcellus shale play across New York, Ohio, West Virginia and Pennsylvania. "Unless oil and gas prices improve," confides a Reliance source, "activity levels are likely to reduce further in 2016-17.
" Take the Eagle Ford JV with Texas-based Pioneer Natural Resources, where Reliance has a 45% working interest. Only four rigs are operating after Reliance demobilised two in November and December 2015.
Things aren't much better at Reliance's two Marcellus joint ventures: one where it partners Chevron and has 40%; the other where it partners Houston-based Carrizo Oil & Gas and has 60%. All drilling has stopped at these two joint ventures.
"Our strategy is not to drill new wells for now," adds Reliance. "Our focus is to cut costs.
" Reliance and its partners have agreed only on "prudent capital expenditure" like completing wells already drilled. "Prices are falling because of abundant (gas supplies)," we hear.
"Local gas offtake in the northeast US was affected by the mild winter."