Southwestern Energy Co., the main producer in the Fayetteville Shale, plans to pull its two remaining drilling rigs from the natural gas play as plunging natural gas and oil prices continue to roil the energy industry.
The Houston-based company sent an email to contractors this week saying that once a project is finished, "drilling in the Fayetteville will be ceased for the foreseeable future."
"Due to challenging gas prices [Southwestern Energy] is decreasing activity levels in the Fayetteville," the email said.
When asked about the email and Southwestern Energy's operations in the Fayetteville Shale, spokesman Christina Fowler said the company is "idling our last two rigs that are operating into the rest of 2015. Anything after that I cannot comment."
In August, Southwestern Energy laid off 80 employees in Arkansas. The company attributed the layoffs to steps the company was taking to reduce its operations and capital budgets in response to low commodity prices.
Southwestern Energy also said earlier this year that it planned to spend 40 percent less in Arkansas this year, and the company slashed its overall capital investment, a step other energy firms have taken because of low natural gas and oil prices.
When asked about the possibility of more layoffs, Fowler said Friday: "There has been no layoff announcement made."
The move by Southwestern Energy to idle its rigs comes as U.S. energy companies try to cut costs by scaling back their operations during a slump in natural gas and oil prices. As a result, they have been pulling drilling rigs and making other spending cuts.
Low natural gas prices, in particular, have hit producers in the Fayetteville Shale in north-central Arkansas where drilling activities have dramatically decreased since the peak of activity in 2008.
In 2008, there were 60 rigs in Arkansas. There were three rigs in the state Friday, according to Baker Hughes, an oil-field service company.
Exploration and drilling activity in the past several years have shifted from the Fayetteville Shale to other shale formations.
Those formations, such as the Eagle Ford Shale in Texas and Marcellus in the Northeast, produce oil and natural gas liquids -- such as ethane and butane -- which are more profitable than the dry gas found in the Fayetteville Shale.
The other two main producers in the Fayetteville Shale, BHP Billiton Ltd. and XTO Energy Inc., a subsidiary of Exxon Mobil Corp., have also reduced their operations in the formation.
XTO Energy has no active rigs in the state. BHP Billiton, which placed its Fayetteville Shale assets for sale briefly last year, has previously said that the company is doing completion and remedial work in the shale. The company did not return emails seeking comment on Friday.
Business on 12/19/2015