Is the level of drilling activity going to drop because of the economic recession?
It is likely that the drilling activity will be lower than under ideal economic circumstances, but it still may increase when compared to 2008 levels of development in the Marcellus Shale. There are two main economic factors that are helping to influence drilling activity. One is the dropping price of the natural gas commodity, which provides less incentive to drill more wells as the rate of return on the investment of drilling a well will be smaller. A lower commodity price also lowers the amount of assets a company will have in the form of proven or unproven natural gas reserves. The other factor is the credit crisis, which is making it difficult for companies to get credit to drill new wells. A Reuters News service article addresses the effects of the economic downturn on drilling activity nationwide. Whatever the drop in activity due to the economic downturn, it is more than likely to be temporary, as overall demand for natural gas is expected to continue to increase and the Marcel
