DESOTO PARISH, LA (KSLA) -
Drilling for natural gas has become a lifeline for several local governments in the ArkLaTex and many businesses.
"We've been very fortunate in Desoto Parish by having all the oil rigs here," says Ben Allen. He owns DuBois Crossing on Highway 171 in Gloster.
"We noticed a slump in January," he says. "After that, it's been doing ok."
Things are about to change for anyone who relies on the Haynesville Shale, especially if they lease to Chesapeake Energy.
"Chesapeake announced that it's going to be reducing its rig count across the country in its dry gas place. 24 total, and six in the Haynesville Shale by May of this year," says Katie McCullin with Chesapeake Energy's Media Relations.
The natural gas industry provides a classic lesson in economics. The supply from drilling at rigs is way up, but the demand is way down. That means prices are too.
"As long as we continue to drill in this low price environment, we're only diminishing our capital," says Director of Corporate Development and Government Relations Paul Pratt.
From 2008 through 2011, Chesapeake Energy paid out $531 million in royalty payments here in the area of the Haynesville Shale.
Many landowners will see smaller and less frequent royalty checks, if they get them at all.
"Because we will essentially be deferring that natural gas for royalty owners to be sold at a higher price, it's more beneficial to them in the long run," McCullin says.
McCullin says each well costs about $8 million. She adds that each rig carries about 180 jobs. We asked what will happen to those.
"Our guys have the opportunity to move to other areas," Paul Pratt says. "We're picking up in Ohio, increasing our drilling in south Texas into the liquid place. No one should be concerned."
But the effects of the scale back are already obvious. One restaurant manager tells us she's lost about half of her business. If the natural gas companies pull all the way out, Ben Allen says he knows what will happen.
"It would be a disaster."
That is a disaster that Chesapeake hopes higher natural gas prices in the future will avert.
Today's price for natural gas is $2.56. The record high is above $14. Paul Pratt says it's estimated that prices will rise in the next two years.
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