Washington (Platts)--19Oct2012/440 pm EDT/2040 GMT

The price of liquids, lease requirements and foreign companies' interests are behind the continued drilling of exploration-and-production companies despite the low-priced natural gas environment, Adam Sieminski, head of US Energy Information Administration, said Friday at a luncheon in which he presented the EIA's Winter Fuels Outlook.

"It is hard to turn off the tap," he said.

The market is seeing relatively few production shut-ins because "the liquids prices are high enough to keep the wells going," he said. In addition, the companies have lease requirements, so they continue drilling to hold those leases.

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Further, "wet and oily" shale plays such as Eagle Ford have numerous wet gas projects that contribute to increased production, Sieminski said.

Finally, many foreign companies "want to be involved in the shale gas revolution," and therefore disregard currently low gas prices, betting on eventual gas price increases, he said.

Many wells are drilled but not turned into production. These drilled but uncompleted wells represent a medium-term source of supply, he said, or something between what the Strategic Petroleum Reserve is for oil and drilling new wells over the next 10-15 years.

--Anastasia Gnezditskaia, ana_gnezditskaia@platts.com
--Edited by Jason Lindquist, jason_lindquist@platts.com

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